Bankruptcy. It does strange things when cities go bankrupt. Police, fire, emergency medical services and city payrolls are affected.
The city of Detroit went bankrupt in 2013 with $18 billion in liabilities.[i] Financial creditors, unions, pension holders and different levels of government were involved. Mediation was suggested to maintain relationships and the city’s ongoing needs.
The bankruptcy court asked Judge Rosen to mediate. Rosen originally hesitated to accept this offer. He later reported about what made him change his mind. His teenage son asked Rosen, "What do you think Churchill would have done?"[ii] Rosen then decided to act as mediator.
Detroit had few assets available to negotiate with creditors. The one exception was Detroit’s valuable art. All of this was part of Detroit’s Institute of Arts (DIA). Selling a Van Gogh and treasured art works could provide the necessary bankruptcy funds. Would liquidating art help deal with the bankruptcy? Or would it simply open another can of worms? Even if sales were feasible, what would these sales signal to Detroit’s citizens?
In Justice Rosen’s view, “liquidating the art would certainly result in many complex legal issues that would take years to resolve, as well as cultural, economic and political issues that might never be resolved.” [iii]
A new source of funding was required. But concessions were difficult to obtain. The dispute appeared intractable.
Creativity in mediation was necessary so all sides could win. Justice Rosen:
…picked up his pen and doodled an idea on the cardboard back of a legal pad. He wrote “art” and drew a box around it, representing protection for the city-owned Detroit Institute of Arts and its billions of dollars in masterpieces.
He wrote “state” and “pensions” and drew arrows in a diagram. He wrote several phrases — “how much?” “timeline,” “what about fed gov,” “foundations,” “private sources.”[iv]
Justice Rosen's doodle became the blueprint to reinvent Detroit. It described a unique collaboration of foundations, governments, unions and others to save the DIA by protecting the art under a new foundation in exchange for funding contributions to ease cuts to underfunded pensions.
Justice Rosen met with stakeholders to gauge their interest, urging consensus with a quote from Churchill: “A pessimist sees the danger in every opportunity. An optimist sees the opportunity in every danger.”[v]
Pensioners, state government and the DIA agreed to unthinkable concessions. City pensioners accepted cuts and agreed not to sue the state over reductions. The state contributed to the settlement. The art was transferred to a new foundation for protection.
In 2017, Rosen's doodle sketch was hung in Detroit’s Institute of Art as a symbol of what’s possible when creativity is applied to dispute resolution.
Cut to the Chase
Lawyers who negotiate believe that they can only deal with “real law.” They think that they cannot or should not digress into abstract modes of thinking as a means of attaining resolution. But Justice Rosen’s doodle shows creative engagement can help resolve conflict.
About the author
Edward Olkovich is a Certified Specialist in Estates and Trust Law, and a prolific author in that area. He is currently pursuing a Master of Laws degree from Osgoode PD, specializing in Dispute Resolution. His full biography is available on his website: mrwills.com.
[iv] “How Detroit Was Reborn”, supra note 2.