Every once in a great while, a group of people perform a voluntary service of hard and diligent effort that produces a result of excellence and provides great value to others. That is precisely what a small group of people did in creating model local rules and supporting commentary on bankruptcy mediation.
These are the people who created the Model Local Rules and Commentary, as participants in a Rules Subcommittee of ABI’s Mediation Committee:
- Mediation Committee Chair: Robert M. Fishman;
- Subcommittee Chair: Richard E. Mikels;
- Subcommittee Members: Jack Escher, Bonnie Glantz Fatell, Reginald W. Jackson, Raymond T. Lyons, Frank A. Monaco, Jr. and Judy W. Weiker; and
- Input Provided by: Hon. Judith H. Wizmur (ret.), Elayne E. Greenberg, C. Edward Dobbs, Jerry M. Markowitz and Scott Y. Stuart
The effort required to accomplish such a feat is huge. So why would these folks undertake a “voluntary” (translation: “unpaid”) effort like this? Here is the “why” that they’ve described:
- To “support and enhance the continuing trend toward the use of mediation in resolving disputes in bankruptcy cases”;
- To help “provide a more efficient method by which courts and parties can realize the goals of the bankruptcy system”; and
- To address a need for “uniformity.”
Here’s how the Model Local Rules and Commentary came about:
Step One: ABI’s Mediation Committee appointed a subcommittee to draft model local bankruptcy rules for mediation. The Mediation Committee wanted to create a resource for bankruptcy courts in adopting or revising local bankruptcy rules on mediation.
Step Two: The subcommittee went to work. For more than two years, they (1) obtained the views of many current and former bankruptcy judges, (2) considered local rules already in effect in various districts, (3) considered the work of other organizations on similar subjects and (4) met many times to hash out issues.
Step Three: The subcommittee prepared a preliminary draft of the model rules and submitted it to ABI’s Mediation Committee and to ABI’s Executive Committee. After receiving input, they created a final draft.
Step Four: ABI’s Executive Committee approved the subcommittee’s final draft of the Model Local Rules on Feb. 5, 2015.
The Underlying Ideas
Here’s how the subcommittee described the underlying ideas behind its efforts:
- Mediation is an effective tool for resolving bankruptcy disputes in every procedural context: adversary proceedings, contested matters, plan negotiations, etc., and its use is likely to expand in the future;
- Some bankruptcy districts have adopted detailed local rules for mediation, but others have yet to do so;
- The hope is that the subcommittee’s Model Local Rules can be used as a template for bankruptcy districts wanting to adopt local mediation rules or amend existing rules; and
- The expectation is that the Model Local Rules can be adopted in whole, in part, or in a modified version by any particular district.
The Perceived Needs
Here are some “needs” the subcommittee tried to address:
- Many bankruptcy districts have no local mediation rules at all, and many have local mediation rules that need to evolve as the use of mediation increases;
- Differences in local rules from one bankruptcy district to the next are significant, and differences are often based on local customs and cultures; accordingly, the Model Local Rules are intended for customization depending on local preferences.
- Nevertheless, uniformity is a still a value that local districts should embrace and pursue, and the Model Local Rules are a resource in providing uniformity.
The Self-Determination Priority
A priority that the subcommittee adopted within the Model Local Rules is that mediation is a self-determination process in which the mediator is a facilitator, rather than a court officer. This priority fosters a sense among mediation participants that they are in control of the process and are not giving up their autonomy in order to participate.
Model Local Rules support self-determination by, for example, (1) allowing time frames to be flexible and dependent on the views and goals of the disputing parties, and (2) allowing and enabling parties to achieve their own resolution, rather than having one imposed upon them by a court or a court officer.
The subcommittee hopes its efforts will promote the greater use of mediation in resolving bankruptcy disputes. Here’s why:
- Chapter 11: Many commentators believe that the effectiveness of chapter 11 for business reorganization, as opposed to liquidation, is hampered by being too expensive and too time-consuming. Mediation, when governed by clear and effective Rules, can help make the chapter 11 process speedier, less expensive and more user-friendly.
- Chapters 13 and 7: Mediation can increase the success rates of chapter 13 cases and make chapter 7 cases more effective.
- All chapters: Mediation can help achieve efficiencies in every type of bankruptcy dispute by providing a streamlined method of dispute resolution, expediting the parties’ realization of their rights, and avoiding additional delays and expenses of litigation.
The Goals Achieved
Back in 2009, Jacob A. Esher published a review of local rules in all bankruptcy districts and concluded that 50 of those bankruptcy districts “are using mediation pursuant to local bankruptcy rules, general orders, or guidelines.” Today, 76 of all bankruptcy districts have adopted some type of local mediation rules. Additionally, the subcommittee’s role in helping various bankruptcy districts evaluate and amend their local rules on mediation is an additional effect that goes beyond any statistical improvement that can be readily measured.
These are major accomplishments. And the subcommittee members identified above deserve our gratitude for their role in making this accomplishment happen.
Here’s a big “Thank you!” to the subcommittee members whose labors gave us the Model Local Rules on mediation. Such efforts are greatly appreciated!
** If you find this article of value, please feel free to share. If you’d like to discuss, let me know.
[Note: This article was originally published on Friday, May 17, 2019, by the American Bankruptcy Institute in its Mediation Committee Newsletter (Vol 5, Num. 2).]