I’m in Mediation. Why do I need a Lawyer?

The Ontario Association of Family Mediators “Code of Professional Conduct” states that mediators must inform clients of the advisability of obtaining independent legal advice, both from the outset of the mediation and prior to signing any mediated agreement. Indeed, many mediators will not accept as clients people who refuse to obtain independent legal advice. Sometimes people who are working with a mediator are dismayed to find this out. “We want to stay out of court!” they protest. “Why do we need lawyers?”

The short answer: Your goal is not just an agreement. Your goal is a durable agreement, one that neither party will be motivated to challenge in the future. A durable agreement will save you time and money in the long run. It will provide stability for everyone involved and allow both parties to get on with their lives.

There are two main reasons why consulting a lawyer is important for crafting a durable agreement. First, each party needs a lawyer to certify their financial disclosure. If it turns out that one of the parties has (whether by mistake or on purpose) misrepresented his or her financial situation, any agreement reached on the basis of the misrepresentation may not be durable. The other party would have a reason to challenge the agreement in court.

Second, both parties need independent legal advice. This means that each party needs to know their rights under the law, and to what extent (if any) the mediated agreement deviates from these legal rights. For example, if one of the parties agrees to forgo spousal support, she needs to know what her legal entitlements are so that she can make an informed decision. If she makes a decision without having all of the relevant information, then any agreement she signs may not be durable. She would have a reason to challenge the agreement in court. Now, some people, for all kinds of reason, decide to accept an agreement that does not reflect their legal entitlements. Some agree to settlements that provide less than their legal entitlement. Some agree to settlements that are more generous to ex-partners than is strictly legally required. Many different kinds of agreements may be fine, as long as everyone is fully informed about their rights and obligations under the law.

Independent legal advice means that each party needs a separate lawyer. By definition, one lawyer cannot offer independent advice to two parties in the same dispute. It is a good idea to consult with a lawyer early on in the mediation process, and be informed about your rights and obligations as you proceed. This is likely to save you time and money in the long run. If you’ve developed an agreement on the basis of misinformation or misunderstanding, a lawyer may advise you to start over.

Finally, be sure to engage a lawyer who has expertise in family law. Don’t hire your cousin the corporate lawyer or the really likeable real estate lawyer who helped you buy your house. Family law is complicated and you want to make sure that whomever you work with is well-informed. If you’re determined to stay out of court, make sure your lawyer knows this and respects your wishes. (And to find a lawyer who is also determined to stay out of court, consider working with a collaborative lawyer.)

"Droit de Suite" in the UK: Economic Impact So Far

I’ve written here before about “Droit de Suite” or artist’s resale rights. These are fees paid to artists when their work is resold. And I’ve written about some of the bad arguments often made against the adoption of droit de suite. In 2006 the UK adopted artists’ resale rights for living artists, and in 2012 they plan to extend the legislation to benefit the heirs of artists who have died within the past seventy years. At the time that droit de suite was implemented in the UK, many artworld figures made dire predictions that prices for the work of living artists would fall, and that those with artworks to re-sell would leave the UK for markets (such as China, Switzerland, and the U.S.) where artists’ resale rights did not apply. Either of these consequences would have been bad news for the UK art market, and for the many artists, designers, dealers, and others, whose livelihood is linked to it.

Have any of these dire predictions come true? Chanont Banternghansa, an economist at the National Bureau of Economic Research, and Kathryn Graddy, a professor in the Department of Economics at Brandeis University, decided to investigate the effect of artists’ resale rights in the UK. Their paper, “The impact of the Droit de Suite in the UK: an empirical analysis,” appeared recently in the Journal of Cultural Economics (2011) 35:2. (It is also available here, on Professor Graddy’s website.) Their results should be encouraging for those who argue that the Canadian government should adopt similar legislation to that already in force in the European Union.

Banternghansa and Graddy focused on works sold by the two major auction houses, Christie’s and Sotheby’s, from August 1, 1993 until July 31, 2007. (They excluded works sold by dealers, as prices paid and quantities sold are difficult to verify.) They made two different comparisons. First they compared those works that would be subject to droit de suite after February 1, 2006 with all art works in the UK that would not be subject to droit de suite. Next, they compared those same works (those subject to the droit de suite after February 2006), with works that were sold in other countries, but would have been subject to droit de suite if sold in the UK.

Banternghansa and Graddy found no evidence that the adoption of artists’ resale rights had a negative impact on price. They speculate that art buyers, in determining what they will pay for a given work, may not calculate the effect that the droit de suite will have on future re-sales, or that the effect may be too small to measure. As they say, given the inherent difficulty of pricing art and the high commission fees paid by both buyers and sellers, the droit de suite may not figure very largely in sellers’ thinking. Banternghansa and Graddy also found no evidence that those wishing to re-sell works subject to droit de suite had deserted the UK for other markets. However they caution that this might change when the UK extends artists’ resale rights to an artist’s heirs after his or her death.

The impact of droit de suite on the UK art market seems to have been minimal so far. Certainly, the most pessimistic forecasts have not come to pass. This might give some confidence to those who would like to see Canada also adopt a policy of artists’ resale rights.