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Mediating FaMily Financial conFlictsKeeping the Peace and Preserving Family Wealth

By Jay FolBerg, esq.

Of all the cases I havemediated over the past 30years, the most challengingandrewardingdisputeshavebeen those between familymembersoverfamilyproperty,estates,trustsandbusinesses.Brothersandsistersmayfightoverpartnershipproperty,buttheyarereallysortingoutoldissuesofsiblingrivalryanddominance.Onceapatriarchormatriarchofafamilyhasgivenupcontrolorpassedaway,adultchildrenareoftenleftinapositionofambi-guityor,worse,contrarybeliefsabouttheirrightfulrole

of control or benefit. Dis-putessurfacethatareusuallylessaboutmalevolencethanabout conflicting feelings,misunderstandingsofintent,divergent expectations, andresistance to change or un-spokenfears. The tremendous financialcostof litigation isonlyonedownside of an intrafamily

lawsuit.Courtpleadingsandproceedingsarepublic.Oneoftheprincipaladvantagesofprivatemediationoverliti-gationofsiblingandintergenerationalfamilydisputesis

reviewed By richard Birke

ChrisGoelz,averyfinemediatorandtheheadoftheNinthCircuit’sSettlementProgramSeattleoffice,oncetoldmethatTonyPiazza,alegendarymediator(stillalive–alivinglegend)isaneighthdegreeblackbeltinAikido.ChrissaidthatTonyswearsbythepracticeofAikidoasapathtobettermediationskills.Thatstatementstuckwithmeforyears.Somewhereonmymentalbackburner,IstoredalatentcuriosityaboutwhatAikidohastooffertomediators. Then,astheysay,“whenthepupilisready,themasterappears.”Iwalkedintothelarg-estbookstoreinAmerica–Powell’sCityofBookslocatedinbeautifulandsoggydowntownPortland,Oregon–tofindMasterUeshibastaringstraightatmefromthecoverofabookonthe“RecentArrivals“rack.Thebookisafirst-everEnglishtranslationofthebiographyofthe

WoRtH Reading

a life in aikido: the Biography of Founder Morihei UeshibaBy Kisshomaru Ueshiba. Kodansha international Publishers. 2008

See “Worth Reading” on Page 8

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theconfidentialityprovidedinkeep-ingfamilyfightsfromthepubliceye.Thelightofpublicityoftencementspositions and makes compromisemoredifficult.Thereare,ofcourse,otheradvantagesofworkingoutasettlement among warring familyfactions,includingreconcilingdiffer-encesandhealing.Courtsarelimitedintheremediestheycanimposeandframingfamilydisputesinlegaltermsinhibitstheparties’abilitytoinventoraccept creative solutions. Litigationrarelyhealsdifferencesorpromotesunderstanding. Iwouldliketosharewithyoufourcasescenariosbasedonfamilycon-flictsthatIhavemediatedandwhatcan be learned from them. Whilenamesandidentifyingcharacteristicsare omitted from the stories, theysharedsomethingincommon.Eachinvolvedhighstakesforthepartici-pantsandconsequencesthatwould

beirreparableifthedisputewerenotconstructivelyresolved.

The case of thereal estate Titans Twobrothers, SamandSid,be-came involved in real estate in theSantaClaraValleywhenitwasstillknown as a center of agriculture,priortobecomingtheSiliconValley.Intheearly1960s,theybefriendedan older couple who owned fruitorchards inSunnyvale that theynolongerwishedtomanageanddidnotknowhowtodevelop.Inexchangefortheirvalueenhancing initiativesandefforts,SamandSidtookapieceoftheaction intheformofpartialownershipintheapartmenthousesandstripmallstheydevelopedfortheburgeoningpopulationofSiliconVal-ley.Astheyaged,thebrothersbegantoargueabout theproperties theyeventually owned between themaspartners.Sam,theolderbrother,wantedtoconservativelymanagetheappreciatedpropertyandpassitontohis childrenunencumbered.Sid,

theyoungerbrother,wantedto le-veragethepropertytocreategreatervalue with new developments in avibrantmarket.Sidunilaterallymort-gagedhisshareandcreatedliensontheproperty that threatenedSam’sdesire for stabilityandfinancial se-curity.Samviewedthisasabetrayalof trust. Sid viewed it as a soundfinancialmovenecessitatedbySam’sconservatismandinsensitivitytotheneedsofSid’syoungerfamily. A suit forpartitionof theprop-erties was filed by Sam and theattorneys for each of the brothersrecommended that the dispute bebrought tome formediation.Dur-ingthemediationIrepeatedlyasked“why?”WhydidSidfeel theneedtomortgagehishalf?WhydidSamconsiderthisabetrayal?Thebrotherslistenedand,atleastinpart,seemedtounderstand theothers’perspec-tive.ItwasagreedthatSamwouldproposeadivisionofthepropertiesintotwobundlesofrelativelyequalvalue,andSid,theyounger,moreag-gressivebrotherwouldchoose.Theapproachwas similar to the classic

Mediating Family Financial conflicts BY JAY FOLBerG, eSQ.

COntInueD FrOM PAGe 1

It was agreed that Sam would propose a division of the properties into two bundles of relatively equal value, and Sid, the younger, more aggressive brother would choose. the approach was similar to the classic parents’ tool of allowing one child to cut the apple and the other to choose one of the two pieces.

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parents’ tool of allowingone childto cut the apple and the other tochooseoneofthetwopieces.Thissimpledistributivetechniqueworked,andtherewasataxbonusresultingfromtheircooperationonthetimingof the exchanges. The needs andinterests of the two brothers weredifferentandtheywereeachabletoactivelyparticipateintheresolutionandgetsubstantiallyequalsharesofthepropertyinawaythatfilledtheirdifferentiatedneeds.(Samwasquiteproudofcreatingadivisionthatof-feredmoredevelopmentpotentialinonebundleandmoresecurerentalincomeintheotherpropertygroup-ing.) Both brothers got what theymostvalued. ThiscasewasreallymoreaboutSid’sdesirestobefreeofcontrolbyhisolderbrotherandtovalidatehisindependence.Sidhadastrongneedtoenlargehisholdingsandprovidemoreforhisgrowingfamily.Samwasabletoacknowledgethatthebroth-ers’ needs were not the same andtakeanactiveroleinstructuringthedivisionof theirproperties tomeettheirtolerancesforrisk.Thisoutcomeand the process used to achieve italsoallowedthechildrenofSamandSidtoputasidethedisputeoftheirfathersandmoveonwiththeirownfamily relationship, independentofjointownershipandthe tensionoftheirfathers’siblingissues. Hadthelitigationproceeded,thenext generation of cousins wouldhavebeendrawn into thedispute,theirrelationshipburdenedwiththeirfathers’ conflict, and their inheri-tancesdiminished.Eachofthebroth-ers was able to pursue their ownaspirationsand theneeds they feltmostimportantfortheirfamilies.Theattorneyshadthebenefitofsatisfiedclientsandtheprospectofcontinu-

ingworkforthenextgenerationofeachfamilybranch.Itwasperceivedbyallasagoodsetofoutcomes.

re-cementingFamily relations An immigrant laborer in the1940s, Casey, worked at construc-tion sitesasahodcarrier (mason’sassistant).Mixingcementandmortaronsitebyhandwasslowandlaborintensive.Casey improvisedvariousmixingdevicesdrivenbysmallmotorswhichsavedtimeandlabor,aswellasresultinginabetterqualitymortarmix.Withfinancialbacking fromacontractor for whom he worked,Casey eventually obtained severalpatentsforhisportablemixersandcreated a company that manufac-turedcementmixers.Thecompanysucceededandgrew.Intime,itwasacloselyheldcorporationthatsup-ported the families of Casey’s fourchildren,hisbrotherSean,hissisterPatty,andthreenephews.FollowingCasey’sdeathinthe1990s,thecom-pany, which produced net incomeinexcessof$10millionayear,wasmanagedbySean,asCEO.Seanhadextensive management experienceandhadbeenclosetohisdeceased

brother. Theother familymembershad corporate shares and seats onthecorporateboard. TensionexistedbetweenCasey’schildrenontheoneside,andSean,Pattyandtheirchildrenontheother(although the line of who was onwhose side was not always clear).Outside acquisition offers for thecompany had been opposed bymanagementand the rejectionde-cision was confirmed by one votemarginson theBoardofDirectors.Casey’s childrenwereupsetby therejectionoftheoffersandfeltthatSean’sresistancewasinfluencedbyhisdesiretoretainhisCEOpositionandcompanyperks.Casey’soldestson, Marty, was particularly vocalabouthisobjectiontomanagementandmade statements at corporatemeetingsandbyemailaccusinghisuncleSeanofmismanagement,theftand company exploitation. Casey’sfour children brought a minorityshareholders’actioninfederalcourtandSeancrossclaimedagainstMartyforlibelandslander. Duringthemediation,thetensionbetween Marty and Sean was pal-pable.Inthejointsession,Martywasvehement about what he thought

Sean believed that he, unlike his nephews and nieces, understood Casey’s dream of keeping the company under family ownership to perpetuate the family name and fortune. [t]here were also divisions between Casey’s children. two of the children wanted to remain shareholders and two wanted to divest their shares.

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were acts of mismanagement andlostcompanyopportunitiesthathewassurewouldcausehisfather“torolloverinhisgrave.”Whenoneoftheothersiblingsindicatedthattheirfatherwouldbemostdisturbedbythe discord in the family, I noticedwhat seemed like agreement byseveralaroundthetable. Aftertheinitialjointsessionofallpartiesandthetwosetsofattorneys,IaskedifanyonewouldobjectifImetprivately with each shareholder. InthecaucussessionIhadwithMarty,he confided that he had expectedto head his father’s company inwhichhehadworkedbeforegoingtoschoolasanengineeringstudentandheviewedSeanasaninterloperwhodidnotappropriatelycredithisfather’s role increatingacompanythatsignificantlyimprovedmasonrypractices. Sean shared with me incaucus that his brother Casey hadmisgivingsaboutanyofhischildrenmanagingthebusinessbecausetheyhadshownlittleinterestinthecom-panyandeachhadotherlifegoals.Sean also believed that he, unlikehisnephewsandnieces,understoodCasey’sdreamofkeepingthecom-panyunderfamilyownershiptoper-

petuatethefamilynameandfortune.Further discussions revealed thatthere were also divisions betweenCasey’schildren.Twoofthechildrenwantedtoremainshareholdersandtwo wanted to divest their shares.All fourof themhad joined in thelawsuitbecausetheydidn’twanttocrossMarty,theirolderbrother. A settlement was reached inwhich a company value would bedeterminedwiththehelpofoutsideexpertise. The method of select-ing the evaluation consultant andanalternateevaluator,aswellasatimeline,wasagreedupon.Iftwoormore shareholders objected to theinitialevaluation,thealternateevalu-ator would reach an independentevaluationandthetwoevaluationswouldthenbeaveraged.Basedonthe determined company value, asharesurrendervaluewouldbeset.The corporation would borrow asnecessarytopurchasethesharesofanyof thefounder’schildrenwish-ingtosellandallpendinglitigationwouldbedismissed.Casey’soldestson,Marty,andCasey’ssister,Patty,agreedtocollaborateinwritingahis-toryofthecompany,whichwouldbeprintedandpostedonthecompany’s

website. Peace prevailed. This casesupportsthemediationmaximthatifyoucannotresolvethedisputeatitsownlevel,youmustlearnwhatun-derliestheconflictandhelpfashionasettlementthatmeetstheunderlyinginterests.

The grape Brokerwho Found salvation Averysuccessfulwineandgrapebroker,Tony,whohadbeenadedi-cated husband and father of twopre-adolescentchildren,builtagrapebrokerage business that producedan annual net income in excess of$500,000ayear.Thefamilyhadnotbeen religious, but Tony becameincreasingly involved in a personalquestthatledhimtoaspiritualcom-munityheadedbyamysticaleasternguru.Thespiritualcommunityhadacompoundlocatedacoupleofhun-dredmilesfromwhereTony’sfamilylived.Thecommunitywassupportedby grape growing and the sale ofbooks and records it produced, aswellasmonetarycontributionsfromits followers. Tony was spendingmoreandmoretimeatthespiritualconclave. He made several signifi-

During the mediation, tony was able to assure Maria that he had no intention of donating any part of the business to the spiritual community or indoctrinating the children. he did, however, want them to be aware of his beliefs and he wanted to remain involved in their lives.

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cantmonetarycontributionstothecommunityandwasappointedchieffinancialofficer(CFO)ofthewinery.Tony’s wife, Maria, a public schoolteacher, was very concerned thatTonywouldgiveawaythebrokeragebusinesstothespiritualcommunity.Shewasalsoworriedthathemightinvolve their twochildren,ages10and 12, in his new spiritual groupactivitiesorattempttoindoctrinatethem. Maria filed a petition fordivorce and obtained a temporaryrestraining order preventing Tonyfrom transferring any business orfamilyassetsandrestrictinghisvisitswiththechildren.TonywasincensedbyMaria’smistrustandtherestrain-ingorder.Therestrainingordernotonly interfered with his continuingrelationshipwiththechildren,italsohamperedhisfinancialmanagementofthebrokeragecompany.TonyandMaria,whowerenolongerspeaking,were each represented by capableattorneyswhorecommendedmedia-tion. Duringthemediation,TonywasabletoassureMariathathehadnointentionofdonatinganypartofthebusinesstothespiritualcommunityorindoctrinatingthechildren.Hedid,however, want them to be awareofhisbeliefsandhewantedtore-main involved in their lives. Mariaexpressedherworstfearsaboutthecommunalvaluesandsexualpromis-cuityshehadheardthecommunityshared,andaboutotherswhogavetheirlivesandassetsoverto“cults.”Tonywassurprisedwithwhathefeltwerefalseimpressions.Afterfurtherdiscussion,Mariaagreedtovisitthespiritualcompoundtomakeaper-sonalassessmentaboutthelifestyleand values manifested there. Thisvisitdispelledherworstfearsandim-provedcommunicationwithTony.

AdivisionofmaritalpropertywasagreeduponwhichallowedTonytoretainsoleownershipofthebroker-agebusinessandMariaretainedthefamilyhomeandotherassets,total-ing approximately one half of themaritalestate.Inadditiontospousalandchildsupport,irrevocabletrustswere established for the childrenthatgenerouslyassuredtheircollegeeducation. AparentingplanwaspreparedbywhichthechildrenprimarilyresidedwithMariaandwerewithTonyev-eryotherweekend, aswell asonenightaweek.Holidaysandsummersweresplit.Itwasstipulatedthatthechildrencouldparticipateinafamilyactivityweekatthespiritualcenterduring the summer, but otherwisewouldnotbe involved in the spiri-tualcommunity.Theplanterminateswhenthechildrenturn16andcanmaketheirownreligiousandspiritualchoices. This case illustrates the impor-tanceinresolvingdisputesbystatingassumptions and fears so they canbe assessed and addressed. AfterlearningofMaria’sworstfears,Tonywas able to accept a financial andparentingplanthathelpedalleviateMaria’s fears and allowed him theparental role he wanted. Becausemediationoutcomesareconsensual,yougetwhatyouwantandfeelyouneed only if your counterpart getswhattheywantandneed.Thetaskinmediationistohelpsolvetheotherside’sproblemasthemeansofsolv-ingyourownproblem.

The case of theseaside villa Twobrothersandasisterinheritedin equal shares a stunning seasidevillainSouthernCaliforniathathad

beenbuiltbytheirgrandfatherasafamily retreat. The middle sibling,Jack,purchasedtheone-thirdown-ershipofhisyoungerbrother,Bob,making Jack two-thirdsownerandhis older sister, Ann, a one-thirdowner. Bob had offered to sell histhird equally to Jack and Ann butonlyJackhadthefinancialresourcestomakethepurchase.HereceivedasubstantialsalaryastheCEOofthesuccessfulbusiness startedby theirgrandfatherandhad investedwell.AnnhadaPhDinBusinessManage-ment and was a widowed collegeprofessor. JackandhisgrownchildrenlivedinSouthernCaliforniawithindrivingdistanceoftheVilla.Jack’sworkre-sponsibilitiesmadeitdifficulttoplanuseoftheVillamuchinadvanceandheparticularlylikedthefreedomtomeethischildrenandfriendsthereonshortnotice.Ann,wholivedontheEastCoastandwhosethreechildrenandgrandchildrenalllivedoutsideofCalifornia,onlyusedtheVillainthesummerandduringschoolholidayswithmuchadvancedplanning. Ann paid one-third of the con-siderablepropertytaxesandupkeepontheVilla,whichwasmanagedbyJack, and she expected use of theVillaone-thirdofthetime,scheduleda year in advance. In addition tofriction over scheduling use of theVilla, Jackwanted to renovateand“update” the Villa, which wouldrequiresubstantialexpensebecauseofcoastalzoningandbuildingrestric-tions.AnnwashappywiththeVillaasis,couldnotreadilyoffertopayone-thirdofJack’sproposedremodelplansanddidnot trust Jack’s tastein “remodeling.” The tension overtheschedulingandstandoffontheremodelworkleftJackandAnnnot

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speaking. Jack wrote Ann that hewasprepared tobuyherone-thirdownership(valuedatmillionsofdol-lars)orpayforalloftheremodelinghimself and allocate her one-thirdoftheuseashefeltwasreasonablewithasmuchnoticeaspracticable.Upontheadviceoftheirlawyers,AnnandJackagreedtomediation. Although I prefer joint face-to-facemediations,atleastattheout-set,JackandAnnchosenottomeettogetherforreasonsbothemotionalandpractical.Duringthecourseofthe mediation, conducted in sepa-rately scheduledmeetingswithmeandextensivetelephonefollow-up,thepossibilityofdividingthemulti-acrepropertywithseveralstructureswas discussed. A legal “partition”wouldhavebeenmessy, expensiveand probably would have resultedinJackbuyingAnn’sthirdatmarketvalue. The market value would bedifficult to determine and conten-tious because of the uniquenessandsizeoftheproperty.Anncouldnot purchase anything comparableor as suitable for her large familyfor a thirdof theVilla’s value. Theincrease in property taxes for Jackupon purchase of Ann’s interestwould be horrific and Ann wouldhavetopaycapitalgainstax,whichwouldconsumeaconsiderablepartofsaleproceeds.Justasimportantanimpedimentwastheirmutualdesiretoholdontotheirfamilyheritageandpasstotheirchildrenandgrandchil-drenthefondmemoriestheyhadinfamilyuseoftheVilla. In our separate conversations itwasrevealedthatJackfeltAnndidnotappreciatethathe“saved”theVillafromoutsideownershipwhen

he stepped forward to purchasetheir younger brother Bob’s one-thirdsharewhenBobfelttheneedtosell,nordidsheacknowledgehisgenerositywhenheofferedBobthecontinued use of the Villa duringJack’stimewithoutcharge.AnnfeltthatJackpushedBobtosellsoJackwouldhavemajoritycontrolanddidnotpayBobfullvalue.Jackalsofelthewasbeingmagnanimous in thetimeconsumingprocessofmanag-ing the property skillfully, securingnecessary services and accountingto Ann, all without compensation.AnnthoughtJackenjoyedcontroloftheVilladetailanddidnotaccountthoroughly for the expenses shewascharged.Jackfeltunreasonablyhamperedbyhavingtogivenoticemonths in advance of his summeruse.Annfeltshewasunreasonablydisadvantagednotbeingabletoplanfamilygatheringsatleastsixmonthsinadvance…andsoon. Inourdiscussion,itemergedthatAnn felt her father nurtured Jackto run the family business, despiteherbeingtheoldestandobtainingdegrees in business, because hewas the oldest male. Jack felt hewasobviouslythemostqualifiedtorunthebusinessandthatAnnwasmore academic than practical. Shehadchosentotravelandpursuead-vanceddegreeswhenhewentrighttoworkgaininghelpfulexperiencefollowinghisundergraduateeduca-tion. BothAnnandJackexpressedtheirdesire to pass on to their childrentheirownershipanduseoftheVilla,although they were aware of theincreased complexity in expandingnumbers of successive generations

sharingtheproperty.Idiscussedwiththemtheimportanceoftheexampletheyprovidedto theirchildrenandthe need to model cooperation.They began emailing one anothermessages we had separately dis-cussed and then talking togetherona three-way callwithme.Withwell received coaching, they com-municated their commongoals fortheirchildren’scontinueduseoftheVillaanddesirefortheirchildrentointeract together. It was clear theyhadadeep,ifstrained,affectionforoneanother. Theyacceptedmysuggestionthatweinvolvetheirchildreninthedis-cussionbyconveningameetingwithmeandoneormoreoftheirchildrenrepresentingeachsiblinggroup,aftereachsidehadtalkedfurtheramongthemselves.The face-to-facemeet-ing included one of Ann’s childrenandoneofJack’salongwithJackinpersonandAnnbytelephone.Thechildrenbothconfirmedtheirdesiretoworkoutasharingprotocolandnotperpetuatetheirparents’dispute.Eachofthechildrenarticulatedtheirparent’s concerns and frustration,which they shared, but not in thesame emotional way as their par-ents.They listenedtooneanother,viewedthesituationasaproblemtobesolved,engagedwithmeinpri-oritizingtheirinterests,participatedin brainstorming, and outlined aproposedpropertysharingprotocolwithchoicesandtimelines. Thechildrenmodeledmotivatedcollaborationandproblemsolvingfortheir parents. Both families agreedtodiscusstheproposedsharingar-rangement including,amongotherterms, confirmation of the 2/3 to

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1/3costallocation, Jack’sauthorityto remodelwithoutAnn’sapprovalwithindefinedlimitsandifbuildingpermitswerenotrequired,andAnn’sone-year advanced reservation ofanythreeconsecutiveweeksinJulyorAugust,withJack’sfamilyhavingprioritytherestofthesummer.Itwasagreedthatnon-summer,non-holi-daytimewouldbeopenforweek-by-week reservation through thecaretaker, including use by “UncleBob”duringthefrequenttimesthatJack’s and Ann’s family were notin residence.TheyalsoagreedthatThanksgivingwouldremainopenforall three families to shareand thatallwouldbeencouragedtodoso.The proposed protocol terms weretweaked and confirmed throughemail exchange with copies to allimmediatefamilymembersandcon-currencebyAnnandJack.Itwasalsoagreed that theprotocolwouldbereexaminedintwoyearsandmedia-tionscheduled,ifnecessary. IreceivedwordthatThanksgivingwasacopaceticoccasionattheVillawith Ann, Jack, Bob and all three

familieswell represented.Thiscaseillustrates the benefit of bringingin others with a stake in the out-come, but who did not create theproblem. In commercial cases, thisusuallymeansgoingupthechainofcommand. Infamilymatters itmayrequiregoingdownthehierarchy.

conclusion These scenarios illustrate thatfamily financial disputes, whetherpresentedinthecontextofabusinessconflict,adivorceorapropertycase,aremattersoftheheartandthelaw.Theypresentchallengesofhowemo-tionsandfamilydynamicsaretobeweighedagainstandbalancedwithlegalrightsandobligations.Ajudi-cialdecisionor legalmandatemaynot address the underlying familyconflictorfullyresolvethedispute.Thedesiretoresolvetheconflictandpreserve the family relationship isdeeplyimbedded.Inmostfamilyfi-nancialdisputesthereisadissonancebetween wanting to win by beingproven right and desiring to make

peacewithinthefamily.Theroleofthe mediator is to help the peacemotivationprevail. Theparticipantsinafamilyfinan-cialdisputearemorelikelytoreachasatisfactoryagreementbytalkingandexploringoptionswiththehelpofamediatorthantheyarebygoingthroughajudicialprocedurewherea decision is imposed upon them,whether by judicial degree or anoutcomenegotiatedbytheirlawyers.Blameandangerbegetblameandanger.Inmediationblameandangercanbelessenedthroughunderstand-ingandthepartiesareencouragedto develop a commitment to theprocessandto theagreement thattheystructure.Mediationisaprovenwaytoavoidthelongtermadverseconsequences of litigating familyfinancialdisputes.

Jay Folberg is former Dean and Professor Emeritus at the University of San Francisco School of Law. He is coauthor of Mediation:TheRolesofAdvocateandNeutral, Aspen Publishers (2006), as well as other books on ADR. Dean Folberg is now a mediator and arbitrator with JAMS and heads the JAMS In-stitute. His email is jfolberg@jamsadr.com.

Both Ann and Jack expressed their desire to pass on to their children their ownership and use of the Villa, although they were aware of the increased complexity in expanding numbers of successive generations sharing the property. I discussed with them the importance of the example they provided to their children and the need to model cooperation.

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fortwopriorgenerations.Morihei’sgrandfather and great grandfathermarried into the Ueshiba clan andtooktheirwives’names.In1883inremoteJapanesevillages,beingtheonlyboyinafamilymeantthatyouwereapamperedpup.Thegirlswereforcedtocookandcleanandwashtheclotheswhile littleMoriheiwasallowedtositaroundandplay. Moriheiwasn’tespecially strong

orathletic.Infact,hewouldnever grow taller than fivefeet.Whileasanoldmanhecouldbeartheweightoftwogrown men sitting on oneextendedarm,asaboy,hewasconsideredscrawny.Thefamilybusinesswasfarmingand fishing, and Morihei’sdaddidn’tthinkhewasuptotherigorsofthatlife.

Moriheidescribedhimself tohissonas“frailandpathologicallyover-sensitive.”Hereadquitealot,andlikemanyascrawny,overprotectedboy,Moriheiwasgoodinschoolandexceptional in math. He enrolledat age 10 in the Yoshida AbacusAcademy–oneofthebestabacusacademiesinJapan,accordingtothebook. Unfortunately for the abacusindustry, Morihei grew bored anddecidedtoenlistinthearmy.There,he was initially refused a combatposition because of his diminutivestature. Frustrated at being deniedsomethinghewanted–forperhapsthe first time in his life – Moriheibeganalifetimeofrigorousphysicaltraining. He started to learn everymartialarthecouldfindanduponhisreturnhome,hisfatherbuilthimadojo–ahomegymwherehebecameso strong that the army promotedhimtoabattlefieldposition.Heex-celledandhiscareer inthemilitaryseemedpromising. Until his father pulled theplug.Givenhowrareboysintheclanwere,hedidn’twanthissontodie,sohepreventedMoriheifromenrollinginofficers’ training school. Morihei,frustrated, accepted a governmentoffer to relocate clans to remote

inventorofAikido,writtenin1978(underthetitleAikido Kaiso Ueshiba Morihei Den),written by his son and theheir to the title of AikidoDoshu. From a quick skim,I learned that the founderofAikido,MoriheiUeshiba,described Aikido as “thewayofharmony.”Heissaidto have gone “far beyondsimplemethodsofattackorself-de-fense,” and instead created an artthat“seekstodispelanyaggressionthrough harmony, thus ultimatelypromoting peace.” Settle casesthrough harmony? That soundedintriguing. It’sworthmentioningthatthisisnotabookaboutAikido–at leastnothowtodoanyAikidomoves.Forthat,youmaywanttoseekoutBest Aikido: The Fundamentals or The Aikido Master Coursewrittenby,re-spectively,KissohomaruUeshibaandMoriteruUeshiba(sonandgrandsonofMorihei).Frankly, ifyouwanttolearnhowto“do”Aikido,youprob-ablyoughttotakeaclass.Rather,thisbookisaboutthelifeofthefounder.Thisbiographydescribeswhatthelifewaslikeofamanwhotranscendedmasteryofgladiatorialcombattocre-ateanew,morepeacefulpath.Thisbiography might contain valuablelessonsforconflictresolutionanditmightshedsomeinsightintothelivesofgreat litigatorswho(sometimes)becomegreatjudgesandthenwhobecomegreatmediators. Talent in harmony creation wasnotobviousfrombirth.Moriheiwastheonlyboyinalargefamilyofgirls.Hisfatherwasalsoanonlyson,andtherehadbeennoboysinthefamily

COntInueD FrOM PAGe 1

the story of O Sensei tracks that

of many great mediators I know.

they start as strong students,

then they turn into talented

warriors, then they become

leaders and conflict resolvers.

And then they sit at the top of

the mountain and ask: how can

the various pieces of my life be

integrated into one? how can I use

the skills in mediation to impact

my daily interactions? how can

I “mediate all the time?”

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regions of the country. Moriheigatheredagroupofsome20fami-lies and under his leadership, theytrekkedmorethanamonththroughsnow-filled ravines before settlingin a wilderness on Hokkaido, oneof Japan’s smaller islands. Moriheiwassaidtospendmanyhourseverydaychoppingdownthree-foot-thicktreeswithhomemademachetes. Itwas here, tilling the land, fendingoffdisplacedmembersoftheformerSamurai class and building fieldsand shelters, that Morihei’s physi-cal prowess and his interpersonalacumen became ever more keenlyhoned.Hewasnotonlytheleadingbuilderandteacher,hewasthetownleaderandfirstcitizen. Onefatefulwinter,whileMoriheiwasawayonexpedition,aragingfireconsumedmorethan80percentofthevillage.Shortlythereafter,newsarrivedthatMorihei’sdotingfatherwasdying.Moriheibeganthemas-sivetrekbackhome,andhefoundhimselfinaremotevillagewhereheencountered one of Japan’s greatmartialartists,MasterOnisaburo.HestayedawhilewithOnisaburoandbythetimeMoriheireachedhishomevillage,hisfatherhadpassedaway.Distraught,Moriheimovedhisfam-ilybacktoAyabe,thevillagewhereOnisaburowasspiritualleader. Ayabewasdevotedtoathrivingreligioncalled“Otomo.”Thereligionwasbasedinlargepartonthewrit-ingsofawomansaidtobeilliterateexcept for a period of trance-likepossession.Here,Moriheilearnedtoappreciatemorekeenlythepossibil-ity that martial arts and spiritualitycouldbedeeplymerged. It ishere,thestorygoes,thatMoriheiachievedenlightenment. MoriheibecameOnisaburo’spu-pil and confidante. Onisaburo and

Otomo were popular with Japan’smilitaryandculturalelite,soMoriheimetmanygreatpeoplewhileservingOnisaburo.WhenOnisaburosoughttoerectahugemountaintopshrine,Morihei ledtheeffort.Onceagain,his physical strength and staminagave rise to many stories and leg-ends, so much so that the youthof Ayabe began to revere Moriheialmost as if he were Onisaburo.OnceOnisaburocaughton to this,heinsistedthatMoriheiopenhisownmartialartsschoolandleadthelocalyouthbrigade.ThusbeganMorihei’slifeasateacher. Moriheidecidedtostopteachingatraditionalmartialartandhede-partedfromhismentorsinDaito-ryu,SojutsuandKenjutsu(popularstylesoftheday)anddevotedhimselftocreatingaholisticstyle.Hewassaidtopractice alone in themountainslateintoeachevening.Hisdevotiontotheself-guidedcreationofanul-timatemartialartbecamethestuffoflegend,andthatlegendspreadfarandwide. He developed such a followingthat admirals in the Japanesenavytemporarily gave up their commis-sions to study under Morihei. Therich and powerful joined side bysidewithvariousyouthgroups(withgreatnames,like“theYouthDragonSquad”and“theWhiteTigerSquad-ron” and my favorite, “the YoungFemaleandInfantArmy”)towitnessthebirthofanewart. Morihei insisted that his pupilswork hard in the dojo but also inthecommunityandonthefarm.Headoptedtheoldsamuraiethicthatarelationshiptothelandisthesameasarelationshiptoamartialart.Thesoldier-farmeraesthetic(probablyde-velopedasapoliticalmeanstorepa-triatevastsquadsofrovingsamurai

aftertheendofJapan’sfeudalera)led Morihei to create a martial artthatpermeatedallaspectsofone’sexistence. OneofthewaysMoriheifeltthattheartshouldmanifestisinword.Heissaidtohavefocusedontwobeliefscalled“Kotodama”and“Musubi.”Inpractice,thesetranslateintoverymindful actions – extending to ev-erythingonedoes,includingspeech.Theideaisroughlyembodiedbythephrase“wordsspokenbysomeonewho has perfected themselves inbody and mind are imbued withspiritualenergy.” Moriheistartedtoseeconnectionsbetweeneverything.Hefeltthathisbreath,hismartialart,his relationswithothers–everyaspectofhislifewas inservicetoagreaterspirit.ApupilofMoriheiwrote,“Thepathislikethebloodthatcirculatesinthebody.ItmustbeinharmonywiththebenevolentheartofGod,functioningaccordingtotheprincipleofonenessofGodandman.Ifthisflowdepartseven a fraction from the heart ofGod,thepathwillbebroken.”Thiskindofallconsumingdevotionwasnewtotheworldofmartialart.Gonewas the focuson the strikeor thedefense,oreventhephysical.Mentaldisciplinewasnotinservicetophysi-calprowess.Rather,everythingwasinservicetoeverythingelse.Balanceandharmonybecamekey toeveryaspectofliving. Fromhere,Morihei’spathbecameintertwinedwiththefateofJapan.Formerstudentssoughthimoutasamilitaryadvisor.Moriheiledthelead-ersontrekstoMongolia,onfightingcampaigns, through rebellions andintothepagesofhistory.Hewasof-feredeveryhonorthenationcould

See “Worth Reading” on Page 10

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spreadnotonly throughout Japan,but throughout the world. A NewYorkstudentremarkedthathehadbeen stuck in his Zenpractice andAikido provided the breakthrough.Hedubbedit“ZeninMotion.” O Sensei continued throughouthislifetoimpress.HebeatmastersofJudoandSumo,militaryfighters,practitioners of many martial arts,mostlyby lettingthemwearthem-selvesoutwhileheappearedtodonothing. OSenseistartedanoutdoordojoinanotherremotearea,nowteach-inghundredsofstudentsatonce.Allthewhile,OSenseieschewedfinan-cialreward.Itwassaidthatherarelyhad even a coin in his purse andhenevertookpleasurefromgrandmealsorniceclothes.Helivedalifethatwasinwardlyrichandoutwardlyimpoverished.Despite this, hewasappointed political envoy to manycountriesandhecountedkingsandrulersfrommanynationsasdevoteddisciples. O Sensei retreated to study toavoidparticipatinginwhathesawasthehorrorsofWorldWarII.There,hedevotedhimselftotheconstructionofashrinetoAikido(nottohimself,ofcourse)andfromitsdedicationin1967totoday,theshrinecontinuesto attract devotees from the wideworld. Prior to his death in 1969, OSenseisummeduphisfeelingsaboutAikido in five points. (1) Aikido isa Great Path that endures forever.It isaphilosophy thatabsorbsandintegratesall things. (2)Aikido isatruthgrantedbyHeavenandEarth.(3)ThepathandphilosophyofAi-kidoseektocreateharmonyamong

heaven,earthandhumanbeings.(4)Aikidobecomescompletewheneachpersonfollowsthepathaccordingtotheir own nature, practices ascetictraining,andseeks tobecomeonewiththegreateruniverse.(5)Aikidoisapathofgreatcompassion,result-inginthegloryandprosperityoftheuniverse. So there we are, from birth todeath,withthecreationofanewartalongtheway.ThestoryofOSenseitracksthatofmanygreatmediatorsIknow.Theystartasstrongstudents,thentheyturnintotalentedwarriors,thentheybecomeleadersandcon-flictresolvers.Andthentheysitatthetopofthemountainandask:Howcanthevariouspiecesofmylifebeintegratedintoone?HowcanIusetheskillsinmediationtoimpactmydailyinteractions?HowcanI“medi-ateallthetime?”AndlikeOSensei,theydiscoverthattheanswerstartswithaninwardquestforpeaceandquiet,andtheystartthatsearchbypayingattentiontosimplethings. While A Life in Aikido is a bitstilted in its language–asaprettydirect translation, there are roughpatches – the story is interestingandinspiring.It’sastoryofadversityovercome, of never being satisfiedwiththestatusquo,ofrejectingfameandfortuneinsearchofsomethinghigher. It’s a story with fascinatinghistoricalmomentsandperspectives.Andit’sastorythatsaysthatyoucanstartsmall,scrawnyandspoiledandpassthroughaperiodasagladiatorintrainingandendupastheembodi-mentofharmonyandpeace.Ifevenoneskinnykidbecomesatriallawyerandthenamediator,itwillhavebeenwellWORTHREADING.

Worth Reading COntInueD FrOM PAGe 9

thinktobestow,butherefusedallreward.Instead,hisnewartspreadtoeverycornerof thecountryandhisfamewasunparalleled.Moriheiwashailedasabeingwhohadun-dergoneadivinetransformation. Inonemuchwrittenabout inci-dent,abrashmilitaryofficerwishedtoshowthathecouldbestMoriheiin a fight. He repeatedly tried tohitMoriheiwithashortbluntclub,and each time Morihei moved justenough to prevent the blow fromlanding.Thiswentonuntiltheofficercollapsed from exhaustion withoutMorihei becoming at all tired, andwithout his ever striking a singleblow. MoriheiannouncedthathisnewartwouldbecalledAikido,inwhichtraining was meant to harmonizeone’smindandbodywiththemove-ments of the universe and to har-monizetheessentialenergy(“ki”or“chi”or“qi”)thatconnectsthebodyandmindwiththemovementsoftheuniverse.“Onlythosewhoareableto train in thesewaysat the sametime,notasatheory,butinthedojoandintheirdailylife,canbecalledpractitionersofAikido.” TheoutsideworldrenamedMori-hei“OSensei”or“GreatTeacher.” The remainder of the historydetailsOSensei’sbattlewithcancer(hewon–whatdidyouexpect)andthespreadofAikidothroughJapan(includingaphasecalled“TheEraofHellDojo”–I’mgladIwasn’tthere!).FascinatingaspectsoftheteachingsarethatOSenseiceasedalleffortsatdescribinghowtopracticeAikido.Hebelievedthatwordswereinadequatetodescribewhatmust, at bottom,be a feeling. Schools grew and

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Therearemanymorecasesofinter-estthanwecanreport,buthereare two significant cases thatsignalasplitamongFederalCir-cuitsandmaygiverisetoanewSupremeCourtruling.

Manifest disregard still a valid ground for vacatur in the Ninth circuit – The Hall Street case does Not change the law

Comedy Club, Inc. v. Improv West AssociatesC.A.9,January29,2009 ImprovWestgrantedalicensetoCCI to open improvisational com-edyclubs.ThecontractcontainedaclauseprohibitingCCIfromopening“non-improv”comedyclubs.Whenitfailedtomeetterms,CCIwasin-formedthatImprovWestwouldseekarbitration.CCIfiledacomplaintinfederal court seeking declaratoryrelief. CCIarguedthatthe“nonon-im-prov clubs” clause was void underCalifornialawandthatCCI’sfailuretomeetscheduletermsdidnotre-vokeitsrightstousevariousImprovclubmarksortoopenimprovclubsoutsidetheschedule. Improvmovedtocompelarbitra-tion and the district court grantedthemotion. Sixmonthslater,anarbitratoren-teredapartialfinalawardthatstatedthatCCIhaddefaultedonitssched-uledopenings,thatCCIforfeiteditsrightstoopenclubsundertheImprovmark, that Improv could contractwith a new party for the openingofthoseclubs,thatCCIcouldopenonly clubs already underway, that

CCIcouldnotchangethenamesofanycurrentclubs,andthatCCIhadtopayattorneyfees. CCIappealed,and in2007, theCourtruledthatitdidnothavejuris-dictiontoreviewtheordercompel-lingthearbitration,andthatthear-bitratordidnotexceedhisauthorityincombiningequitableclaimswithmonetaryclaims,thatthearbitratoractedwithinhisauthorityinenjoin-ingactsofnon-parties (partnersofCCI that wanted to open clubs),thathisawardwas“notcompletelyirrational,”BUTthatthearbitrator’senforcementofthecovenantnottocompetewas inmanifestdisregardofthelaw. ThecasewentuptotheUSSu-preme Court which remanded thecasetotheNinthCircuitforrecon-siderationinlightoftheHall Street case. TheNinthCircuitnotedthatCCI’sappealontheordercompellingarbi-trationwasuntimely–farinexcessofthe180daysallowedbythefederalrulesofappellateprocedure. In all other respects, the Courtaffirmeditsearlierrulings,including

the finding of manifest disregard.TheCourtnotedthattheUSSu-preme Court left it open as towhethermanifestdisregardisastatutorygroundforreversalorvacaturundertheFAA.BecausetheNinthCircuithadruledthatmanifestdisregard(orexceedingpowers or where an award is

completelyirrational)arestatutorygroundsundertheFAA,Hall Street

didnotaffectpriorNinthCircuitju-risprudence. The arbitrator’s award was af-firmedinallrespectssaveone–thecovenantnottocompetewasruledunenforceable because it violatedCalifornia law and therefore, theportion of the arbitral award thatallowedImprovtoenforcethecov-enantwas inmanifestdisregardofthe law.Thatportionoftheawardwasvacated.

Fifth circuit holds That the Hall Street case ends the Manifest disregard standard

Citigroup Global Markets, Inc. v. Bacon C.A.5(Tex.),March05,2009

Debra Bacon discovered thatCitigrouphadallowedherhusbandtowithdraw$238,000fromherIRA.Shewasawarded$256,000atarbi-tration. Citigroup moved to vacatethe award, and the district courtcomplied,findingthattheawardwasmade in manifest disregard of thelaw.ThecourtheldthatthematterwasbarredbyTexaslawthatrequireda complaint within 30 days of thewithdrawal(Baconcomplainedlater

See “Cases of Interest” on Page 12

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cases of interest COntInueD FrOM PAGe 11

JaMs disPUte ResolUtion aleRt • sUMMeR 2009 • Page 12

than that),andso it found that thearbitrator’sawardviolatedthatlaw. BaconappealedtotheCourtofAppealfortheFifthCircuitwhichreadtheSupremeCourt’sHall Street deci-siontostrictlylimitthegroundsforvacaturofanarbi-trationawardtothoselistedinFAAsections10and11,whichsectionsmakenomentionoftheground“manifestdisregardofthelaw.”Assuch,manifestdisregardis,ac-cordingtotheFifthCircuit,nolongeravalidgroundforvacaturofanarbitrationaward.TheCourtnotesthatitwasoneofthelastcircuitstoacceptmanifestdisregardasagroundforvacaturandthatitemployedthegroundonlyinextremecircumstances.TheCourtmakesitclearitwasprimedtoreverseandHallStreetprovidedaperfectexcuse.TheCourtnotesthatothercircuitshavealreadyreadHall Streetdifferently,buttheyfoundnoreasontofollowthecircuitsthatreadHall Streettoallowmanifestdisregardtoremainviable. Asaresult,thedistrictcourt’svacaturoftheawardwasreversedandthecasewasremandedfordeterminationofwhethervacaturwassupportedbyoneofthesection10or11grounds. Andwiththiscase,itisalittlemorelikelythatwe’llseeanotherSupremeCourtopiniontoclarifyHall Street–staytuned.