From the Trenches: A Spotlight Interview with Larry Farese
The Spotlight had a chance to sit down with longtime Robins Kaplan trial attorney and mediator Larry Farese for a good old-fashioned story telling session.
THE SPOTLIGHT: Larry, you have, as they say, “seen a few things.” What is the strangest “asset” you have seen beneficiaries fight over and if it got resolved, how did that happen?
FARESE: Although a corpse should hardly be considered an “asset,” I have handled at least two cases where family members fought over the body of a loved one. In one the children of the decedent wanted access to their father’s corpse in order to have a private autopsy to prove that their father had advanced-stage Alzheimer’s that resulted in an invalidated offending will. The surviving second spouse initially resisted out of respect for her deceased husband, but ultimately agreed, believing that the results would prove a negative. Her gamble failed miserably and the case settled shortly after the results were obtained.
On another occasion, the decedent’s children refused to sign a consent form to transport their mother’s body from a hospital’s morgue to a funeral home for cremation. Instead, they intentionally left their mother decomposing in the hospital’s morgue and refused to consent to the removal unless and until the hospital admitted to its own malpractice in causing the death of the mother. The hospital rightfully refused. I filed suit against the family to obtain a mandatory injunction ordering the family to abate the private nuisance by consenting to have the body removed. The family signed the consent form immediately after the injunction hearing to avoid incarceration for contempt.
THE SPOTLIGHT: Why is it that sometimes the assets that are lowest in value create the greatest degree of difficulty in finding a path to resolution?
FARESE: Two reasons. First “sentimental value,” an emotionally charged but very real concept devoid of rational thinking. An estate beneficiary may be inclined to delay probate administration and engage in disproportionate litigation and expense to obtain the cherished family heirloom that is equally coveted by other siblings. While obstinance might work and cause the more reasonable siblings to give in rather than continue to waste their inheritance on legal fees, the strategy often backfires. Which leads me to reason number two: revenge. Armed with the knowledge that one sibling is blinded by the emotional attachment to a valueless heirloom, other siblings are happy to weaponize the object and use it as leverage to obtain what they really want - more money.
THE SPOTLIGHT: You are a longtime litigator turned mediator. Did your approach to dealing with “clients” in the context of hard-to-value assets differ depending upon which hat you were wearing?
FARESE: Yes and no. Even as a full-time litigator, my approach was always to seek an amicable resolution as early as possible if one could be achieved on reasonable terms. However, clients often view the litigator as a gladiator who should be willing to fight to the death regardless of the amount in controversy. How often have we all heard the client say: “I don’t care what it costs. I would rather pay you than them. I don’t care if I spend all of my inheritance on legal fees. It is the principle of the thing.” This leaves the litigator with the difficult task of properly advising the client on the cost-benefit analysis of continued litigation and the risk of loss without appearing too “weak” and prompting the question: “Whose side are you on anyway?” As a litigator I often called on the mediator to do my bidding and beat sense into my client. Now, in my role as a full-time mediator, the tables are turned. I consider it my job to bring both sides back to reality. As I see it, it is better for the clients to be mad at me for pushing back against their unrealistic expectations than to be mad at their own lawyers.
THE SPOTLIGHT: What is your view on experts when it comes to ascertaining a meaningful valuation of a hard to value asset?
FARESE: Experts can be useful as a reference point when valuing hard-to-value assets, but parties in dispute rarely agree on the opinion of one expert as a basis for resolution. An ownership interest in a closely held business is a prime example. A business valuation expert can provide an opinion on a total enterprise value of the business as a going concern based on “comparable market data,” which may or may not be comparable in the eye of the beholder. Even with a reasonable enterprise valuation as a starting point, valuing a partial ownership interest in the venture, particularly a minority position, becomes very subjective when applying appropriate discounts for lack of marketability, lack of control, etc. Because there is no objective data to prove or disprove the expert’s hypothesis of the value, expert opinions are of limited use when attempting to achieve an agreement on a purchase and sale price between business partners.
As a mediator of disputes between business partners, I prefer to rely on the parties themselves to set the value of their business by negotiating an after-the-fact buy/sell agreement, where, for example, one partner sets a per-share price for her interest, and the other has the option of either buying the partner out at the offered price or selling her shares at the same price per share. I find these types of practical techniques more useful than an expert’s hypothetical opinion of value.
THE SPOTLIGHT: Do you have a success story as a practitioner or mediator in terms of getting to resolution on an asset or class of assets on which the interested parties were stuck?
FARESE: Often in probate, disputes items of tangible personal property have no market value, other than “yard sale value” as I call it. Nevertheless, heirs are happy to fight about it. I once mediated a case in which three brothers could not agree on an equal division of personal property. To solve the dispute, the parties agreed to my suggestion that one brother, who was the personal representative, would divide the property into three lots that he felt were equal. Each lot contained some of the decedent’s coins, artwork, jewelry, family photos, etc. The brother who was causing most of the problems was given the first choice to pick a lot, the other brother chose second, and the personal representative got the leftover lot. After the three lots were chosen, the brothers were free to make trades of items if they so desired, but of course by that time no one was speaking to the others. In the end, everybody was unhappy, but the case got resolved.
Lawrence A. Farese
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