By Joseph C. Barsalona II, Law Clerk to the Hon. Robert N. Opel, II for the U.S. Bankruptcy Court for the Middle District of Pennsylvania.
I. INTRODUCTION
Consumer bankruptcy filings are making an unwelcome comeback.[1] After a steady decline in the number of filings since the start of 2010, recent data shows a 20-percent uptick in noncommercial filings in February 2012 compared to only one month earlier.[2] An even more startling indication of the mounting misery is the fact that filings per day rose 27 percent, from 2,838 in January to 3,601 in February.[3] While others focus on improving the economy, the perpetual stream of Americans seeking bankruptcy relief requires its own attention.
Bankruptcy, in the majority of instances, is the right path for these individuals, but the right path for bankruptcy courts is less clear. The financing of bankruptcy courts suffers from the same economic pinch as the people they strive to protect. Exacerbating this problem is the funding situation of the federal judiciary, which includes bankruptcy courts.[4] Funding for the federal judiciary has basically been frozen at the same level for three years despite the rise of noncommercial bankruptcy filings.[5] Additionally, an impending bankruptcy judge shortage may create a heavier burden on continuing judgeships that will absorb the pending cases onto their dockets.[6] In order to resolve this problem, districts across the country should handle the rising influx of bankruptcy cases in the most efficient and effective way that allows each case to receive the proper attention while also attempting to get the debtor through the bankruptcy process as soon as possible.[7] Thus, courts must find ways to utilize all of their available resources without expending its already limited budget in order to meet this end.
Intra-court means of alternative dispute resolution (“ADR”) provided by the court, specifically mediation, are the means to meet that end. ADR and the bankruptcy system are no strangers to one another; indeed, corporate Chapter 11 filings are inherently a form of alternative dispute resolution between an entity and its creditors.[8] Mediation, on the other hand, is a relatively new addition to the bankruptcy system and some bankruptcy courts still have not implemented a court-annexed mediation system under their local rules.[9] The urgency of today’s economic times is in need of a new model of court-annexed mediation for consumer matters: one that utilizes private-mediation features, costs less for the court system to implement, and, most importantly, costs less for the debtor.
By going in-house and making law clerks the only assigned mediators for consumer matters, debtors will receive high quality mediators and bankruptcy courts can reduce their costs as judges efficiently work through their dockets. Moreover, law clerks are capable of handling the responsibility of mediating consumer disputes: they are neutral and independent, they are eager to gain experience before going into practice, and they connect to today’s consumer debtors better than any others. In sum, law clerk mediators can help America’s debtors as the country continues to improve.
This paper proposes the framework of a plan[10] under which judicial law clerks are the only assigned mediators for consumer matters. Its focus is on why such a plan is needed and how it can be effective. Part II gives a brief history of the legislation that brought mediation into the federal bankruptcy court system. Part III delves into the details of the Law Clerk Plan and why it can work.
II. MANDATING MEDIATION IN BANKRUPTCY COURTS – SOURCE OF COURT’S AUTHORITY AND A BRIEF HISTORY
To implement a court-annexed system, a district must have the jurisdictional power to do so. This section gives a brief history of how and when the district courts were granted this power.
A. Federal Legislation
ADR is an inherent trait of the bankruptcy system: it is designed to facilitate the resolution of multiple claims in one forum in a manner that appeals to all parties involved[11] Indeed, arbitration, a form of ADR that is not covered in this paper, was an essential part of the very first bankruptcy code implemented in 1898.[12] Notwithstanding its roots in ADR, only until recently has the federal government, and the bankruptcy courts themselves, been given the opportunity to utilize mediation to the benefit of its citizens[13]
The first bankruptcy court to implement mediation into its procedures was the U.S. Bankruptcy Court for the Southern District of California[14] Along with mediation, the original program established in 1986 also included procedures such as nonbinding arbitration, binding arbitration (if all parties consented), neutral evaluation, and minitrials.[15] Other courts followed suit by establishing pilot programs by local rule or general order[16] Still, federal law was needed before mediation would be generally accepted by the bankruptcy courts.
That federal legislation came in 1998 with the adoption of the Alternative Dispute Resolution Act.[17] The Act gives United States District Courts the power to promulgate ADR programs into their court rules.[18] Although not expressly stated in the ADR Act, it is generally believed that bankruptcy courts are given the exact same powers.[19] Today, the majority of bankruptcy courts maintain court-annexed mediation programs through their local rules, and if they do not, they use the ADR rules adopted by the district court.[20] Thus, Congress bestowed federal bankruptcy courts with the ability to graft unique mediation programs to efficiently and expeditiously manage their dockets.
B. BAPCPA and Its Effect on the Consumer Debtor
Bankruptcy is just as hard to cope with emotionally as it is financially. Unfortunately for debtors in the new millennium, Congress made it much harder when it enacted the latest amendments to the Bankruptcy Code in 2005. This subsection gives a summary of those amendments.
On April 20, 2005 President George W. Bush signed the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”)[21] which dramatically changes which debtors can file under Chapter 7 and Chapter 13.[22] Prior to BAPCPA, debtors had more of a choice between Chapter 7 liquidation, where all of their debts would be discharged to foster a fresh start for the debtor[23] or Chapter 13, where debtors pay off their debts over a course of years.[24] After a series of hearings, Congress believed that the majority of debtors were manipulating their creditors by choosing Chapter 7, discharging all of their debts, and moving on without paying off their debts.[25] Although this was an unwarranted assumption on its part, Congress, through the BAPCPA, effectively made filing Chapter 7 much more difficult: the Act sets a “median income” pursuant to IRS standards and any debtor that is above the median income automatically goes into Chapter 13.[26] As a result, most debtors are placed into Chapter 13 three- or five-year plans.[27] Therefore, debtors must find suitable income to pay off all of their debts over a long period of time while also trying to recover a semblance of the life they once knew.
With more debtors being pressed into five-year Chapter 13 plans, there is a heightened need for negotiation between the debtors and their creditors to agree on an effective, long-term plan. Mediation is the bridge that debtors and creditors will need to get through this emotional and lengthy process: the goal is settlement plus a better relationship, not just settlement.[28]
III. LAW CLERKS AS MEDIATORS: AN EFFICIENT STEP FORWARD
This section focuses on why law clerks are necessary, competent, and skilled professionals who are primed to take over the sole responsibility of mediating consumer matters.
A. The Federal Judiciary’s Budget and Need for Cost-Cutting
The portion of the federal budget allocated to the judiciary has remained stagnant at the same levels for three years and officials fear that further cuts in spending could be on the horizon.[29] For bankruptcy courts, the financial situation is more severe. The National Conference of Bankruptcy Judges has assembled a Task Force specifically to “analyze and investigate cost containment issues confronting the federal judiciary.”[30] The Task Force recommends an elimination of bankruptcy appellate panels, mandating consolidation of bankruptcy clerks’ offices, and cost sharing between the district and bankruptcy courts.[31] In other words, bankruptcy courts are looking for ideas on how to save and cutting jobs may be an option.
As the Task Force looks for ways to reduce costs, an additional hurdle facing the bankruptcy system is the recently reported impending judge shortage.[32] Reports indicate that 27 temporary judgeships are set to expire, and if Congress does not extend the temporary funding or make them permanent, the positions will vanish altogether.[33] This would result in a heavier burden on the sitting bankruptcy judges who would incur a significant rise in caseload and work hours.[34] Notwithstanding Congress’ final decision on this matter, districts should face this problem head on by finding a way to alleviate it.
Mediation, specifically through the Law Clerk Plan, can help solve both issues. While the ADR Act prohibits a district from removing its mediation program,[35] each district can still be creative by using available resources to produce a more cost-effective program. Currently, bankruptcy courts are spending resources on creating and maintaining lists of eligible mediators.[36] There is an inherent opportunity cost[37] in using resources to update these lists instead of handling cases, an elimination of which will be beneficial. There are substantially more opportunity costs for a court-annexed program that requires sitting judges to mediate. Indeed, despite the value of mediation to the parties, judges’ efforts can be better spent in hearings or writing opinions for their own cases. There is value in conserving judicial attendance, and promoting law clerks as mediators can harbor that value.
Also, by utilizing judicial law clerks to facilitate mandated mediation of consumer matters a court can deduct costs from their balance sheet. All federal law clerks receive pay based on the Judicial Salary Plan (“JSP”) specific to their geographic location.[38] Requiring them to mediate would not require a pay raise, but a mere addition to their job description. There will be no extra expenses in contacting and managing outside mediators and the judge-mediated districts can conserve more time for mandatory hearings.
It is true that compelling law clerks to mediate will occupy their time away from doing other work, thus adding opportunity costs; however, this is a minor sacrifice compared to the greater service they are providing the parties: free mediation that may result in settlement. Even if one law clerk is backlogged with work, another law clerk in chambers would be able to take on the responsibility; compare this to a private-mediator district where the cancellation of a mediator could take weeks to reschedule.
An example can show how maintaining mediators in-house may be an effective solution for bankruptcy courts. First assume the parties would have to pay for mediation as a separate cost. If this cost is too burdensome for the debtor, he will choose to spend as little as possible and proceed to the necessary hearings as scheduled. More hearings equal more preparation for those hearings, and more work for the law clerks and judges assigned to the case. If mediation is free, however, it may be more likely that the debtor chooses that venue. The more mediations chosen by parties, the less hearings for all law clerks and judges involved, and, in the long-term, this could reduce, and maybe eliminate, the amount of sacrificed time by the law clerks.[39] Thus, by providing a free service to the parties, the amount of hearing preparation should decrease, allowing for more efficiency.
From a strictly economic viewpoint, the Law Clerk Plan can help bankruptcy courts save opportunity costs for its judges while also utilizing law clerks in new and creative ways. In essence, for those districts that are looking to cut costs, the Law Clerk Plan could be the solution.
B. Law Clerks: Individuals to Whom Today’s Debtors Can Relate
One very important characteristic every mediator should have is the ability to earn the trust of each party.[40] The need for trust is even more essential in the bankruptcy context where emotions are amplified and where typically the trust between the parties has eroded since the debtor filed for bankruptcy protection. In order to obtain the necessary level of trust, then, it is each district’s responsibility to provide mediators to whom debtors can relate who can also be respected by the lawyers representing both parties. To build that trust, the mediator must show legitimacy to gain respect while also displaying empathy towards the situation. Because law clerks can bring both of these elements to the negotiation table, they are natural candidates to mediate consumer matters.
Today, college students and graduate students are becoming the new repeat bankruptcy-filers, and no one can connect with these individuals more than those law clerks that are experiencing the same financial pinch. Recent news reports predict that student loan defaults may be the next “debt bomb” on the U.S. economy.[41] In 2011 the total amount of student-loan debt exceeded $867 billion, an increase from $767 billion in 2010.[42] Furthermore, in many cases the parents of the student co-sign on the debt making them liable if their child defaults.[43] These statistics correlate with the rise in business that debtors’ counsel is reporting around the country: 81 percent of consumer bankruptcy attorneys report an increase in student clients, 48 percent of which stated that this increase is “significant.”[44] Indeed, the problem has gotten so dire that one Senator has even proposed a bill to afford students the ability to discharge their student-loan debt.[45]
As for graduate-school debt defaults, an increasing number of law students are seeking debt relief through the bankruptcy courts.[46] The problem for law students is two-fold: 1) the shrinking legal-job market[47] and 2) the almost insurmountable burden of discharging student loan debt in bankruptcy court.[48] These issues have lead more law students to file consumer bankruptcy cases, and ultimately into a mediation between the law student and the lender.
While the route to obtaining the trust of today’s debtor seems clear, the same cannot be said for gaining trust with creditors and their counsel. Indeed, one judge interviewed for this paper expressed the opinion that creditors and their attorneys need a mediator to have deference so that they are convinced their claims are being properly heard.[49]
In contrast to this opinion, a recent study published in the fall of 2011 reports that attorney satisfaction with “staff mediators” was higher compared to both judge and outside mediators.[50] This study supports the idea that districts that have quality control over in-house mediators, e.g. law clerks, can provide satisfactory mediation services to parties on both sides of the dispute.[51] Where the attorney is satisfied with the process, it follows that the client should be as well. Hence, if law clerks can gain trust and credibility from the creditor attorneys, then hopefully they will have a base to build similar trust with creditors.
Just as important to building trust with the parties is a mediator’s ability to comfort and emphasize with the parties.[52] Law clerks have an upper hand to judges and independent mediators in this regard as well when looking at today’s debtors. When a law student enters mediation, it would be more comforting for the debtor to see a similarly situated, less-intimidating individual than a judge or a private individual that has achieved the success in the private arena that the student-debtor covets. At this point, the debtor may be more willing to trust the mediator, and the talks will me more productive.[53] Thus, by law clerks building trust and comfort with the parties, they are capable of creating a productive environment for mediation sessions which hopefully can lead to settlement.
C. Law Clerks as Neutral Third-Parties
A fundamental tenet and skill of all mediators is the ability to maintain neutrality throughout the process.[54] In the bankruptcy context, where a judge is engaged with the debtor and debtors’ counsel from filing to discharge, it can be assumed that there is an omnipresent specter of some bias, though not reaching the level of judicial-disqualification bias,[55] for the debtor. It is human nature to want to help the “honest[-]but[-]unfortunate” debtor, judges certainly may be persuaded to lean towards favorable results to help them.[56] Thus for court-annexed programs that compel bankruptcy judges to mediate their own cases or their colleagues cases,[57] neutrality may be compromised. The lack of judicial neutrality during mediation is supported by scholarly commentary.[58] However, this omnipresent specter of bias does not necessarily permeate from the judge to his/her law clerk: without the experience of decision-making they have a separation from the case and the parties that aids neutrality.
For those districts that want to keep mediation in-house, either to guarantee that the mediator is up to speed on the case or for cost purposes, they should implement the Law Clerk Plan to maintain neutrality in consumer mediations. First, law clerks have never acted as decision-makers and thus are more likely to go into mediation with an open mind rather than set on a decision from the beginning. Secondly, since the law clerk position is generally the first legal job for many post-graduates, they have both a fresh understanding of their ethical limitations and, more likely, a general fear of not doing handling the case fairly. This is a large responsibility, and no young lawyer wants to start his/her career with a fellow lawyer or party challenging their neutrality. Finally, in order to live up to the standards of their supervisor, the judge, law clerks want to assume the role of a neutral and fair public servant. Equity and law inspired them to join the federal judiciary in the first place; there should be no reason they can attain the same level of neutrality and impartiality of their mentors.
In essence, the law clerk will strive to meet the standards set by the judges who hired them. They will not have the years of fact-finding experience that would mold their brain into that of a decision-maker, but instead one of a pure facilitator. For these reasons, law clerks can be the ultimate neutral mediator debtors need to help them through the bankruptcy process.
D. Debtors Will No Longer Need to Pay for Mediation of Their Cases
As seen in the S.D. Cal. and the S.D.N.Y., courts maintain comprehensive lists of available mediators and the majority of these practitioners get paid for their services.[59] These payments are coming directly out of the debtors’ and creditors’ pockets, which may deter the frugal debtor from choosing this option.[60] Indeed, as a growing number of circuits are permitting debtor-attorneys’ fees to be paid up-front,[61] the amount of cash-on-hand for consumer debtors at the beginning of the bankruptcy process is decreasing and any additional cost could substantially hinder a debtor’s fresh start.
The potential positive effects the Law Clerk Plan can have on a bankruptcy case are analogous to those it can have on the courts: it directly reduces costs for the parties to the mediation while efficiently moving the case forward. As a recent study shows, maintaining mediators in-house allows a court to have quality control over its program while providing a cost-free service to disputing parties.[62] By ensuring quality, bankruptcy courts using in-house mediators “might inspire greater confidence and respect” for the program.[63] While a list of volunteer mediators serves the same cost-saving purpose, the level of quality is not guaranteed.[64] Moreover, considering their position with the court, bankruptcy law clerks may receive a presumptive status and respect from attorneys than private or volunteer mediators.[65] Thus, using bankruptcy law clerks to mediate disputes may be an optimal choice for courts looking to both cut costs and provide valuable mediation to the parties.
IV. CONCLUSION
The American economy and its bankrupt citizenry are at an impasse, one that only law clerk mediators can break through. As seen, bankruptcy courts have taken great strides, since the adoption of the ADR Act, to adopt court-annexed mediation programs into their local rules, but the current economic situation necessitates a re-evaluation of these programs. With consumer-bankruptcy filings increasing, the potential debt-bomb of student loans on the horizon, and the federal judiciary looking to cut back on spending, bankruptcy courts must authorize judicial law clerks to take on the responsibility of mediating consumer matters. Law clerks are well prepared for this duty: they are available, they will be trusted by the parties, and they can be neutral allowing them to absorb the necessary training in a short amount of time. There are certain problems that bankruptcy rules must answer, but in the aggregate the positive attributes of using law clerks outweigh the negatives. Desperation drives creativity, and nowhere is that innovation more valuable than in today’s bankruptcy courts. Law clerks are ready and willing to help their fellow citizens, and only by their hard work can America find the “fresh start” that it needs.
[1] The term “consumer bankruptcy” includes Chapter 7 individual filings under U.S.C. 11 § 109(b), Chapter 11 individual filings under U.S.C. 11 § 109(d), Chapter 13 filings under U.S.C. 11 § 109(e), and Chapter 12 filings under U.S.C. 11 § 109(f). “Consumer bankruptcy filings” is synonymous with “noncommercial filings.”
[2] John Hartgen, February Bankruptcy Filings Up 19 Percent Over January, ABI JOURNAL, March 6, 2012, http://www.abiworld.org/AM/Template.cfm?Section=Home&CONTENTID=65294&TEMPLATE=/CM/ContentDisplay.cfm.
[3] Id.
[4] See generally James Vicini, Judges Warn U.S. Budget Cuts Could Halt Some Trials, THOMSON REUTERS NEWS & INSIGHT, March 13, 2012, http://newsandinsight.thomsonreuters.com/Legal/News/2012/03_-_March/Judges_warn_U_S__budget_cuts_could_halt_some_trials/ (reporting on the across-the-board budget cuts set to effect the federal judiciary budget this year).
[5] Id.
[6] Jacqueline Palank, Bankruptcy Judges Confront Impending Shortage, BANKRUPTCY BEAT (Apr. 10, 2012, 3:37 PM), http://blogs.wsj.com/bankruptcy/.
[7] See Lisa A. Lomax, Alternative Dispute Resolution in Bankruptcy: Rule 9019 and Bankruptcy Mediation, 68 AM. BANKR. L.J. 55, 56 (1994) (“An important goal of the Bankruptcy Code is expeditious resolution of the financial affairs of the estate.”).
Bankruptcy Judges have corroborated this dual need of 1) proper attention and 2) getting the debtor through the process as quickly as possible: “In the bankruptcy context . . . you have people who are financially distressed; it’s a fairly compact process so the idea is to get through it as quick as possible with the minimum amount of attorneys’ fees . . . while also getting the proper attention to provide the fresh start the debtor needs.” Interview with the Hon. Charles M. Caldwell, Chief Judge, U.S. Bankruptcy Court for the S.D. Ohio, in Columbus, Ohio (March 21, 2012).
[8] See David B. Young, Alternative Dispute Resolution in Bankruptcy, 876 PLI/Comm. 999, 1025 (March-April 2005) (“Bankruptcy, particularly reorganization, is itself a collective form of alternative dispute resolution in which numerous parties with conflicting interests attempt to achieve an agreement as to how assets will be distributed or as to how debts will be paid over time.”).
[9] See, e.g., R.I., App. VII (2012) (the statute is merely a placeholder “[r]eserved for future procedure for alternative dispute resolution”).
[10] Hereinafter “Law Clerk Plan.”
[11] Young, supra note 8, at 1025. See also Robert J. Niemic, Improvements Are Sought As Bankruptcy Courts Try ADR, 15 ALTERNATIVES TO HIGH COST LITIG. 152, 152 (1997); accord Hon. Lisa Hill Fenning, Mediation, Not Litigation, 15-Aug. AM. BANKR. INST. J. 35 (1996) (“The Bankruptcy Code and Rules provide an “alternative” to the volume and complexity of actions creditors might bring, which would occur in several forums under different timetables.”).
[12] Bankruptcy Act of 1898, ch. 541, §§ 26-27, 30 Stat. 553 (repealed 1978). See also Lomax, supra note 7, at 56.
[13] The current version of the Bankruptcy Code, 11 U.S.C. §§101-1532, implemented in 1978, does not mention mediation anywhere throughout its text.
[14] See Jacob Aaron Esher, ADR Comes to Bankruptcy: Claims Resolution Facilitation in Reorganization Cases, 9 No. 4 DISP. RESOL. MAG. 29, 29 (Summer 2003); Hon. Ralph R. Mabey, Charles J. Tabb & Ira S. Dizengoff, Expanding the Reach of Alternative Dispute Resolution in Bankruptcy: The Legal and Practical Bases for the Use of Mediation and the Others Forms of ADR, 46 S.C. L. Rev. 1259, 1259 (1995); Young, supra note 8, at 1028.
[15] Steven R. Wirth & Joseph P. Mitchell, A Uniform Structural Basis for Nationwide Authorization of Bankruptcy Court-Annexed Mediation, 6 Am. Bankr. Inst. L. Rev. 213 (1998); Niemic, supra note 11, at 152.
[16] Young, supra note 8, at 1028.
[17] 28 U.S.C. §§ 651-658 [hereinafter “ADR Act”].
[18] ADR Act § 651(b).
[19] See Young, supra note 8, at 1031. Technically the statute refers to 28 U.S.C. § 2071(a), which authorizes district courts to adopt local rules; it does not expressly authorize bankruptcy courts to do the same or make reference to 28 U.S.C. § 2075, the provision authorizing the adoption of nationwide bankruptcy rules. Id. However, the more sensible reading of the statute shows that bankruptcy courts are units of the district court, and thus under 28 U.S.C. § 151 may adopt their own local rules pursuant to ADR Act § 651 and Bankruptcy Rule 9029. Id.
[20] See Sidney K. Swinson, Alternative Dispute Resolution in Bankruptcy, 36 TULSA L.J. 813, 814 (2001); Young, supra note 8, at 1031.
[21] Public Law 109-8, 119 Stat. 23. See also HON. WILLIAM HOUSTON BROWN & LAWRENCE AHERN III, 2005 BANKR. REFORM LEG. WITH ANALYSIS 2d §1:1 (2006).
[22] Id.
[23] David B. Harrison, Bankruptcy: When Does Filing of Chapter 7 Constitute “Substantial Abuse” Authorizing Dismissal of petition under 11 U.S.C. §707(b), 122 A.L.R. FED. 141, §2(a) (1994).
[24] See Erin J. Koffman, What is Bad Faith Conversion? The Need For a Uniform Method of Determination, 18 BANKR. DEV. J. 425, 425 (2002) (the policy of Chapter 13 in the 1978 Bankruptcy Code was to “encourage honest debtors to reach agreements with creditors that enable both parties to benefit as much as possible in a difficult situation”).
[25] See generally Jean Braucher, A Guide to Interpretation of the 2005 Bankruptcy Law, 16 AM. BANKR. INST. L. REV. 349, 349 (2008) (the article gives extensive history and criticism of the Act and also states “[t]he legislation itself . . . is a defectively defined and poorly drafted mess”).
[26] See Allen P. Turnage, Living with BAPCPA, Aspatore Best Practice’s Series, 2010 WL 3935, 2 (Jan. 2010). The median income is the level set by the IRS for delinquent taxpayers. Id.
[27] See id.
[28] STEPHEN B. GOLDBERG, FRANK E.A. SANDER, NANCY H. ROGERS & SARAH RUDOLPH COLE, DISPUTE RESOLUTION: NEGOTATION, MEDIATION, ARBITRATION AND OTHER PROCESSES 147 (6th ed., 2012).
[29] See Vicini, supra note 4.
[30] See National Conference of Bankruptcy Judges Task Force Report, Cost Sharing Among the Federal Courts: Options and Opportunities (Dec. 27, 2011), available at http://www.ncbj.org/documents/Cost_Share_Study_Final_12-30-11.pdf.
[31] Id.
[32] See Palank, supra note 6; Todd Ruger, Bankruptcy Judge Shortage Looms, THE NATIONAL LAW JOURNAL (Apr. 9, 2012), available at http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202548248684
&rss=nlj&slreturn=1 (subscription required).
[33] Palank, supra note 6.
[34] Id.
[35] See Part II.A, supra.
[36] See, e.g., U.S. BANKR. CT. RULES S.D. CAL., LBR 7016-6 (2011) [hereinafter “S.D. CAL. RULE”]; U.S. BANKR. CT. RULES S.D.N.Y., GEN. ORDER M-390 (2012) [hereinafter S.D.N.Y. RULE].
[37] See BLACK’S LAW DICTIONARY 155 (3d ed. 1996) (opportunity cost is defined as “[t]he cost of acquiring an asset measured by the value of an alternative investment that is forgone”).
[38] For updated pay levels see http://www.uscourts.gov/Careers/Compensation.aspx.
[39] This potential snowball effect fits squarely within the establish priorities of ADR programs in general which began to take form in the late 1980’s. See GOLDBERG, supra note 28, at 6-7. The established priorities include: 1) lowering court caseloads and expenses; 2) providing speedy settlement; and 3) providing accessible forums to disputing parties. Id.
[40] Sarah Rudolph Cole, Mediator Certification: Has the Time Come?, 11 NO. 3 DISP. RESOL. MAG. 7, Spring 2005, at 7; see also Roselle Wissler, Court-Connected Mediation in General Civil Cases: What We Know From Empirical Research, 17 OHIO ST. J. ON DISP. RESOL. 641 (1999).
[41] See Eric Pianin, Student Loans Seen as ‘Next Debt Bomb’ for U.S. Economy, WASH. POST., March 10, 2012, http://www.washingtonpost.com/business/student-loans-seen-as-potential-next-debt-bomb-for-us-economy/2012/03/05/gIQAM0iF4R_story.html; Debra Cassens Weiss, Bankruptcy Lawyers Warn of Looming Student Loan ‘Debt Bomb’, ABAJOURNAL.COM, March 12, 2012, http://www.abajournal.com/news/article/bankruptcy_lawyers_warn_of_looming_student_loan_debt_bomb/?utm_source=maestro&utm_medium=email&utm_campaign=weekly_email.
[42] Pianin, supra note 41.
[43] See id.
[44] Weiss, supra note 41.
[45] See Debra Cassens Weiss, Senator Seeks Support for Bill to Allow Discharge of Private Student Loan Debt in Bankruptcy, ABAJOURNAL.COM, March 21, 2012, http://www.abajournal.com/news/article/senator_seeks_support_for_bill_to_allow_discharge_of_private_student_loan_d/?utm_source=maestro&utm_medium=email&utm_campaign=weekly_email.
[46] See generally Leigh Jones & Moira Herbst, Law Grads Go To Court for Bankruptcy Protection, REUTERS.COM, Feb. 3, 2012, http://www.reuters.com/article/2012/02/03/usa-lawstudents-bankruptcy-idUSL2E8D1MB320120203.
[47] See id. (“Since Jan. 1, 2008, major law firms have laid off about 5,900 attorneys, according to the Lay-Off tracker at lawshucks.com . . . . That is about 5 percent of all attorneys at the 250 largest law firms, according to the National Law Journal.”).
[48] Id. The standard is referred to as the “undue hardship” doctrine and requires a debtor to prove 1) that s/he cannot maintain, based on current income and expenses, a “minimal” standard of living for herself and her dependents if forced to repay her loans; 2) that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and 3) that the debtor has made good faith efforts to repay the loans. Brunner v. New York State Higher Ed. Services Corp. 831 F.2d 395, 396 (2d Cir. 1987). This common law standard attaches to the language in 11 U.S.C. § 523(a)(8).
[49] On this matter Judge Hoffman stated: “I just think . . . status, the title, [of judges and experienced practitioners] brings some degree of acceptability and authoritativeness that law clerks don’t have. . . . I don’t know if [creditors] would accord [law clerks] the same deference.” Interview with the Hon. John E. Hoffman, Jr., U.S. Bankruptcy Court for the S.D. Ohio, in Columbus, Ohio (March 21, 2012).
[50] See generally Roselle L. Wissler, Court-Connected Settlement Procedures: Mediation and Judicial Settlement Conferences, 26 OHIO ST. J. ON DISP. RESOL. 271, 314-25 (2011). The study by Professor Wissler is focused on process quality of court-annexed mediation programs and is based on questionnaires disbursed to 290 lawyers appearing in the United States District Court for the Southern District of Ohio. Id. at 275-276.
[51] Law clerks would fill in the role as “staff mediator” in bankruptcy courts. For the efficacy of staff mediators, see id. at 314-20.
[52] See Wayne D. Brazil, Comparing Structures for the Delivery of ADR Services By Courts: Critical Values and Concerns, 14 OHIO ST. J. ON DISP. RESOL. 715, 778 (1999) (quality mediators should be “capable of empathy and able to hear emotionally subtle messages”); see also Cole, supra note 40, at 7 (quality mediators should “show respect for parties” so as to make them feel comfortable).
[53] NANCY H. ROGERS & RICHARD SALEM, A STUDENT’S GUIDE TO MEDIATION AND THE LAW 9 (Mathew Bender eds., 2003) (“Only when trust has been established can the parties be expected to be candid with the mediator, disclose their real interests and value the mediator’s reactions.”).
[54] GOLDBERG, supra note 28, at 104.
[55] For a description of true judicial bias that results in disqualification, see 48A C.J.S. Judges §244 (2012) (“Generally, bias and prejudice sufficient to disqualify a judge must be personal and extrajudicial in origin . . . .”).
[56] See Lauren E. Tribble, Note, Judicial Discretion and the Bankruptcy Abuse and Prevention Act, 57 DUKE L.J. 789, 793 (2007) (noting the moral dilemma for bankruptcy judges ruling on consumer matters); see also Stephen R. Bentfield, Note, Determining the Dischargeability of Fraudulent Claim Settlement Agreements in Bankruptcy, 8 SUFFOLK J. TRIAL & APP. ADVOC. 111, 117-19 (2003) (noting Congress’ choice to aid such debtors find their fresh start).
[57] The S.D. Ohio program is of the latter sort. U.S. BANKR. CT. RULES S.D. OHIO, LBR 9019-2(b).
[58] See generally Peter Robinson, Adding Judicial Mediation to the Debate About Judges Attempting to Settle Cases Assigned to Them for Trial, 2006 J. DISP. RESOL. 335 (2006); Louise Otis & Eric H. Reiter, Mediation By Judges: A New Phenomenon in the Transformation of Justice, 6 PEPP. DISP. RESOL. L.J. 351 (2006).
[59] S.D. CAL. RULE 7016-6(f)(4); S.D.N.Y. RULE 4.0.
[60] See S.D. CAL. RULE 7016-6(f)(4); S.D.N.Y. RULE 4.0.
[61] See Sheri Qualters, 1st Circuit Approves Chapter 13 Plans That Pay Lawyers, Trustees First, THE NATIONAL LAW JOURNAL (Mar. 23, 2012), http://www.law.com/jsp/law/article.jsp?id=1202546789146 (the 1st circuit joins the Eastern District of North Carolina and the District of New Mexico in allowing “fee-only” Chapter 13 plans whereby the attorney and trustee are paid first leaving little for creditors).
[62] See Wissler, supra note 50, at 314 (describing the benefits of staff mediators).
[63] Id. at 314-15.
[64] Id.
[65] Id. at 293-94.
———————————————————
Joseph C. Barsalona II is the law clerk to the Hon. Robert N. Opel, II for the U.S. Bankruptcy Court for the Middle District of Pennsylvania. He graduated from The Ohio State University Moritz College of Law, cum laude, in May 2012. During law school, he was the Chief Managing Editor of the </em><em>Ohio State Journal on Dispute Resolution</em><em>. Prior to attending law school, Joseph was a corporate legal assistant in the mergers & acquisitions department of Cravath, Swaine & Moore LLP.
