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Tuesday, January 8, 2019

New Mediation Law Keeps Confidentiality Inviolate But Mandates Lawyers Beef Up Disclosures

California Evidence Code 1129 is new law.  It protects mediation confidentiality, with the caveat to lawyers to beef up disclosures concerning confidentiality BEFORE a client enters mediation.

In a nutshell, the new law ensures that whatever happens in mediation, stays in mediation.  However, as a lawyer representing a client who is headed into mediation, you have a duty to advise them of their rights and waivers as to communications occurring during a mediation (in or outside that mediation room!)  You have to basically tell them - in mediation, confidentiality is inviolate, and sure, you can sue me for malpractice, but you cannot use anything said in the course of this mediation as evidence.  (This basically means you have no case).

Anyway, this new law came after years of debate following the Casel case, where some client who went through mediation tried to sue his lawyer for malpractice, saying he was forced into an uninformed settlement. After that case, the California legislature tried to pass a law that excluded attorney communications in mediation as confidential when related to a malpractice claim. But there was gross outrage from practitioners everywhere!!!  (For obvious reasons, if what you say in mediation can come back to haunt you, why in the world would ANYONE mediate?  They would just GO TO COURT like any normal person!)

The text of the new law is below. Evidence Code 1129.  Put this in a template and give to all of your clients going into mediation!

Notice of confidentiality restrictions

(a) Except in the case of a class or representative action, an attorney representing a client participating in a mediation or a mediation consultation shall, as soon as reasonably possible before the client agrees to participate in the mediation or mediation consultation, provide that client with a printed disclosure containing the confidentiality restrictions described in Section 1119 and obtain a printed acknowledgment signed by that client stating that he or she has read and understands the confidentiality restrictions.
(b) An attorney who is retained after an individual agrees to participate in the mediation or mediation consultation shall, as soon as reasonably possible after being retained, comply with the printed disclosure and acknowledgment requirements described in subdivision (a).

(c) The printed disclosure required by subdivision (a) shall:
(1) Be printed in the preferred language of the client in at least 12-point font.
(2) Be printed on a single page that is not attached to any other document provided to the client.
(3) Include the names of the attorney and the client and be signed and dated by the attorney and the client.

(d) If the requirements in subdivision (c) are met, the following disclosure shall be deemed to comply with the requirements of subdivision (a):

Mediation Disclosure Notification and Acknowledgment

To promote communication in mediation, California law generally makes mediation a confidential process. California’s mediation confidentiality laws are laid out in Sections 703.5 and 1115 to 1129, inclusive, of the Evidence Code. Those laws establish the confidentiality of mediation and limit the disclosure, admissibility, and a court’s consideration of communications, writings, and conduct in connection with a mediation. In general, those laws mean the following:

* All communications, negotiations, or settlement offers in the course of a mediation must remain confidential.

* Statements made and writings prepared in connection with a mediation are not admissible or subject to discovery or compelled disclosure in noncriminal proceedings.

* A mediator’s report, opinion, recommendation, or finding about what occurred in a mediation may not be submitted to or considered by a court or another adjudicative body.

* A mediator cannot testify in any subsequent civil proceeding about any communication or conduct occurring at, or in connection with, a mediation.

This means that all communications between you and your attorney made in preparation for a mediation, or during a mediation, are confidential and cannot be disclosed or used (except in extremely limited circumstances), even if you later decide to sue your attorney for malpractice because of something that happens during the mediation.

I, _____________ [Name of Client], understand that, unless all participants agree otherwise, no oral or written communication made during a mediation, or in preparation for a mediation, including communications between me and my attorney, can be used as evidence in any subsequent noncriminal legal action including an action against my attorney for malpractice or an ethical violation.

NOTE: This disclosure and signed acknowledgment does not limit your attorney’s potential liability to you for professional malpractice, or prevent you from (1) reporting any professional misconduct by your attorney to the State Bar of California or (2) cooperating with any disciplinary investigation or criminal prosecution of your attorney.

[Name of Client] [Date signed]

[Name of Attorney] [Date signed]

(e) Failure of an attorney to comply with this section is not a basis to set aside an agreement prepared in the course of, or pursuant to, a mediation.

Saturday, January 5, 2019

Mediation is Better for Divorcing Couples


Remember the fights we used to have as children?  The "Judges" were usually the parents, the teachers - people who knew us and cared about us.  And our fights were over nothing substantial.

As divorcing adults, the Judges don't care about us.  They are strangers assigned to the case - and likely temporary until replaced by the next Judge assigned.  On one case I had - it lasted 11 years, and in that time, we had a total of 4 Judges.  Each time, we had to rebrief the Judges.  The attorneys made a LOT of money on that case: 2 college accounts depleted, a family home sold.

Mediation isn't always available.  Sometimes,one spouse JUST needs to fight and will go to all ends of the earth to destroy the other side, even if it means ruining themselves and their children.  This is the "scorched earth" method.

3 reasons you should consider mediating your case.  You don't need to agree on anything - just agree to mediate.

1.  It is much less money.  Marriage is grand; Divorce - a hundred grand!  Lawyers are expensive, and paid to fight.  Fighting costs money.  A typical divorce lawyer in Los Angeles has a $10,000 retainer, billed against their hourly rates ranging from $350 - $1500 per hour.  And each of you has one!   A mediator is a neutral party - NOT paid to fight or advocate, but instead to facilitate a settlement.  A mediator charges much less than an attorney, and you are sharing the costs of the mediator.

2.  You cannot win in a divorce.  You are already starting with HALF of what you had!  No one wins. You may prevail at a hearing for spousal support to obtain the support you need.  But the truth is, if both sides were properly advised by counsel (or better, a mediator that knows the law), the support would have been paid anyway, without having to go to court!  Most people think going to Court is the ONLY way to get what they want and all good lawyers go to Court. This is not true.  In fact, the BEST lawyers can get what they want WITHOUT going to Court.

3.  The law is the law. I can summarize family law in 2 sentences.  1) Custody is awarded per the best interests of the children. and 2) Community property is all assets and debts acquired after the date of marriage and before date of separation.  It is amazing that from those 2 statements arise thousands of divorces which cost upwards of $100,000.  And who is winning after all that money is paid to lawyers?  The lawyers!  It isn't your pocketbook, or your children.  This couple spent ALL of their children's money for college (over $500,000) fighting over their kids!!!

4.  The Judge does not care about petty disputes, and in Family Law, most of it is petty.  In the story above, some of the requests taken to Court are a) prevent one parent from co-sleeping; b) set s Facetime schedule c) decide where kid should go to school; d) prevent Uncle from being around kid.

REALLY??!?!?!?  These irresponsible parents!!

Here is the basic rule: if it's your time, you make good Judgments for them.  If it's not your time, back off.

A good mediator would be able to provide information regarding certain things so you do not have to hire lawyers to file motions which piss off the Judge. 

5.  Most people can settle their disputes with information.  A common complaint is that one spouse is "hiding assets".  Unless you are Ms. Rossi, who hid her winning lottery ticket (and was punished because he discovered it!), most people DON'T have enough assets to justify hiding it.  Also, unless you have ready access to an offshore bank account, you would need to be dealing heavy in CASH to hide assets.  Presumably, drug lords, and money-laundering guys would hide money, but obviously people married to those types have bigger issues to deal with.   Sometimes one person is the financial person int he marriage.  In that case, ASK them for bank statements and tax returns!  By law, they have to produce it anyway, and the majority of people voluntarily produce this without attorneys!  Because the majority of people in the world are NOT hiding assets!

There are several other good reason, but those are the few I can think of.  If you are going through a divorce, try mediation.  Call my office to schedule.

Wednesday, September 20, 2017

Divorce Revenge


Lately, I have vehemently spoken out about trying to exert revenge on your ex in Court.  It's just a bad idea, as the courts are NOT equipped to dole out your revenge, and frankly, you're not special because in divorce court, every Judge has about 25,000 cases.

However, if you are the vengeful type, I fully support self-help (within the confines of the law, of course.)  Below is one of the more satisfying revenge stories I've read in divorce.  Enjoy!


After 37 years of marriage, Jake dumped his wife for his young secretary.

His new girlfriend demanded that they live in Jake and Edith’s multi-million dollar home. Since Jake had better lawyers, he prevailed. He gave Edith, his now ex-wife, just 3 days to move out.  She spent the 1st day packing her belongings into boxes and crates.

On the 2nd day, she had two movers come and collect her things. On the 3rd day, she sat down for the last time at their beautiful dining room table by candlelight, put on some soft background music, and feasted on a pound of shrimp, a jar of caviar and a bottle of Chardonnay.

When she had finished, she went into each and every room and stuffed half-eared shrimp shells dipped in caviar into the hollow of all the curtain rods. She then cleaned up the kitchen and left. When Jake returned with his new girlfriend, all was bliss for the first few days.

Then slowly, the house began to smell. They tried everything- cleaning, mopping, and airing the place out. Vents were checked for dead rodents and carpets were cleaned. Air fresheners were hung everywhere. Exterminators were brought in to set off gas canisters during which they had to move out for a few days and in the end they even replaced the expensive wool carpeting. Nothing worked.

People stopped coming over to visit. Repairmen refused to work in the house. The maid quit. Finally, they could not take the stench any longer and decided to move.

A month later, even though they had cut their price in half, they could not find a buyer for their stinky house. Word got out and eventually even the local realtors refused to return their calls. Finally they had to borrow a huge sum of money from the bank to purchase a new place.

Edith called Jake and asked how things were going. He told her the saga of the rotting house. She listened politely and said that she missed her old home terribly and would be willing to reduce her divorce settlement in exchange for getting the house back.

Knowing his ex-wife had no idea how bad the smell was, he agreed on a price that was about 1/10th of what the house had been worth, but only if she were the sign the papers that very day. She agreed and within the hour, his lawyers delivered the paperwork.

A week later, Jake and his girlfriend stood smiling as they watched the moving company pack everything to take to their new home...

Including the curtain rods.

Monday, March 27, 2017

Double-Dipping In Divorce


Double-dipping is only awesome when you represent the outspouse.  The rest of the time, it sucks.  In divorce, "double-dipping" refers to when an asset (which was previously awarded to one spouse in equal division of the estate) is counted again for income for support purposes.

Double-Dipping is generally barred in pension/retirement.  Thus, if you are the payor, and you already paid your ex-spouse half your pension, when you finally receive it as an income stream, you would not have to then pay alimony based on its receipt.

What about for division of a business?  For example, when a business is valued and the owner spouse buys out the non­-owner spouse's interest, future support obligations to the spouse who relinquished his or her interest will be determined based upon the entire income stream produced by the business. This could occur with any income-producing asset (such as a pension or annuity) when it is valued based upon its projected, future income stream and assigned to the earner spouse after an equalizing payment to the non-earner spouse.

According to the California Court of Appeal in Marriage of 1Vhite ( 1987) 192 Cal. App. 3d 1022, 1026, the flaw in the ··double dipping" argument is that spousal support considerations  are separate and distinct  from  property  division concepts. The Court  found  that a spouse who wants pension benefits treated as income is not claiming entitlement as a co-owner, but instead is asserting that those payments cannot be ignored  when calculating  the ability of the pensioned  spouse to pay spousal support. Calling the double-dipping theory a "fallacy," the Court found "in every case where one spouse receives  pennanent  spousal  support  from  the other spouse, the  source is from the separate property  of the paying  spouse,  including  ... earnings or   property which were once the community property  of both  spouses.." Id  at  1028 (quoting  In re Marriage of Epstein, 24 Cal. 3d 76, 91 n.14).  Marriage of White remains good law.

However, distinctions can me made where business cash-flow is reinvested to capitalize or diversify a business. In 2009, the California Court of Appeal held that a trial court acted within its discretion in calculating an obligor's income for spousal support purposes without including funds derived from the obligor's company that he used to diversify the business so that it could remain a viable entity, thus attributing t hose funds to the business instead of the obligor, where the reinvested funds were reasonable expenses properly chargeable to the business. Marriage of Blazer (2009)  176 CA4th  1438, 1447-1448.

In Marriage of Blazer, the parties were married in 1982 and separated in 2002. Husband was a partner  in Blazer-Wilkinson,  LLC ( BW), a brokerage  company  that  bought and sold produce. Temporary spousal support was set at $57,224 per month during the pendency of the divorce.

In 2004, the trial  court valued the community interest in BW at $5,600,000. Wife   received other property plus an equalizing payment of $1,340,000 for her share of the business. Temporary spousal support was reduced to $52,000 per month pending further findings of the court.

In 2006, temporary spousal support was reduced to $30,000 per month retroactive to August 2004 and permanent spousal support was set at $20,000 per month beginning January 1 , 2006. In determining Husband's income available to pay support, the court excluded profits  from the business. which were needed to maintain adequate capitalization and to diversify. All other profits were considered as available to Husband. The court specifically rejected Husband's argument that his buyout of Wife's interest in BW was a factor that should eliminate spousal support.

Wife appealed the decision, arguing that the trial court abused its discretion by excluding a portion of husband's income when considering his ability to pay support. Husband cross­-appealed on the grounds that the support order unfairly allowed the wife to ''double dip" into the income stream from his business

The Court of Appeals disagreed  with  Wife,  finding that  there was a need  to diversify and to maintain  adequate capital  in the business.  In reaching  its decision, the court relied  in part on   the California child support statute, which  excludes income required  for the operation  of a   business from income. Thus, amounts required to achieve such were not available to Husband. It should be noted that credible expert testimony from a CPA to the effect that reinvesting the funds  was necessary  for Husband's business to survive likely swayed exercise of the trial court's discretion in Husband's favor without such credible testimony, a contrary result (i.e., charging Husband with the funds reinvested in the business for purposes of determining his ability to pay spousal support) may  well  have been reached.

The Court of Appeals also disagreed with Husband. The Court's decision was based  primarily on the lack of evidence before it that BW had been valued  using a stream of future  income. Although Husband's expert testified that he assumed that BW had been valued using the capitalization  of excess earnings method  that  implicitly  ties the val ue to Husband's  future earnings, the court was not convinced. In fact, the court stated that even though the expert's  testimony had not been contradicted, it was not conclusive to either the trial court or the Court of Appeals.

Based on the Court's explicit statement that the record was devoid of whether the business valuation included a stream of future income, I believe argument could be made that goodwill is the expectation of what will be earned in the future. Since goodwill is a component of the business valuation, this results in a "double dip" scenarios. 

Thus, "double dipping" appears to be permitted unless (i) the parties explicitly agree to an ··Anti-White''  order during negotiations; (ii) a portion of the business' cash flow is required to be reinvested to either capitalize or diversify the business; or (iii) sufficient evidence is presented that demonstrates a business is valued using a stream of future income. For the third possibility, credible CPA testimony will be key.

Thursday, October 6, 2016

Schedule a Consult

Law and Mediation Offices of Kelly Chang now offers online scheduling of consultations.  If you prefer to call, you can call 323-393-5669.  Thank you!  We look forward to meeting you.



Tuesday, February 2, 2016

10 Ways to Drive Up Divorce Costs

Divorce is expensive.  As the joke states, they're worth it.  Sometimes it's "cheaper to keep her".

Around this time of the year (starting the first work day of January) to right after Valentine's Day, most divorce lawyers' phones are ringing off the hook. In fact, I was quoted here, in this article, "Kelly Chang, a Los Angeles-based divorce lawyer said she has seen an increase in divorce filings shortly after Valentine’s Day. This can be attributed to two major groups of people: the ‘Delayed New Year’s Resoluters’ who are merely moving forward on their resolution to be single, just a month late, and the ‘Waiting to Exhalers,’ who, depending on the actions of their spouses on Valentine’s Day, will either reconcile or file for divorce,” she said.

Google "expensive divorces", and you will find a listing of the most expensive divorces in history, including but not limited to: Alec Wildenstein's divorce from Jocelyn Wildenstein; estimated at $3.8 billion; Rupert Murdoch's divorce from Wendi Deng; estimated at $1.8 billion.; Rupert Murdoch's divorce from Anna Murdoch: estimated to be $1.7 billion.

I have been a divorce attorney for over 16 years.  Here in Los Angeles, the estimate is that a contested divorce costs approximately $100,000 total in attorneys' fees, and lasts 3-4 years.

Why?  Because it's divorce!!! They still want to WIN!!!  DESTROY!!!  They want that PITBULL! I wish I could share some of the emails I have received from people i have NEVER met, telling me how much they hated their spouses and how much they needed to WIN.

Here are 10 ways to drive up your divorce costs.

1.  Refuse to talk to your spouse.  Have everything go through the lawyers.
2.  Don't teach yourself anything about the divorce process.  Just stick your head under the sand and have your lawyer handle it.
3.  Email/call your lawyer to tell her everything that happened today between you and your ex.
4.  Assume settlement is for "losers", and always try to "win".
5.  Insist on being "heard" in court, because your situation is different, and you just KNOW the Judge will always side with you.
6.  Even though you have always handled the finances, develop a conspiracy theory that your spouse is hiding assets, and stick to it.  Hire private investigators and forensics to back up all your theories.
7.  Refuse to read any documents presented by the other side's lawyer, because you don't trust them.  At all.  
8.  Even though your wife hasn't worked in over 12 years because she has been a stay-at-home mom, refuse to pay ANY spousal support and make her undergo a vocational evaluation.
9.  Fight for FULL CUSTODY, because you alone KNOW what's in the best interests of your children.
10.  Refuse to hear anybody's version of "what's fair", because only you know best, and you will get what you want in Court.

Good luck out there!  

Tuesday, January 5, 2016

Minnesota Family Judge Michael Haas Advice to Divorcing Parents, 2001

I read this article yearly.  I give it to my potential clients.  

Your children have come into this world because of the two of you.  Perhaps you two made lousy choices as to whom you decided to be the other parent.  If so, that is your problem and your fault.

No matter what you think of the other party - or what your family thinks of the other party - these children are one-half of each of you.  Remember that, because every time you tell your child what an "idiot" his father is, or what a "fool" his mother is, or how bad the absent parent is, or what terrible things that person has done, you are telling the child half of him is bad.

That is an unforgivable thing to do to a child.  That is not love.  That is possession.  If you do that to your children, you will destroy them as surely as if you had cut them into pieces, because that is what you are doing to their emotions.

I sincerely hope that you do not do that to your children.  Think more about your children and less about yourselves, and make yours a selfless kind of love, not foolish or selfish, or your children will suffer.

- Honorable Judge Michael Haas