Wisconsin
Lawyer
Vol. 79, No. 10, October
2006
Supreme Court Orders
The Wisconsin Supreme Court will
hold public hearings on Dec. 11, 2006, to consider petitions on
memorializing settlements reached via alternative dispute resolution,
expanding the nature of continuing legal education, and amending the
rules affecting the Lawyers' Fund for Client Protection.
Alternative Dispute Resolution
In the matter of the Creation of Wis. Stat. § 802.12(5) relating
to Memorializing Settlements Reached by Way of Alternative Dispute
Resolution
Order 05-05
On Feb. 16, 2005, Attorney Donald Leo Bach filed a petition seeking
to amend Wis. Stat. § 807.05 and to create Wis. Stat.
§ 802.12(5). A public hearing was conducted on this petition
on Oct. 25, 2005.
At the ensuing open administrative conference the court discussed the
proposed creation of § 802.12(5) and determined that it was
appropriate to obtain input from mediators regarding the anticipated
scope and impact of the proposed rules change.
With respect to the proposed amendment to § 807.05, the
court determined that it would benefit from additional research
regarding the practice of other jurisdictions with respect to whether a
stipulation made on the record during a deposition should be
enforceable. The court directed its staff to undertake this research and
to obtain comments from interested parties. On Jan. 26, 2006, Attorney
Bach filed an amended petition, requesting this court issue an order
creating § 802.12(5), as set forth in the amended
petition.
IT IS ORDERED that a public hearing on the amended petition shall be
held in the Supreme Court Room in the State Capitol, Madison, Wis., on
Dec. 11, 2006, at 9:30 a.m.
IT IS FURTHER ORDERED that the court's conference in the matter shall
be held promptly following the public hearing.
IT IS FURTHER ORDERED that notice of the hearing be given by
publication of a copy of this order and of the petition in the official
state newspaper once each week for three consecutive weeks and in an
official publication of the State Bar of Wisconsin not more than 60 days
nor less than 30 days before the date of the hearing.
Dated at Madison, Wis., this 1st day of September, 2006.
By the court:
Cornelia G. Clark, Clerk of Supreme Court
Amended Petition
Pursuant to the Court's direction on Oct. 25, 2005, Petitioner
Attorney Donald Leo Bach of DeForest respectfully amends that portion of
his Feb. 15, 2005 Petition requesting the Supreme Court of Wisconsin to
issue an Order creating Wis. Stat. § 802.12(5).
History of the Petition. On Feb. 15, 2005, Petitioner filed a
formal request ("Petition") with the Supreme Court of Wisconsin to (1)
amend Wis. Stat. § 807.05 relating to agreements, stipulations, and
consents made at depositions and, (2) create Wis. Stat. § 802.12(5)
relating to memorializing settlements reached by way of alternative
dispute resolution. A copy of the Petition is attached. Notice of these
rulemaking requests in the Petition was duly published in the
Wisconsin Lawyer. Pursuant to such notice, on Oct. 25, 2005, the
Supreme Court held a hearing and an open-court administrative rule
conference on the Petition. Petitioner made a presentation before the
Court in support of the Petition. There was no written or oral
opposition to either rulemaking request. The Supreme Court, during its
administrative rule conference, requested that internal staff conduct
research within the 50 states in regard to the first proposed rule
relating to agreements, stipulations and consents made and recorded
during depositions. In regard to the second rule change requested,
i.e., the creation of Wis. Stat. § 802.12(5) relating to
memorializing settlements reached as a result of the use of a dispute
resolution method, the Court requested that the Petitioner amend the
Petition and resubmit it as amended.
Background. The Feb. 15, 2005 Petition proposed that Wis.
Stat. § 802.12(5) be created as follows:
"(5) Settlement Finalization. Any settlement reached as a result of
the use of an alternative dispute resolution method shall be reduced to
writing, dated, and signed by each settling party prior to concluding
the dispute resolution process."
This proposed rule simply sought to require that any settlement
reached as a result of the use of an alternative dispute resolution
method be reduced to writing, dated, and signed by each settling party
prior to concluding the dispute resolution process. The purpose of the
proposed rule is to address case law which establishes that if such
settlement is not so finalized, it is not binding and a settling party
can simply "back-out" and disclaim the settlement even if the party
previously fully agreed to the settlement.
Alternative settlement dispute resolution methods, primarily
mediation, have been found to be a very good method of resolving
disputes short of a full court trial. Mediation, however, can be
time-consuming and relatively expensive, especially if a professional
mediator is retained. Further, in most cases, the strengths and
weaknesses of a party's case are revealed in mediation. When a
settlement is reached after the expenditure of time, expense, and
tactical costs, that settlement should be enforceable and provide
finality to the controversy.
However, Wis. Stat. § 807.051 and ensuing case law
says that unless that settlement is in writing and is signed - even
if the mediator recorded the settlement faithfully and sends a written
memorialization of the settlement to all sides - it is not
enforceable and binding. That is exactly what happened in Laska v.
Laska, 2002 WI App 132, 255 Wis. 2d 823, 646 N.W.2d 393. After
mediation, the parties agreed that one party would pay $135,000 and not
make other claims in regard to a will dispute. However, that party was
allowed to back out because of noncompliance with the formal
requirements of Wis. Stat. § 807.05.
The Court held:
"Wisconsin Stat. § 807.05 is an exception to the usual rule that
oral contracts are binding. Adelmeyer v. WEPCO, 135 Wis. 2d 367,
400 N.W.2d 473 (Ct. App. 1986). It `seeks to prevent disputes and
uncertainties as to what was agreed upon.' Id. at 372, 400 N.W.2d
473 (citation omitted). The statute adds requirements for enforceability
of an otherwise valid oral agreement when the agreement is reached in
the course of a claim that is in the process of adjudication.
Kocinski v. Home Ins. Co., 154 Wis. 2d 56, 67, 452 N.W.2d 360
(1990). `An oral contract reached by stipulation in the course of court
proceedings is unenforceable unless formalized in the way required by
sec. 807.05.' Id. at 67-68, 452, N.W.2d 360." Id. at
¶ 9.
Very recent case law indicates that failure to meet the requirements
of Wis. Stat. § 807.05 continues to cause problems in enforcing
settlements, including those reached by way of mediation. See
Affordable Erecting, Inc. v. Neosho Trompler, Inc., 2005 WI App
189, ____ Wis. 2d ____, 703 N.W. 737, review granted, Sept. 8,
2005, and Wangard Partners Inc. v. Tandem Tire & Auto Serv.,
Inc., No. 2005 AP 64 (Ct. App. Oct. 27, 2005).
Proposed rule 812.05(5) addresses Wis. Stat. § 807.05 and case
law to provide the following benefits:
1. It puts everyone on notice that settlement reached in mediation is
not final and binding until reduced to paper and signed;
2. It tells professional mediators that ensuring the settlement is so
finalized is a minimum standard of their jobs;
3. It provides the parties another opportunity to clarify, confirm,
and potentially change their agreement through the final step of
formalizing the agreement in writing;
4. It greatly limits the ability to "back-out" of a negotiated
agreement.
Supreme Court Request for Amendment of the Petition Relating to
Proposed Wis. Stat. § 802.12(5)
During the Court's administrative rule conference, concerns were
expressed as to the scope and coverage of the proposal to create Wis.
Stat. § 802.15(5) in the following areas:
1. What is a "settlement" under the proposed rule?
2. Is it the intent of the proposed rule to cover all alternative
dispute resolution methods? If so, how does that comport with the
binding arbitration alternative outlined in Wis. Stat. §
802.12(1)(a) and its formal requirements and the definition of
"settlement alternative" in Wis. Stat. § 802.12(1)(i)?
3. Should language be added that to be binding any settlement
agreement must be reduced to writing and signed?
Discussion
1. What is a settlement?
Concern was expressed by one member of the Court as to what
Petitioner meant by the words "settlement" in the proposed rule and that
the Petition did not include any definition of "settlement."
The proposed rule is simply an amendment to Wis. Stat. § 802.12,
the section of the statutes providing for alternative dispute
resolution. This section was first enacted by the Supreme Court in 1993
as a result of a petition by the Judicial Council and has been in place
for about twelve years. The section also appears to have been amended
three times since. However, § 802.12 itself does not contain any
definition of "settlement," and there does not appear to have been any
difficulty carrying out the goals and intent of the section as a result.
Settlement is also not defined in Wis. Stat. § 990.01, a list of
definitions used in construction of Wisconsin law, nor elsewhere in the
statutes. This suggests "settlement" is one of those concepts that is
self-explanatory.
To the extent it is felt necessary that "settlement" must be defined
in order to carry out the intent and purpose of proposed rule 802.12(5),
the following definition could also be created by adding a definition of
"settlement" to § 802.12(1)(i) (and renumbering current §
802.12(1)(i) and (1)(j) to 802.12(1)(j) and (k) respectively):
(1) "Settlement" means the agreement of the parties to resolve their
dispute entirely or in part.2
2. Was it the intent of the proposed rule to cover all
alternative dispute resolution methods; if so, how does that comport
with the binding arbitration alternative outlined in Wis. Stat. §
802.12(1)(a) and its formal requirements and the definition of
"settlement alternative" in Wis. Stat. § 802.12(1)(i)?
Because Wis. Stat. § 801.12(1)(i) lists binding arbitration as a
"settlement alternative," a concern was raised that the proposed rule
did not make sense if such "settlement alternative" were chosen as an
alternative dispute resolution between the parties, because binding
arbitration does not result in a "settlement," but instead in a formal
decision rendered by a neutral third-person.
It is the case that Wis. Stat. § 802.12 recognizes that binding
arbitration is not a negotiated compromise under the statute. Wis. Stat.
§ 802.12(4) states:
(4) Admissibility. Except for binding arbitration, all
settlement alternatives are compromise negotiations for purposes of s.
904.08 and mediation for purposes of s. 904.085. [Emphasis supplied]
However, the language of the proposed rule stating that "any
settlement" reached as a result of the use of an alternative
dispute resolution method ..." is broad enough to cover any
negotiated compromise reached during the binding arbitration
process. Thus, it was and is the intent of the proposed rule to cover
all voluntary settlements reached as a result of the use of any dispute
resolution method.
If it is felt ambiguity still remains, the proposed rule could be
modified as follows:
(5) Settlement Finalization. Any settlement reached as a result of
the use of an alternative dispute resolution method, including a
settlement voluntarily reached by the parties during binding
arbitration, shall be reduced to writing, dated, and signed by each
settling party prior to concluding the dispute resolution process.
3. Should language be added that to be binding any settlement must
be reduced to writing and signed?
This is the current state of the law and, in fact, is the situation
that the proposed rule addresses.
If necessary to "reconfirm" the requirements of Wis. Stat. §
807.05 and to provide notice of the same in the alternative dispute
resolution section of the statutes itself (Wis. Stat. § 802.12),
language could be added to the proposed rule as follows:
(5) Settlement Finalization. To be binding, any settlement
reached as a result of the use of an alternative dispute resolution
method, including a settlement voluntarily reached by the parties during
binding arbitration, shall be reduced to writing, dated, and signed by
each settling party prior to concluding the dispute resolution
process.
or
(5) ) Settlement Finalization. Any settlement reached as a result of
the use of an alternative dispute resolution method,
including a settlement voluntarily reached by the parties during
binding arbitration, shall be reduced to writing, dated, and signed by
each settling party prior to concluding the dispute resolution
process.
Compliance with these requirements
satisfies Wis. Stat. § 807.05 and binds the parties to their
settlement.
Respectfully submitted:
Donald Leo Bach (#1014386), (608) 255-8891, dlb@dewittross.com
1Wis. Stat. § 807.05 provides:
"No agreement, stipulation, or consent between the parties or their
attorneys, in respect to the proceedings in an action or special
proceeding shall be binding unless made in court or during a proceeding
conducted under ss. 807.13 or 967.08, and entered into the minutes or
recorded by the reporter, or made in writing and subscribed by the party
to be bound thereby or the party's attorney."
2"In part" is included to allow
parties to reach a final settlement as to a portion of their dispute and
yet allow other portions to be decided through the course of litigation.
For example, the parties may agree as to liability but not damages or
vice-versa.
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Continuing Legal Education
In the matter of the Petition for Amendment to Supreme Court Rules
31.01 and 31.05 relating to Continuing Legal Education
Order 05-09
On Dec. 9, 2005, the Director of the Board of Bar Examiners filed a
petition proposing certain amendments to SCR 31.01 and 31.05 relating to
continuing legal education.
IT IS ORDERED that a public hearing on the petition shall be held in
the Supreme Court Room in the State Capitol, Madison, Wis., on Dec. 11,
2006, at 9:30 a.m.
IT IS FURTHER ORDERED that the court's conference in the matter shall
be held promptly following the public hearing.
IT IS FURTHER ORDERED that notice of the hearing be given by single
publication of a copy of this order and of the petition in the official
state newspaper and in an official publication of the State Bar of
Wisconsin not more than 60 days nor less than 30 days before the date of
the hearing.
Dated at Madison, Wis., this 1st day of September, 2006.
By the court:
Cornelia G. Clark, Clerk of Supreme Court
Petition
The Petitioner, Gene R. Rankin, Director of and on behalf of the
Board of Bar Examiners of the Supreme Court of Wisconsin, hereby
petitions the Supreme Court of Wisconsin for an order that amends
Supreme Court Rules SCR 31.01 and 31.05 relating to expanding the nature
of continuing legal education (CLE) as follows:
PROPOSED AMENDMENT:
SCR 31.01 Definitions
(9) A "repeated on-demand" program is an on-line program delivered
over the Internet, repeating a program previously approved by the board,
and given at a time of the attendee's choosing during the same calendar
year during which the course was originally approved.
SCR 31.05 Approved hours.
(5) On-line programs which repeat programs previously approved by the
board and which are attended on an on-demand basis may be used to
satisfy the requirement of SCR 31.02, provided that:
(a) Such repeated on-demand programs are approved prior to being
claimed for credit by a lawyer on CLE Form 1; and
(b) A certificate of attendance identifying the course by title and
as a repeated on-demand program, submitted by the sponsor of the
repeated on-demand program, is attached to a lawyer's CLE Form 1 if
credit is to be granted; and
(c) No more than 10.0 credits may be claimed for such repeated
on-demand programs during a lawyer's reporting period.
(d) No ethics and professional responsibility credit will be allowed
for repeated on-demand programs.
(e) Repeated on-demand programs may not be used for reinstatement,
readmission, or reactivation.
(6) Service on the Office of Lawyer Regulation (OLR) District
Committee or as Special Investigator may be used to satisfy the
requirement of SCR 31.02, to a maximum of 3.0 hours (to include 3.0
hours of legal ethics and professional responsibility credit) per
reporting cycle provided that a certificate of attendance submitted by
OLR is attached to a lawyer's CLE Form 1 if credit is to be granted.
JUSTIFICATIONS
1. The additions to SCR 31.01 and 31.05(5) would enable the use for
credit of on-line CLE programs that have heretofore been deemed
self-study and, as such, not able to be approved. Such on-line programs
are repeats of prior `live' or real-time programs that can be reviewed
by a lawyer at his or her own time rather than at a specified time. To a
limited extent they are analogous to video-taped programs, but differ in
that video-taped programs now must have a moderator present in order for
credit to be granted. On-demand programs represent a close approach to
self-study, which is not permitted in Wisconsin (nor most states with
mandatory CLE). They are limited to but 1/3 of a lawyer's CLE
requirement, require additional documentation, and are not allowed for
ethics credit nor for reinstatement, readmission, nor reactivation.
2. The addition to SCR 31.05(6) expands in limited fashion the
permitted activities for which CLE credit can be granted, permitting the
concentrated work of Office of Lawyer Regulation (OLR) District
Committees and Special Investigators to qualify for a limited number of
ethics and professional responsibility (EPR) credits per reporting
period when accompanied by the appropriate documentation. Members of
those Committees and those Special Investigators gain intensive training
in the Code of Professional Responsibility in the course of their
performance of their duties for many hours more than they are allowed
EPR and CLE credit.
Dated this 7th day of December, 2005.
Respectfully submitted:
Gene R. Rankin, Director, Board of Bar Examiners
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Lawyers' Fund for Client Protection
In the matter of the Amendment of Supreme Court Rule
12.11-Confidentiality and the Creation of Supreme Court Rule
12.12-Immunity, Supreme Court Rule 12.13-Reimbursement from the Fund is
Discretionary, and Supreme Court Rule 21.16(5m)-Restitution
Order 06-03
On April 3, 2006, the Board of Governors of the State Bar of
Wisconsin filed a petition proposing an amendment to SCR 12.11,
confidentiality, and the creation of SCR 12.12, regarding immunity, SCR
12.13, providing that reimbursement from the Lawyers' Fund for Client
Protection is discretionary, and SCR 21.16(5m), regarding
restitution.
IT IS ORDERED that a public hearing on the petition shall be held in
the Supreme Court Room in the State Capitol, Madison, Wis., on Dec. 11,
2006, at 9:30 a.m.
IT IS FURTHER ORDERED that the court's conference in the matter shall
be held promptly following the public hearing.
IT IS FURTHER ORDERED that notice of the hearing be given by a single
publication of a copy of this order and of the petition in the official
state newspaper and in an official publication of the State Bar of
Wisconsin not more than 60 days nor less than 30 days before the date of
the hearing.
Dated at Madison, Wis., this 1st day of September, 2006.
By the court:
Cornelia G. Clark, Clerk of Supreme Court
Petition
I. The Board of Governors of the State Bar of Wisconsin hereby
petitions the Wisconsin Supreme Court to amend SCR 12.11
Confidentiality. Such a change requires the following specific
amendments:
SCR 12.11 Confidentiality.
All applications, proceedings and reports concerning
applications for reimbursement from the fund shall be confidential until
such time as the committee authorizes or denies payment to the claimant
unless the attorney upon whose alleged dishonest conduct the application
is predicated requests that the matter be made public. This rule shall
not be construed so as to deny access to relevant information to the
supreme court or to such appropriate agencies as the committee shall
authorize by rule or as the law may otherwise provide or to prohibit the
committee from giving publicity to its activities as the committee deems
appropriate.
A. (1). Claims, proceedings and reports
involving claims for reimbursement are confidential until the Fund
authorizes payment to the claimant, except as otherwise provided by
these rules or by law. After payment of a claim, the Fund may publicize
the nature of the claim, the amount of the payment, and the name of the
lawyer. The Fund shall not publicize the name and address of the
claimant unless authorized by the claimant.
(2). The Fund may:
(a) Authorize access to relevant information by
professional discipline agencies or other law enforcement
authorities.
(b) Release statistical information that does not
disclose the identity of the attorney or the claimant.
(c) Use any information in its possession to pursue
its subrogation rights.
DISCUSSION. This rule is patterned after Rule 18 of the
American Bar Association's Model Rules for Lawyers' Funds for Client
Protection. The Comments to the Model Rules state:
[1] The need to protect wrongly accused lawyers and to preserve the
independence of the Board's deliberations should be balanced with the
strong public interest in protecting legal consumers and promoting
public confidence in the administration of justice.
[2] Publication of awards by the Board demonstrates the legal
profession's responsiveness to clients and its commitment to
self-regulation. Responsible public information programs are essential
to achieving the purposes of the Fund. The public, bar, and judicial
leaders, and the news media should be kept informed of the activities of
the Board and the status of its reimbursement efforts.
[3] The Board must also be sensitive to the privacy concerns of
claimants, and of the constitutional rights of lawyers who may be the
subject of criminal proceedings. Deferring publicity may therefore be
appropriate where there is a pending criminal prosecution against a
lawyer. Securing a claimant's consent to the release of information
concerning a claimant's loss and reimbursement may also be a desirable
practice, particularly for a voluntary fund which may not be protected
by the immunity that is afforded a court-established Fund under Rule
9.
[4] It is within the discretion of the Board to determine which
public agencies should be provided access to claim files. Lawyer
discipline, law enforcement, and agencies considering nominations to
public offices may have a legitimate need for information contained in
the Fund's records that would otherwise be confidential.
II. The Board of Governors of the State Bar of Wisconsin
hereby petitions the Wisconsin Supreme Court to create SCR 12.12
Immunity and SCR 12.13 Reimbursement from the Fund is Discretionary.
Such a change requires the following:
SCR 12.12 Immunity.
The committee members and agents of the Fund are immune from civil
liability for all acts performed in the course of their official
duties.
DISCUSSION. This rule is patterned after Rule 9 of the
American Bar Association's Model Rules for Lawyers' Funds for Client
Protection. The Comments to the Model Rules state:
[1] Immunity from civil liability encourages lawyers and nonlawyers
to serve on the Board, and protects their independent judgment in the
evaluation of claims. Immunity also protects the fiscal integrity of the
fund, and encourages claimants and lawyers to participate in seeking
reimbursement for eligible losses.
[2] As a matter of public policy, immunity should attach to the
Fund's activities and proceedings in the same way that absolute immunity
attaches in lawyer disciplinary proceedings.
[3] In the absence of court rule or statute, immunity may not be
available in proceedings involving voluntary funds. Insurance may
therefore be required to protect Trustees [Committee members], staffs,
claimants, and the volunteer lawyers who assist claimants in processing
their claims.
SCR 12.13 Reimbursement from the Fund is
discretionary.
The Fund's decision to pay claims is discretionary. Decisions of
the Fund are not appealable.
DISCUSSION. This rule is patterned after Rule 15 of the
American Bar Association's Model Rules for Lawyers' Funds for Client
Protection. The Comments to the Model Rules state:
[1] Although these Rules establish procedures for the processing of
claims seeking reimbursement from the Fund, they are not intended to
create either substantive rights to reimbursement, compensation, damages
or restitution for a lawyer's dishonest conduct, or procedural rights
subject to judicial review with respect to determination of claims.
[2] The Fund is not a guarantor of honesty and integrity in the
practice of law. Dishonest conduct by a member of the bar imposes no
separate legal obligation on the profession collectively, or on the
Fund, to compensate for a lawyer's misconduct. The Fund is a
lawyer-financed public service, and payment by the Board is
discretionary.
III. The Board of Governors of the State Bar of Wisconsin
further petitions the Wisconsin Supreme Court to add SCR 21.16
Restitution as follows:
SCR 21.16 Discipline. (1) Any of the following
may be imposed on an attorney as discipline for misconduct pursuant to
the procedure set forth in SCR chapter 22:
(a) Revocation of license to practice law.
(b) Suspension of license to practice law.
(c) Public or private reprimand.
(d) Conditions on the continued practice of law.
(e) Monetary payment.
(f) Conditions on seeking license reinstatement.
(g) Restitution.
(2) When the Court orders restitution:
(a) The amount of restitution shall be determined in
the related disciplinary proceeding.
(b) If the Wisconsin Lawyers' Fund for Client
Protection makes payment on a claim as the result of related proceedings
involving an attorney, the Court may order the attorney to reimburse the
Fund. Upon ordering restitution to the Fund, a judgment and transcript
of judgment shall be issued in favor of the Fund. The Fund may file and
docket the judgment in any county and that judgment shall have the same
effect as a judgment docketed under §§ 806.16 and 809.25,
Stats.
(c) The amount of the restitution, either ordered or
paid, does not affect the attorney's liability for damages in any civil
action or proceeding.
DISCUSSION. Collection efforts by the Fund have been hampered
by the inability to find collection counsel to take cases on a
contingent fee basis. The vast majority of awards are made against
disbarred or suspended attorneys. Collection counsel are concerned these
attorneys would vigorously defend their cases. Allowing a restitution
order to be reduced to judgment will help the Fund collect restitution
from dishonest attorneys against whom awards have been made.
The restitution orders which will be reduced to judgment are those
which will have been processed under the current disciplinary procedure.
Therefore, due process requirements will be met.
Respectfully submitted on behalf of the Board of Governors of the
State Bar of Wisconsin:
D. Michael Guerin, President,
State Bar of Wisconsin
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