By: Donald L Swanson
A mediator’s motto must always be, “Never give up.”
At the beginning of any mediation, a mediator will hear, all the time and from all the parties, “No, never!” So, a mediator must ignore such statements and keep talking—exercising patience and perseverance . . . and then more patience and more perseverance.
That’s the assessment of Judge Gerald Rosen, whose background includes serving as Chief Judicial Mediator in the City of Detroit bankruptcy. [Fn. 1]
Earlier this year, I discuss the Detroit bankruptcy with Judge Rosen. [Fn. 2] And he provides a fascinating example of how patience and perseverance pay off—in unexpected and unpredicted ways—even as things seem to be going badly.
What follows is a summary of that discussion.
Various foundations are stepping forward, back then, with hundreds of millions of dollars that would be used to fund retiree benefits.
Judge Rosen wants to keep such information out of the press for as long as possible, fearing that:
- the boards of the foundations might get cold feet; and
- the financial creditors are going to be very upset.
–Detroit Free Press
But after eight days, the information leaks out. A Detroit newspaper reporter calls Judge Rosen. The reporter is very nervous. He says, “You know, we’re hearing about what went on in the room with the foundations and I want to run it past you.”
The reporter starts spooling the story out, and Judge Rosen is thinking, “We’re screwed!” The more the reporter says, the more it becomes clear that that the cat is completely out of the bag.
So, Judge Rosen starts pleading with the reporter not to run the story because of what will happen. The reporter responds with what every reporter says:
- “Well, if we don’t run it, everybody’s chasing the story, somebody else is going to run it”; and
- “I’m calling you because I want to be sure its accurate.”
Judge Rosen responds, “You have no idea how bad this is going to be!”
So, Judge Rosen calls his neighbor and close friend, the publisher of the Detroit newspaper, trying to get him to spike the story. In response, the publisher laughs and says, “I’m surprised the story held for eight days, Jerry.”
So the story comes out in the newspaper—front and center, top of the fold.
–A Foundation Executive’s Response
That morning, Judge Rosen is having breakfast with one of the foundation executives. The executive is well aware of the story, and Judge Rosen worries that, (i) the executive will react with an, “Oh, no!” and (ii) the foundation’s board might be scared off.
But instead, the foundation executive says, “You know, my board is made of sterner stuff,” and “I think this will actually be good for the Board that the story is out there.”
Judge Rosen responds with, “Ok, I hope so.”
–Financial Creditors’ Response
But then, Judge Rosen meets with the financial creditors and gets “blasted” . . . but “in a very nice, respectful way.” They are not happy at all.
Then the financial creditors start fighting the deal—trying to take it apart in many different ways, using the financial press.
$5 Million Hero
Then, about 10:00 o’clock that same morning, Judge Rosen gets a “very strange email” from somebody he’d never heard of. The email says, “I’m inspired by this story, and we’d like to kick-start the funding with $5 million.”
Judge Rosen does not know this person—has never even heard of him. So he googles the person’s name, Paul Scott. Turns out, he was a chemistry professor that invented a firefly molecule that lit up diseased cells—he turned that invention into a business and “sold it many years later for a fortune.”
For Judge Rosen this is “so inspirational”:
- Every day Judge Rosen is working in what he calls the “shark tank”—“dealing with some of the toughest, smartest lawyers and financial experts in the world,” and they are wanting to “take the city apart piece by piece”; and
- “Here’s this very humble, self-effacing, elderly, gray-haired chemistry professor, and all he wanted to do was help his city.”
They have lunch the next day, and the conversation goes like this:
- Rosen: “Paul, why are you doing this?’”
- Scott: “My wife and I have been very fortunate. We don’t have any children, and everything we’ve ever had we owe to the city of Detroit. The city needs us, and we want to help.”
- Scott tries to explain what his firefly molecule does, a Judge Rosen says, “I can tell you in two words why I went to law school – organic chemistry.’”
- Scott: “Well it’s not that interesting anyway.”
- Rosen: “You know, if we can get this story out I think it will get some legs.”
- Scott: “Yeah, I’ve gotten a lot of calls from the media.”.
And that night Paul Scott is on the news, all the local news, and the City starts getting contributions from all over the country and all over the world — “from Amsterdam, from Paris.”
Ultimately, the city gets an additional $300,000 that way. It’s “amazing!”
“To us in the shark tank, the mediators,” such unexpected, unpredicted developments are “a tonic” because it shows that the people care and are rooting for us.
Judge Rosen says, “I call Paul my ‘VW.’”
In the world of espionage and spy novels, a “VW” is a “virtual walk-in”: people who “volunteer intelligence, cooperate with intelligence, with an email or something.” Such people are called “virtual walk-ins.”
“So, Paul Scott was my VW.”
A mediator’s motto must be: “Never give up!”
Judge Rosen provides an excellent example of why.
Footnote 1: Hon. Gerald E. Rosen (Ret.) now serves as mediator, arbitrator and neutral evaluator in high-level business cases for the JAMS office in Detroit. Previously, Judge Rosen served as Chief Judge of the U.S. District Court for the Eastern District of Michigan. He was serving in such role when the City of Detroit filed its Chapter 9 bankruptcy—shortly thereafter, the presiding Bankruptcy Judge appointed Judge Rosen as Chief Judicial Mediator in the City of Detroit bankruptcy case.
Footnote 2: Immediately below is a link to a YouTube video of this discussion with Judge Rosen: the “Never give up,” the background, and the “VW” portions of the discussion begin at the 10:50 time mark and after the 18:35 time mark).
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