http://www.scmediation.org/article_detail.asp?ArticleID=65
Thirty FAQ’s for California Mediators
on Ethical Minefields
Max Factor III
Max Factor III is President of the SCMA, an elected Fellow, International Academy
of Mediators and a member of the National Panel of Neutrals of the American
Arbitration Association. Harvard College AB '66, magna cum laude in Economics.
Yale Law School JD '69 and member of the Yale Law Journal Editorial staff. View
profile.
Thirty FAQ’s for California Mediators on Ethical Minefields Involving Business,
Construction, Employment and Real Estate Mediations
Questions re: Which Standards of Ethical Practice Govern Mediators’ Conduct
Q 1: National Ethical Standards: What are the applicable National Ethical Standards of
Practice for a mediator, located in California, mediating a dispute likely to be litigated or
in litigation in the substantive areas of Business, Construction, Employment and Real
Estate Law?
A 1: There are a number of organizations that promote confidence in the mediation
process by promulgating codes of conduct for mediators. The most widely recognized is
The Model Standards of Conduct for Mediators, (“Joint Standards”) (1994). The Joint
Standards are the result of a collegial initiative of three professional groups: the
American Arbitration Association (AAA), the American Bar Association (Dispute
Resolution Section) (ABA) and the Society of Professionals in Dispute Resolution
(SPIDR, now known as Association for Conflict Resolution or ACR).
The Joint Standards have not been adopted by the State Bar of California or the
California Judicial Council. Nevertheless, the adoption by the ABA, AAA, ACR and the
US Navy, among many other prestigious national organizations, causes me to consider
the Joint Standards the most widely recognized national standard governing the conduct
of mediators. Many of the state and national organizations that have not adopted the Joint
Standards, still use the Joint Standards as a primary source in drafting their own
organizational standards.
In addition, attorneys are faced with a legion of potentially applicable National Ethical
Standards when serving as a neutral Mediator. An attorney, or non-attorney, serving in
court-connected mediation programs should familiarize himself or herself with the
comprehensive discussions of ethics set forth in the National Standards for Court-
Connected Mediation Programs (“Court-Connected Standards”) and the ABA’s Model
Rules of Professional Conduct, particularly Rules 1.12 and 2.4, [Lawyer Serving as a
Third-Party Neutral (2002)]
Attorneys who handle attorney-client disputes should review the ABA’s, Model Rules for
Mediation of Client-Lawyer Disputes (1998) (“Attorney-Client Standards”). Also,
mediators need to keep these rules in mind when it appears during mediation that the
attorney and his or her client may be demonstrating by their conduct that a possibly
unrecognized conflict of interest has arisen between the attorney and his or her client. At
least four frequent conflict-of-interest situations that arise during mediations will be
discussed later on in these FAQ’s at Q #19, 20, 21 and 22.
Useful discussions of appropriate ethical practices may be found in the ABA’s Ethics
2000 Report, the CPR-Georgetown Commission and Model Rule of Professional
Conduct for the Lawyer as Third Party Neutral (2002) (Model Rule for Lawyer as
Neutral Standards), although the latter has not been adopted by the ABA.
In addition, some states, but not the State of California, have adopted the Uniform
Mediation Act (2001). The Uniform Mediation Act with its Prefatory Note and extensive
Reporter’s Comments provides a useful catalogue of most of the ethical dilemmas facing
mediators in a commercial environment. The Uniform Mediation Act, if passed in
California, would generally weaken the California laws on Mediation Confidentiality.
The Uniform Act’s broad list of “exceptions” to Mediation Confidentiality is set forth in
the Uniform Mediation Act, Section 6 (a)-(d).
Q 2: California’s Ethical Standards: What are the applicable California Ethical Standards
of Practice for a mediator, in court-connected programs, mediating a dispute likely to be
litigated or in litigation in the substantive areas of Business, Construction, Employment
and Real Estate Law?
A 2: Ethical standards in California for mediators in court-connected mediations
involving commercial civil litigation are codified at California Evidence Code §§ 11151128 (2001) and California Rules of the Court Rules,1620-1640.8 (2003).
In addition, an attorney licensed in California is well advised to be familiar with the State
Bar’s “California Rules of Professional Conduct” because it is likely that the “reasonable
expectations” of mediation participants will be that a licensed attorney will abide by his
or her professional commitment to the State Bar’s Rules of Professional Conduct – many
of which do govern an attorney’s behavior when acting in a capacity other than as an
advocate for a particular client.
Unlike attorneys, architects, building contractors, engineers, family therapists, real estate
agents, mortgage brokers and a myriad of other professionals, there is no state wide
regulatory agency that licenses and governs mediators, as mediation professionals. A
mediator who is also licensed as an attorney, a building contractor, a real estate agent or a
therapist, may very well have his or her activities as a mediator regulated by the
profession in which that person is licensed.
In fact, there seems to be a consensus that when a mediator provides professional advice
and counseling during the course of a mediation, the mediator should take care not to
provide advice in areas in which the mediator is not licensed, because there is a growing
risk of exposure to lawsuits for the unlicensed practice of a profession. Cal Business &
Professional Code §6126. See ABA Dispute Resolution Section, Resolution on Mediation
and the Unauthorized Practice of Law (2002) (herein, “UPL Standards”).
An experienced California professional on “legal ethics,” Robert L. Kehr observes: “The
conduct of the lawyer/mediator must make it clear at all times that no legal services are
being provided, and one can imagine situations in which the lawyer/mediator’s efforts to
bridge a settlement gap might lead to statements to a party that sound an awful lot like the
providing of legal advice. This seems to me to be a real danger to lawyers working as
neutrals.”
For example, at least in theory, a human resource or employee relations director who
serves as a neutral mediator in an employment dispute and provides tax advice and
counseling to the employee may be considered to be engaging in either the practice of
law or accountancy, or both -- two professions in which the mediator may not be
licensed. The “Better Practice” in such a situation is not to provide such advice; but,
instead, the mediator should consider recommending that the employee seek appropriate
professional assistance.
Similarly, consider an attorney, experienced in construction defect litigation, serving as a
mediator in a case that involves a AIA Contract with a Guaranteed Maximum Price that
has attached as exhibits a Soils Report indicating unstable conditions on a hillside slope
and Building Plans by an architect who has not considered the risks of hillside instability
described in the Soils Report. The mediator is likely to be asked by one of the parties for
a personal evaluation as to:
“Whether the General Contractor should be financially responsible for the $100,000 plus
cost overrun because he should have anticipated in his bid that the extra cost of caissons
being required based on the Soils Conditions described in the Soils Report?”
Many real estate attorneys will have sufficient experience to have an opinion, but offering
up such an opinion in order to influence one or both of the parties in a construction defect
case could expose the mediator to a legitimate claim that the mediator is offering
professional advice in the licensed professions of civil engineering or geology without
having a proper license.
The moral of the story is that the role of the mediator is to facilitate settlements, but it is
not to offer a professional evaluation in an area in which a license is likely to be required,
unless it is done with the express voluntary permission and understanding of all present
of the limitations of the observation, and it is done in a non-coercive fashion. Joint
Standards VI , Comments, par. 4 (“Mixing the role of a mediator and the role of a
professional advising a client is problematic, and mediators should strive to distinguish
between the roles. A mediator should, therefore, refrain from providing professional
advice.”) And further, parties should routinely and expressly be encouraged to consult
independent qualified professionals. CRC Rule 1620.3 Advisory Comment Committee
par. 2, (2). . See also, Joint Standards VI , Comments, par. 4 .
If the opinion offered by the mediator on tax advice or civil engineering turns out to be
dead wrong, but is relied upon to the detriment of one or both of the parties in entering
into a settlement, the mediator may be exposed to professional liability claims. Of course,
the former mediation participant bringing the lawsuit will have to find a way to overcome
the shield of mediation confidentiality in the subsequent civil proceeding for “mediator
malpractice”. See FAQ #30 and The Trouble with Foxgate and Rojas by Max Factor III.
Most attorneys in civil cases probably expect that the mediator selected will adhere to the
Joint Standards . In addition, many mediators are affiliated with mediation organizations
that also promulgate comparable ethical standards and certain minimum mediator
qualifications. In California, AAMC, ADR Services, ARC, CDRC, IAM, JAMS and
SCMA, among many other organizations of ADR professionals, endorse specific ethical
standards and/or promote minimum standards of Mediator Ethics. Each organization’s
standards are readily available on the Web.
Q 3: Standards for Licensees other than Attorneys: A) Is a mediator who is not licensed
to practice law in California required, when mediating a business, employment or real
estate dispute in litigation in California courts, to comply with the California Rules of the
Court governing mediator conduct, CRC Rules 1620-1640.8 ? B) The applicable
California mediation statutes, Evidence Code Sections 1115- 1128 and the fourteen (14)
specialized mediation confidentiality laws listed in the Law Revision Commission
Comments to Evidence Code section 1119 ? C) And the ABA’s Joint Standards ?
A 3: A) Yes; B) Yes: and C) Yes! Practically speaking, it is the reasonable expectation of
mediation participants that, whether or not mediation participants are involved in a
“court-connected program”, litigated disputes submitted to mediation are to be conducted
consistent with the prevailing Standards of Conduct – national and state. At least in
California, an attorney licensed in California is required to comport him/herself in an
honest manner and in conformity with the minimum ethical standard of the Rules of
Professional Conduct. B&P Code §6106.
Q 4: Mediator Honesty: What ethical standards govern whether, and to what extent, a
mediator is supposed to be “honest”?
A 4: “Honesty is the best policy [for mediators]!”
What Do We Mean By Deception? John Cooley: “Deception has been defined generally
as ‘the business of persuasion aided by the art of selective display,’ and it is effected by
two principal behaviors: hiding the real and showing the false.” Jim Stark: “I define
deception in mediation to include all intentional communicative acts, concealments and
omissions by which a mediation participant – mediator, attorney or client – attempts to
induce in other participants a belief at variance with his or her own beliefs.”
The “Joint Standards” and California law require a mediator to be truthful when
disclosing information about his or her own advertising, competency, direct and indirect
compensation and solicitation of clients, as well as truthful in disclosing fully any actual
or potential conflicts of interest and/or bias.
However, there is no express requirement that mediators behave truthfully during the
mediation when participating in the exchanges of information and in negotiating
strategies.
In considering the ethics of truthfulness for attorneys participating in a mediation, many
writers initiate their reasoning with a premise that certain “accepted deceptions” are the
ethical norms for attorneys who abide by the ABA’s Model Rules for Professional
Conduct, Rule 4.1. That Rule, after exhorting truthful communications, proceeds to carve
out a wide swathe of acceptable deceptions in negotiations, the most salient of which are:
(a) expressing misleading estimates of value or price; (b) making misleading statements
of future settlement/litigation intentions; (c) failing to disclose voluntarily material
adverse facts; (d) failing to disclose voluntarily material adverse case law; and (e) making
a partial disclosure of a material fact, or identity of a witness, but not to the extent a fraud
is being committed based on a belief that opposing counsel’s due diligence would reveal
the truth. See Comment to Rule 4.1.
The ABA’s Model Rule 4.1 applies to an attorney acting when “representing” a client,
and not when an attorney serves as a “neutral” – that is, as a Mediator.
It is a “Better Practice” for a mediator to adhere to a much higher standard: one that
approaches “transparent truthfulness” at all times during the mediation process.
There are two clear exceptions to a mediator conducting him/herself with “transparent
truthfulness”. First, a mediator must not breach the Duties of Mediation Confidentiality.
A mediator who learns in private caucus from a plaintiff’s counsel that “plaintiff will
accept as little as $75,000” may not ever disclose that fact -- directly or by indirect
communication -- unless and until plaintiff’s counsel authorizes such a disclosure.
Similarly, if defense counsel indicates a willingness to settle for up to $75,000, but
instructs the mediator to tell plaintiff that “the highest defendant will go today is
$32,500”, then the mediator must communicate that defense offer without disclosing the
knowledge of defendant’s willingness to offer more, except to the extent authorized by
the defense.
It takes restraint and experience for a mediator to keep sacred confidential
communications provided in private caucus, while still keeping the parties making
concessions, creating options and believing that the mediator’s confidence in reaching a
settlement is reasonable. Yet, it is a necessary skill set for a mediator to master!
Second, a common use of permissible mediator deception is the mediator’s use of some
psychological chicanery to keep one or more of the parties from “Snatching Defeat Out
of the Jaws of Victory”.
Let’s call these somewhat deceptive strategies: “Reframing for Persuasive Effect” or
“Peacemaking Skills.”
More often than not, some psychological deception, immaterial to the substantive
interests of the parties, may be necessary to bridge an impasse or to create movement or a
sign of goodwill. One familiar example is that of the “Mediator’s Proposal”, designed to
overcome the psychological barrier of some parties that any offer coming from the other
side should be rejected, even if it is well within what had previously been described as an
acceptable range. See FAQ #26.
Other examples include a mediator using flattery about one party’s leadership or courage,
emphasizing family values or common interests the mediator has discovered between
truly disparate parties, and/or minimizing the significance of truly offensive prior
personal attacks in order to foster a willingness to move from an otherwise fixed position.
A party who is ready to settle, underneath the bravado of “Impasse” and “Final Offer,”
will usually find something in the mediator’s flattering assessments of a party’s
leadership abilities, character and generosity of soul that will bring the negotiations to a
mutually satisfactory resolution.
It is my belief that it is the “Better Practice,” and the reasonable expectations of
sophisticated counsel, that a mediator will use his or her “Peacemaking Skills”, rather
than relying on the Deception of “White Lies” or “Noble Lies”. Peacemaking Skills
include:
(a) “Coaching” parties in negotiating strategies in order to improve communications and
respect for each other; (b) Encouraging a party to thoughtfully examine whether taking an
intransigent position based upon “Principle” is in that party’s long-term interest; (c)
Identifying with each party a broader set of interests that may be satisfied through a
collegial settlement that includes “co-operation” with the other parties involved in the
dispute; (d) Assisting an attorney in becoming aware of his or her selfish “ego needs” to
beat or intimidate the other party, which “ego needs” conflict with the client’s expressed
interests; and (e) Diffusing, as appropriate, emotional states so that rational decisionmaking is able to prevail over decisions governed primarily by feelings of Anger,
Revenge, Intimidation and/or an Unreasonable Sense of Loss.
There is a third area which some mediators recognize as an “Accepted Deception”. It is
the use of the “Noble Lie”.
Of course, most sophisticated counsels recognize that because the mediator controls the
flow of information in private caucus, there is necessarily some level of consensual
deception that everyone agrees to by engaging in negotiation through “private
caucusing”. Christopher Moore states “The Mediation Process: Practical Strategies for
Resolving Conflict (1986), at page 269: “The ability to control, manipulate, suppress or
enhance data, or to initiate entirely new information, gives the mediator an inordinate
level of influence over the parties.” And the exercise by the mediator of such
“information influence” is likely to result in the mediator presenting something other than
the whole and balanced truth to shake up and create movement from a seemingly
intransigent party.
Examples of “Noble Lies” which undermine a participant’s ability to Self-Determine by
making an “informed choice” include a Mediator representing:
(a) “Defendant is so angry about your charge of Fraudulent Concealment, which he is
prepared to spend on defense costs his entire self-liquidating insurance policy of
$250,000, unless you drop the Fraud charge and publicly apologize for attacking his
character!” [When – in fact - the defendant carrier has authorized the mediator to settle
within policy limits, but implicitly promised the mediator that the insurance carrier uses
mediators who can save it money.] (b) “I am authorized by plaintiff to give you my
evaluation of the impeachment testimony I heard in a telephone call during the private
caucus. I believe that, if true, defendant will not be found credible at trial! [When – in
fact - the plaintiff’s counsel has advised the mediator that plaintiff had just spoken to her
strong impeachment witness, who now was wavering about testifying for fear of losing
his job.] (c) “I believe the plaintiff is so emotionally outraged that unless he wins Big, he
will carry on a dreadful program of adverse public attacks on your company’s business
practices! [When – in fact – plaintiff has advised the mediator in private caucus that he
carries no grudge and will agree to make a confidentiality agreement in exchange for the
defendant making a settlement offer in the dollar range the mediator has indicated
privately is a reasonable compromise.]
Simply put, the danger of the “Noble Lie” and the “White Lie” is that it uses Deception to
undermine a decision-making process based on Impartiality and Self-Determination.
A good working definition of the “Noble Lie” is a deception which is “designed to shift
and re-configure the thinking of disputing parties, especially in the conflict and
confusion, and to foster and further their co-operation, tolerance and survival”. Robert
Benjamin, “The Constructive Uses of Deception: Skills, Strategies and Techniques of the
Folkloric Trickster Figure and their Applications by Mediators, 13 Mediation Quarterly
3, 15-16 (1995) and John W. Cooley, “Defining the Acceptable Limits of Deception in
Mediation at mediate.com (articles).
Using the mediation tactic of the “Noble Lie” is not a “Better Practice”, and use of the
“Noble Lie” is not ethical unless the mediation participants believe that the “Core Value”
of Mediation is “Settlement” and not Voluntary and Informed Self-Determination.
Q 5: Additional Professional Standards of Ethics: When a mediator handling a real estate
dispute is a Realtor and/or qualified in California as a real estate licensee or a general
contractor, is the mediator bound by the national standards for Realtor’s or the Ethical
Standards for real estate licensees or for general contractors under applicable California
laws and regulations, as well as the state and national ethical standards for the conduct of
mediators?
Similarly, when a certified public accountant acts as a mediator, is the accountant
required to make decisions and conduct himself or herself in accordance with the
Standards of Professional Conduct of the AICPA?
And, is an MAI real estate appraiser bound to follow the MAI Standards of Conduct
when offering a personal evaluation during a mediation ?
A 5: Many mediators belong to national organizations such as a Realtor; or many
mediators are certified and/or licensed as a CPA following the AICPA Standards, or as an
architect following A.I.A. Standards. Each of these national organizations have Code(s)
of Ethics and/or Standards of Practice, which are readily available on the Web.
Non-attorney mediators also include psychiatrists or licensed therapists in any number of
specialties from counseling for the recently disabled to counseling individuals who have
suffered recent trauma, such as sexual harassment in the workplace or unexpected
termination from a job after 20 or more years of employment with the same company.
Most therapist-mediators are familiar with, and probably rely upon, the Model Standards
for Family and Divorce Mediation (2000).
One would expect that a Realtor, a CPA, an MAI Appraiser, a Therapist and an Architect
would each follow the published ethical standards of their profession. Nevertheless, ask
before making the final selection of a mediator, because following both “specialty
specific” standards and California’s standards may materially affect the mediation
process.
Questions re: Handling Mediators’ Actual and Potential Conflicts of Interests
Which Do Not Involve Compensation, Fees or Gifts
Q 6: Initial Disclosures of Conflicts: Prior to a mediation commencing, to what extent
should a mediator fully disclose the extent of each of his or her personal, professional
and/or financial relationships to each of the parties, to their counsel and to the substantive
facts in the case to be mediated ?
A 6: Disclose fully, prior to the mediation. As Sara Adler, a prominent national mediator
and arbitrator has opined: “If it crosses your mind to wonder if “it” should be disclosed –
Disclose!”
Moreover, the duty to disclose is a continuing one covering past, present and currently
expected (future) interests, relationships and affiliations of a personal, professional or
financial nature. This area is clearly governed by CRC Rules 1620.5 and 1620.9, of
particular assistance are the Advisory Committee Comments to each CRC Rule.
The “Joint Standards” II (Impartiality), III (Conflicts of Interest) and VIII (Fees),
including the Comments section, appear to be comparable, but somewhat less detailed
than the California rules. However, the Joint Standards may more strongly require
disclosure and permission for acts subsequent to a mediation which may raise a
legitimate concern about the mediator’s impartiality at the time of the earlier mediation.
Q 7: Continuing Duty: Is there a continuing duty of disclosure if matters arise during a
mediation which may give rise to an actual or potential conflict of interest, such as the
possibility of future business if the mediation is successful or the discovery of some past
business relationship that was not apparent at the commencement of the mediation?
A 7: Yes.
Two (2) “Better Practices” to minimize instances of belated discovery, during a
mediation, of a prior professional or financial interest or affiliation are: one, prior to the
mediation, ask each mediating participant to review with care the mediator’s resume to
determine whether there are any likely prior contacts or relationships with one of the
mediation participants; and two, expressly ask each party and counsel if they are aware of
possible prior professional or financial interests, relationships or affiliations that the
parties or counsel may have in common with the mediator.
In the “small world” we live in, there are likely to be situations in which paths have
crossed. Discovering and discussing those situations prior to beginning the process of
mediation is likely to increase the confidence and trust the parties and counsel repose in
the mediator’s impartiality.
It is also helpful to ask participants why you were selected as mediator. All mediation
participants should know that a mediator was chosen because an accountant or
investment advisor that the party has is also the mediator’s investment advisor or
accountant? And, if one party advises a mediator he was chosen because he previously
handled a similar matter for the predecessor company that is a defendant in this
mediation, all parties should be advised.
Disclose. Disclose. Disclose. This is Life, not a Game to create settlements!
Questions re: Mediators’ Compensation, Fees and Gifts to or from Mediator
Q 8: Written Disclosure: Should a mediator always require a written agreement with the
parties of any fees, costs or charges to be paid to the mediators by the parties?
A 8: No, but written disclosure is required. CRC 1620.9 (b); and a written agreement is a
“Better Practice.”
The CRC prohibits mere oral disclosure of mediator fees, by requiring that “the mediator
must disclose to the parties in writing any fees, costs or charges to be paid to the mediator
by the parties.” CRC 1620.9 (b) Nevertheless, California’s Rules of the Court also
indicate that a “good practice” is to put mediation fee agreements in writing and “strongly
encourages” mediators to do so. Apparently, the CRC makes a distinction between
written disclosure of all fees to be paid by the parties and a written agreement as to all
fees to be paid by the parties. CRC 1620.9, Advisory Committee Comment.
The Joint Standards VIII also require only oral disclosure of the mediator’s
compensation, fees and charges to the parties, but also require such fees and charges to be
both “reasonable” and consistent with “the rates customary in the community.” The Joint
Standards also indicate that the “Better Practice” in reaching an understanding about fees
is to set down the arrangements in a written agreement.
Q 9: Contingent Fees: May a mediator offer or accept a fee agreement which is
contingent on the result of the mediation or the amount of the settlement? Is it ethical to
encourage business by having a fee schedule which announces any of the following?
(a) “I only charge Mediation Fees, currently $5000 per day, if the parties reach a
settlement, so there is Absolutely No Mediation Fee unless I Settle Your Case;” or (b) “I
only charge Mediation Fees, currently $5,000 per day, if the parties to the lawsuit are
satisfied. Any dissatisfied litigant will receive a full refund of monies paid by or for that
litigant.” Just let me know within 10 days of the conclusion of the Mediation.” (c) “HalfOff my Daily Mediation Fee of $5000 if your case does not settle at or within 10 days of
the Mediation.” A 9: No, as to (a) and (c). Possibly, Yes as to (b).
According to the Joint Standards VIII, comment 2, “A mediator should not enter into a
fee agreement which is contingent upon the result of the mediation or amount of the
settlement.” Similarly, California’s Rules of the Court prohibit “Contingent Fees.” CRC
1620.9 (c) provides: “The amount or nature of a mediator’s fee must not be made
contingent upon the outcome of the mediation.” And further, CRC 1620.8 (c)(1) states
that “In marketing his or her mediation services, a mediator must not…promise or
guarantee results.”
Based on a literal reading of these rules, it would appear that the solicitations for business
identified as (a) and (c) above are clearly prohibited mediator conduct. However, it could
be argued that the marketing of mediation services on a “satisfaction guaranteed or your
money back” basis may not be an ethical violation, although virtually every mediator
believes such solicitation is not a “Better Practice,” regardless of whether it is specifically
prohibited; and I agree that California’s “public policy” in favor of settlement of litigated
cases should not be used to compromise a mediator’s perceived neutrality.
Q 10: Acceptance by Mediators of a Referral Fee: May a mediator accept a fee for a
referral of a matter to another mediator or to any person, such as an expert to be used by
one or both of the parties during mediation?
A 10: No, under the Joint Standards ; but California law simply requires disclosure with
the concomitant risk of a mediation participant withdrawing as a result.
According to the Joint Standards VIII, comment 4, “A mediator should not accept a fee
for referral of a matter to another mediator or to any other person.”
California does not have a similar prohibition for those mediators who do not choose to
follow the Joint Standards.
Accepting a referral fee appears ethically permissible under California law. However, in
our judgment the “Better Practice” is not to request or accept any referral fee from an
individual or law firm or any person or entity that has been or may be a future mediation
participant.
For example, sometimes, an opportunity arises for a mediator to refer a possible client to
an attorney who is a specialist in a particular area of employment, environment,
intellectual property or real estate.
It would be natural to make a referral to an attorney that a mediator has seen in
mediations as an advocate and who has demonstrated exceptional strong skills. But, if the
mediator were to accept a referral fee from that legal specialist, then the mediator would
be required under the CRC to disclose that financial arrangement, and may even be
required to withdraw upon objection by a mediation participant. CRC Rule 1620.5 and
CRC Rule 1620.9.
The “Better Practice” is to make referrals of three (3) or more professionals without
taking any referral fee and to be prepared to disclose that practice, also, on a case by case
basis to avoid the appearance of a lack of impartiality. CRC Rule 1620.9 (9) Advisory
Committee Comment, par. 2.
Q 11: Payment of a Referral Fee by Mediators: May a mediator pay a fee for a referral of
a matter from another mediator or pay a referral fee to any other person, such as an expert
to be used by one or both of the parties during a mediation ?
In other words, Is it ethically permissible in California for a mediator to solicit business
by offering a referral fee to accountants, attorneys, architects, appraisers of real estate,
family therapists, ministers of various faiths (although the referral fee would probably be
called a “charitable contribution or donation), psychiatrists, and a broad variety of
professionals from “A to Z,” in exchange for these professionals referring clients who
have disputes to a specific mediator?
A 11: Generally, No, but possibly Yes, on a case by case basis.
Whenever the referral fee might reasonably raise a question about the mediator’s
impartiality on a particular mediation, the payment of a referral fee to solicit or express
appreciation for new business is prohibited. CRC Rule 1620.9 (d). (“a mediator must not
at any time solicit or accept from or give to any participant or affiliate of a participant any
gift, bequest, or favor that might reasonably raise a question concerning mediator
impartiality.”)
It may be that Full Disclosure of a Referral Fee, or an Annual Gift to repeat customers, is
sufficient to satisfy all mediation participants that the mediator is, and remains, “neutral
and “impartial”.
Moreover, before, during, and in some cases even after a mediation has concluded, a
mediator should not, without the consent of all participants to the mediation, establish a
professional relationship with any of the parties in a related matter, nor should the
mediator subsequently establish a professional relationship with any of the parties in an
unrelated matter, if such a relationship may raise legitimate questions about the integrity
of the earlier mediation process. Joint Standards III, CRC 1620.5 (b) (1), CRC 1620.9 (d)
and Advisory Committee Comments to both CRC Rules.
The Joint Standards, however, do not prohibit a payment by the mediator of a referral fee
for the receipt of mediation business. The language of Joint Standards VIII [“A mediator
shall fully disclose and explain the basis of compensation, fees and charges to the
parties”] is consistent with the full disclosure of any referral fees paid by a third party by
the mediator to a third party.
Questions re: Ethical Tension between Party Self-Determination and Mediator
Impartiality
Q 12: Voluntary and Involuntary Diminished Capacity to Mediate: What are the ethical
and legal responsibilities of a mediator when a participant shows up and the mediator
determines the participant is not able to meaningfully participate due to drug use, alcohol,
diminished mental capacity or a physical disability which would make meaningful
participation improbable, unless provided a reasonable accommodation?
A 12: Clearly, mediation must be suspended or terminated or the mediator withdraws,
rather than proceeding when a party has voluntarily diminished his or her capacity from a
contemporaneous consumption of drugs or alcohol such that the participant cannot
meaningfully participate in the negotiations. Joint Standards VI, Comments (“A mediator
shall withdraw from the mediation or postpone a session if the mediation is being used to
further illegal conduct or if a party is unable to participate due to drug, alcohol, or other
physical or mental capacity”).
Yet, the California standards appear more permissive, in that the determination to
suspend or terminate the mediation is discretionary, rather than mandatory. CRC 1620.7
(i) (2) and (3).
However, the Joint Standards do not address the more common situations in which a
participant to the mediation has a physical or mental disability that is covered by The
Americans with Disabilities Act, at 42 U.S.C. Section 12101, et. seq.
In each such instance, a mediator has the responsibility to address the disability and have
a dialogue about whether and how a reasonable accommodation may permit the disabled
participant to go forward and participate meaningfully in the mediation process.
Assuming that a reasonable accommodation exists, in most cases, the reasonable
accommodation must be paid for by the mediator.
In others situations, either the disabled person or the other party (often an employer of the
disabled person) may voluntarily choose to absorb the cost of a family surrogate, a heath
care aide or a computer assisted translation. Simply put, the mediator has an ethical and
legal responsibility to place the disabled person in a position that is comparable to that of
a mediation participant who is not disabled, except in those rare situations in which such
an accommodation is not reasonable.
Examples of reasonable accommodations are legion. For example, a person who is deaf
may need a computer assisted translation or someone to sign, or both. A mildly retarded
litigant should be invited or encouraged to have the participation of a qualified surrogate.
CRC 1620.7, Advisory Committee Comments See, Lessons from the Bioethics Field,
Ellen Waldman, July 2003 and other articles on “Capacity to Mediate” posted at
www.mediate.com/adamediation.
It is inappropriate and unlawful for a mediator to minimize the importance of compliance
with ADA standards.
Q 13: “Relative Incompetence of Participant or Legal Counsel”: How important is the
Principle of Self Determination by the Parties and Impartiality of the mediator, when
each of the participants have “legal capacity;” however, the relative incompetence of a
particular party or the relative incompetence of a party’s attorney to enter into a
reasonable agreement results in both a negotiation process and a proposed settlement that
is substantively unfair when evaluated by community standards of what is in the range of
a fair outcome?
A 13: This question and several of those that follow in this section of the FAQ’s raise an
important question as to “The Role of a Mediator.” These critical issues that are best
resolved by a mindful mediator who (a) checks in frequently with the mediation
participants as to what type of facilitation is desired and (b) remains keenly aware of the
ethical tensions created when one or more “uninformed participants” are making binding
decisions upon themselves. The following FAQ’s are a modest attempt to address a very
complicated and “personal” issue of the often competing values of “what is just” and
“what is impartial” conduct by a mediator.
Consider Joint Standard I (“A Mediator Shall Recognize that Mediation is Based on the
Principle of Self-Determination by the Parties.” …. “A mediator cannot personally ensure
that each party has made a fully informed choice to reach a particular agreement, but it is
good practice for the mediator to make the parties aware of the importance of consulting
other professionals, where appropriate, to help them make informed decisions.”) and
Joint Standard II ( “A Mediator Shall Conduct the Mediation in an Impartial Manner.”
…. “A mediator should guard against partiality …. based on the parties’ …performance
at the mediation.”). Similarly, CRC 1620.5 (“A mediator must maintain impartiality
towards all participants at all times”) and CRC 1620.7 (b) (“A mediator is not obliged to
ensure substantive fairness of an agreement reached by the parties.”). [Emphasis added
throughout prior paragraphs]
The Twin Goals of Voluntary Self Determination and Impartiality, if rigorously applied
to every mediation, will inevitably create many situations in which substantively unfair
outcomes result. Some, if not most, substantively unfair outcomes would become
significantly less onerous or unfair were the mediator to intervene proactively during the
mediation process.
Yet, Joint Standards VI , Comments, par. 4 advises that “Mixing the role of a mediator
and the role of a professional advising a client is problematic, and mediators should strive
to distinguish between the roles. A mediator should, therefore, refrain from providing
professional advice.”
This is an area most often honored in theory, but not in practice.
Imagine conducting a mediation in which it is readily apparent that a substantively unfair
settlement is likely to result because one of the parties to the negotiation and proposed
settlement is clearly an individual :
(a) who is far less skilled at negotiation, or (b) who has insufficient financial means to
become informed about the relevant facts and/or applicable law, or (c) who is
unquestionably less able emotionally or intellectually to make a reasoned and informed
decision about the settlement of the dispute, or (d) who is poorly represented by a counsel
or a family member that is acting in his or her own self interest rather than that of the
party.
The next several questions and answers will consider “The Role of the Mediator” and
circumstances in which it is possible for a mediator to be both ethical and engage in a
“Better Practice” of taking a more proactive role to mitigate the danger of a substantively
unfair or relatively unfair settlement.
Q 14: Proactive Involvement in Suggesting Substantive Options: Should a mediator
proactively make inquiry during a mediation about the types of provisions that
customarily belong in a settlement agreement, and raise those issues in the mediation
prior to the parties reaching an oral settlement so that important (according to most
experienced attorneys) party protections are not left out in the final written document ?
For example, in an employment mediation in which the mediator observes the plaintiff is
not represented by knowledgeable counsel, should a mediator ask about such essentially
“legal matters” as: The tax treatment of any of the monies that are to be paid? The value
to the employer of a confidentiality clause? The possibility of payment of attorneys fees
in a workers compensation action, rather than as part of the civil suit? The value to the
employer of a one year covenant not to solicit certain employees or certain customers?
Is the employment mediator ever constrained to exploring “Value Added Options” such
as: an apology, a well written letter of recommendation rather than the typical
confirmation of “dates of employment only,” an employer-paid educational program to
assist in occupational retraining or skills, a continuing consulting agreement so that
medical benefits or pension benefits may be retained, assistance by a knowledgeable
person in finding a job with a competitor, a continuing right to state that employment is
continuing for a specific period of time in order to avoid the appearance of senior
personnel appearing unemployed, etc.?
A 14: Mediators disagree on how much proactive questioning is within the framework of
a “Better Practice.” However, being proactive without the permission of the mediation
participants may cause either the withdrawal of a participant or of the mediator when one
mediation participant requests that the mediator not do so.
A mediator should inform all participants from the outset of the “nature” of the mediation
process, the “procedures” to be used and the “roles” of the mediator and the other
participants. Subject to the rules of Impartiality and Self-Determination, a mediator may
provide information or opinions that he or she is qualified by training or experience to
provide. CRC Rule 1620.7 (c) and (d) particularly the Advisory Committee Comments to
subdivision (c) and (d)
The Joint Standards also allow a mediator to “provide information about the process,
raise issues, and help parties explore options.” Yet, the same Joint Standards I draw a
distinction between encouraging parties to become more fully informed by consulting
other professionals, and the mediator proactively insuring the parties are fully informed.
The Joint Standards and California’s Judicial Council Rules clearly prefer the alternative
of recommending appropriate professional advice be obtained by each mediation
participant.
Remember, telling an inexperienced plaintiff counsel or an uninformed client about likely
adverse tax consequences of a proposed settlement in which the attorneys fees paid
directly to plaintiff’s counsel may, and probably will be, taxed as income to the plaintiff
may very well “blow” the proposed settlement. Is doing so, unbeknownst to opposing
counsel, in private caucus consistent with remaining a “neutral” and being “impartial?”
It is clearly not an ethical problem if a mediator has checked in with both counsel and
received express permission to pass on suggestions as to a variety of options and
alternatives, as well as their possible effect on the respective parties’ interests.
The difficult ethical issue is when the more experienced counsel expressly asks the
mediator not to be proactive in raising customary alternatives or frequently considered
options because of a belief by the more experienced counsel that less experienced
opposing counsel will be less effective in representing his or her client if the mediator is
not proactive in educating opposing counsel by exploring options and their likely effect
on the parties’ interests.
CRC Rule 1620.3 (c) provides that “A mediator must…refrain from coercing any party to
make a decision”; however the Advisory Committee Comments seem to go much further:
“[E]xamples of conduct that violate the principles of voluntary participation and self
determination include …providing an opinion or evaluation of the dispute in a coercive
manner or over the objection of the parties….” (Emphasis added). Moreover, CRC Rules
1620.5 (d)-(f) requires a mediator to withdraw if one of two parties object to the
mediator’s conduct as failing to be “impartial,” but allows the mediator to continue a
mediation in which there are more than two parties, if in the mediator’s discretion the
mediator believes himself or herself to be maintaining impartiality.
Q 15: Proactive Intervention by Being Evaluative Over Parties’ Objections: Does the
Prohibition on Being Evaluative “over the objection of the parties” [Advisory Committee
Comment to CRC Rule 1620.3(c)] apply when ONLY ONE of the parties objects to a
mediator providing an experienced professional opinion or evaluation, or just when ALL
of the parties object?
If it only applies when ALL parties object, there is no problem. A mediator both abides
by the parties reasonable expectations and expressed preferences, or the mediator
discloses his or her insistence on particular preferences and style and withdraws, if
requested to do so.
Clearly, the Joint Standards III provides that a mediator must withdraw before or during
the mediation in the event there is a conflict of interest to which any party to the
mediation objects on the grounds that it “might create an impression of possible bias.”
From this Standard, one may infer that when the Joint Standards are applied in a multiparty mediation to conduct which gives rise to “an impression of possible bias,” a
mediator is required to withdraw, unless that party’s objection is not withdrawn after the
matter is discussed.
Yet, it is equally clear that the California Judicial Council did not intend that the mediator
in a multi-party mediation be required to withdraw upon the belief of just one of the
several parties that the mediator is not “impartial,” unless the mediator is actually unable
to maintain impartiality with reference to the balance of the mediation participants or
continuation “would jeopardize the integrity … of the mediation process.” CRC Rule
1620.5 (f)
Therefore, may a mediator who feels a strong ethical belief that his or her impartiality
remains intact provide a proactive opinion or a proactive evaluation in a “private caucus”
when just ONE of the opposing counsel in a multi-party mediation has objected to the
mediator’s proactive opinions or evaluations in an earlier “joint session?”
Clearly the “preferred practice” is for the mediator to disclose first to the objecting
counsel and to the objecting party that the mediator intends to be proactive
notwithstanding one party’s objection. This affirmative disclosure permits the objecting
party to withdraw voluntarily from the mediation in a multi-party mediation. Moreover,
in two-party mediation, the mediator is required to terminate the mediation upon
receiving a clear objection to the mediator’s style by just one of the two parties. See FAQ
#27, CRC Rule 1620(e).
There are mediators who are simply unwilling to tolerate a negotiated settlement that
reflects a “power imbalance in knowledge and experience” between opposing counsel
which results in a negotiated settlement that the mediator considers so substantively
unfair that it is contrary to the mediator’s own values system. See CRC Rule 1620.5 (a)
and CRC 1620.7 (i) (3) and Joint Standards II and VI. Such mediator must take care to
remain silent about the underlying substantive basis for his or her withdrawal because of
the requirement that Mediation Confidentiality remain intact. CRC Rule 1620.7 (j)
Q 16: Proactive Intervention to Correct a Substantively Unfair Settlement Proposal [as
opposed to proactive intervention at earlier stages of negotiation, Question 15]: When, if
ever, should a mediator advise one side or the other that the proposed settlement
agreement the parties are about to write up appears to be based on a misunderstanding of
the applicable law? Or, a misapprehension of what type of factual evidence, were a trial
to have occurred, is likely to be admissible?
A 16: Probably, never, assuming “legal capacity” to contract and the actual presence, or
informed opportunity, of each of the parties to have their own legal counsel.
Although, it would be permissible to intervene proactively and upset a tentative
settlement in the unlikely event the mediator received the express permission of each and
every party that is agreeing to settle the dispute that each would like to learn of the
mediator’s opinion as to whether the settlement is substantively fair based on the
mediator’s evaluation of the facts and applicable legal principles the parties relied upon
in reaching a settlement.
A mediator may ask questions to confirm that the settlement reached is voluntary and that
it is understood by each party.
More often than not, an apparently unfair settlement is the natural consequences of
unequal resources. Sometimes one party is so much more financially able that the other
party will never obtain a fully just result, but a reality check results in the unbalanced
settlement still being mutually desirable to the litigation alternative proceeding without a
settlement. Often the less advantaged party’s attorney will expressly disclose during
private caucus to the mediator the less advantaged party’s desire for a merciful
settlement, rather than for a continuation of the litigation.
Sometimes, one counsel is far more experienced in negotiation skills or competent in the
specific subject matter in dispute than the other; and this relative imbalance of attorney
competency results in an apparently unjust settlement. A mediator should not proactively
intervene other than to suggest in private caucus to counsel and to the disadvantaged
party that adding a more experienced counsel may further assist in making an informed
decision. Of course, this is a good way to increase the likelihood that the less experienced
counsel will not select you as a mediator in future mediations.
Sometimes, an attorney has a conflict-of-interest with his or her own client and the client
is apparently unaware of the conflict. This issue is discussed in FAQ #19-22.
Q 17: Proactive Intervention to Protect Persons Not Present at the Mediation: When, if
ever, should a mediator advise one side or the other that the proposed settlement
agreement the parties are about to write up appears likely to cause significant harm to a
third party that is not present at the mediation?
A 17: The “Better Practice” is to do so first in private caucus; and subsequently, in joint
session if all disputing parties at the joint session wish to discuss the matter further.
This is really a question of a mediator’s personal moral code. California law appears by
implication to condone a negotiated settlement agreement in a mediation which is likely
to cause significant harm to third parties not represented in the mediation. CRC Rule
1620.7 (i) lists as one of three grounds for “Discretionary Termination”, rather than
“Mandatory Termination”, the circumstance that “Continuation of the process would
cause significant harm to any participant or a third party.”
Q 18: Proactive Intervention to Prevent Harm from Ongoing Illegal Conduct or to
Society’s interests: What should a mediator do if a mediation is being used to further
illegal conduct, such as blackmail or illegal dumping of toxic wastes?
A 18: California law and the Joint Standards appear to diverge somewhat on the ethical
procedure to be taken.
Under California law, it appears that a mediator may choose to condone such conduct if it
is an integral part of the mediation! This conclusion is derived by implication from CRC
Rule 1620.7 (i) (1) which lists as grounds for “Discretionary Termination,” rather than
Mandatory Termination the circumstance in which the mediator suspects that “the
mediation is being used to further illegal conduct.” And from Evidence Code Sections
1119 and 1120, which provide a very broad umbrella of confidentiality for
communications made in furtherance of the mediation process, but do prevent “parties
from using mediation as a pretext to shield material [and communications] from
disclosure.” Evidence Code Section 1120 Advisory Committee Comment, par 1.
However, a mediation process is not a safe place to plan or to commit most crimes. Under
Evidence Code §1119-1120, CRC Rules and California Rules of Professional Conduct,
discussions of criminal conspiracies arising during a mediation process are generally
considered as confidential if there were a reasonable expectation of privacy and it was
integral to the negotiations occurring at the mediation; nevertheless, it is an attorney’s
duty to try and dissuade the parties from such illegal conduct. And, if the attorney’s
efforts fail, it is generally the attorney’s responsibility to withdraw and keep confidential
the alleged illegal conduct, rather than facilitate the illegal activity. B&P Code §6068(2),
California Ethics Opinion 1981-58. California Rules of Professional Conduct, Rules 3210, 3-600, 3-700.
Interestingly, the Joint Standards VI requires a mediator to withdraw from mediation if
“the mediation is being used to further illegal conduct.” I would expect that most
mediators will probably follow the ABA’s Joint Standards in this regard. The Uniform
Mediation Act permits disclosure to the authorities of such conduct. However, in
California, under some circumstances, a mediator will probably be required to maintain
the confidentiality of a mediation communication that is integral to the mediation, and in
so doing, the mediator’s silence will permit the continuance of the illegal conduct!
Evidence Code §1119.
One may reasonably ask why a physician or a psychiatrist has a legal duty to report
certain ongoing criminal conduct discovered during a professional relationship and
learned in confidence, but that a mediator in court connected civil cases that do not deal
with family law must remain silent. The answer probably is as simple as California law
favors private mediated settlement agreements and is willing to condone participant
threats of exposing private conduct or of another participant’s agreements to be silent
about past illegal dumping of toxic wastes in order to facilitate a mediated settlement.
These principles may be tested by the California Supreme Court’s decision in Rojas v.
Superior Court (2002) 102 Cal.App.4th 1062. The Trouble with Foxgate and Rojas:
When Should Public Policy Interests Require that Mediation Confidentiality in California
be subject to Certain Common Sense Exceptions?
www.mediate.com/articles/factorM1.cfm
Personal Opinions, rather than Specific Ethical Advice, concerning Conflicts between an
Attorney and his/her Client.
Q 19: Attorney-Client Conflict of Interest Arising From Underlying Transaction: Should
the mediator intervene proactively when the mediator observes an apparently
unrecognized conflict of interest between the attorney for one party and his or her client?
A 19: Yes, it is a “Better Practice”. Although some mediators will not do so because it is
perceived to interfere with the participant’s fundamental right of self determination,
including the right to trust their chosen attorney without interference or comment from
the mediator.
Moreover, some mediators are reluctant to raise the issue of an unrecognized conflict
between an attorney and his or her client because the mediator may threaten his or her
ability to obtain repeat business from the attorney who must handle questions from the
mediator concerning the possibly undisclosed conflict of interest.
There are four (4) common situations in which a mediator may believe that a client is, as
a practical matter, unaware legal counsel representing that client may be conducting
himself or herself as if a conflict of interest exists. These are dealt with in this FAQ #19
and the three that follow: FAQ’s #20, 21 and 22.
The first situation is when an attorney representing a client at mediation also represented
that same client in the underlying transaction that gave rise to the current litigation that is
in the process of being mediated.
The attorney may have concluded that his or her prior representation was below the
standard of care and possibly resulted in some or all of the cause of the problems that
gives rise to the current litigation. In such cases, the conflicted attorney will often
denigrate the reliability of statements or positions of opposing counsel that, if accepted as
legally correct or factually accurate, would be likely to reveal that the conflicted attorney
had failed to protect adequately the client in the underlying litigation.
Most attorneys in retrospect come to believe that a clause could have been added or
modified to the earlier agreement or their own conduct as a legal advisor could have
minimized or eliminated the alleged liability or damages. So, it is helpful to explore these
areas with potentially conflicted legal counsel in order to ensure that these matters have
been discussed with his or her client. Otherwise, either inadvertently or intentionally, the
conflicted counsel may be unable to evaluate accurately and to inform fully his or her
client about adverse material facts or adverse material defense that arise from the lapses
by the conflicted counsel in the earlier representation of the underlying action.
I have personally observed conflicted attorneys who minimized the difficulty of proving
fraud in matters in which the attorney had failed to undertake the type of “due diligence”
that would have prevented the alleged fraud from ever being relied upon.
Similarly, I have observed attorneys who minimized the danger of a “statute of frauds”
defense in situations in which there was some partial performance, such as investment in
some real property improvements, apparently because the attorney could have avoided
the defense by advising a written documentation to make enforceable a Lease of more
than twelve (12) months. Other examples are legion.
Every mediator should watch out for the possibility of a conflicted attorney under such
circumstances; and as a matter of “Good Practice,” the mediator should raise these
possible conflicts in private caucus with the attorney. Further, as a matter of “Good
Practice,” the mediator should satisfy himself or herself that the mediator’s client has
been informed fully of the potentially conflicted counsel’s challenge and possible
disability. More often than not, conflicted counsel will permit an open discussion in
private caucus about the possible conflicts so that the matter is resolved without
permanently alienating the potentially conflicted counsel.
Q 20: Hourly Fee Conflicts: Should the Mediator proactively intervene when it appears
an attorney, likely to be “paid by the hour”, is exhibiting conduct consistent with having a
fee-related conflict of interest with his or her client?
A 20: The second common conflict of interest between attorneys and clients is well
known to most clients, but still may have an unexpectedly strong effect on the negotiation
process unless it is openly discussed in private caucus with the possibly conflicted
attorney and his or her client.
It is often quoted that Peter Ustinov was not speaking of just wine when he opined, “No
wine should be drunk before its time.” Many an hourly attorney seems to believe that
“No case may be settled before its time.”
Such attorneys may insist on seemingly needless discovery, and even more expensive
needless discovery motions.
Others insist on filing a Motion for Summary Judgment, or in the alternative For
Summary Adjudication on matters in which there is no possibility that every meaningful
cause of action will be summarily and finally determined. Frequently, the cost of such
attorney explorations cannot exceed the value to the client because the motions will not
meaningfully dispose of the ultimate issue of damage exposure, since some liability is
almost certain.
Still others will make absurdly low estimates of how much money it will cost to take the
litigation through trial or through trial and appeal, in order to keep the client happily
paying his or her hourly fee until it is too late.
It is a common, and legitimate, litigation strategy to run up legal costs in order to cause
an opposing party with limited financial resources or limited financial gain or limited
emotional commitment to accept a more favorable settlement proposal. Yet, it is often an
over used strategy that frequently turns out to be much more beneficial to the hourly
attorneys than to the litigants.
Discussing this conflict openly with legal counsel and his or her respective client at first
in private caucus is usually constructive. Personally, I use a kind of Socratic game with
the hourly counsel, usually conducted with permission in front of his or her client.
It usually goes something like: (in private consultation with the attorney) May I discuss
openly with you and your client the anticipated costs and fees your client faces in this
litigation? Assuming a “Yes” answer, I proceed in private caucus with the attorney and
client.
If a “No” answer, I proceed in private dialogue with just the attorney; and thereafter, deal
with the matter after the attorney and I have come to a tentative conclusion in our
attorney’s fees and cost dialogue.
Would you describe the anticipated number of days that will be spent on responding
completely to all written discovery? The number of days to be spent in propounding all
written discovery and subsequent discovery motions, assuming the answers are not
complete? The number of days in deposition for all non-expert witnesses and the number
of days in preparation for each such deposition? The number of days in deposition for
expert witnesses and the days of preparation for each deposition? The number of days
expended in summarizing the depositions and the written discovery and organizing it for
trial? The number of days in preparing the trial brief? The number of days expended in
preparing and reviewing Exhibits for trial of each of the litigants and stipulating to their
admissibility or not? The number of witnesses to be testifying at trial? The number of
days expended in communicating and preparing each witness for trial testimony? The
number of days to prepare and to agree upon Jury Instructions? The number of days to
prepare and respond to Motions in Limine? The number of days to prepare voir dire,
conduct a mock trial or other special preparation tactics for trial? The number of days at
trial etc.? The out of pocket cost of each of the costly items such as expert witness fees,
duplication costs for trial, deposition costs, trial transcript costs, if deemed desirable,
etc.?
Then, we price each item of work out on an hourly basis and we cost out each anticipated
out-of-pocket expense. We reach a consensus as to the likely total fees and likely total
out-of-pocket costs. Then, ask the attorney if he or she will guarantee that the actual fees
and costs will not exceed that anticipated number, say $75,000. Almost always there will
be an answer of “No.”
Then ask the attorney if he or she will guarantee the total fees and costs will not exceed
150% of the total, say $112,500. Usually, there is still an answer of “No.”
I increase the total maximum fees and costs until the attorney is ready to say: “Yes, I will
guarantee my law firm’s fees and costs will not exceed $XXX,XXX.00.” Ask the
attorney if he or she is willing to provide this information and guaranty to the client so
that the client may consider this new and possibly significant information.
Once the client and attorney have a “guaranteed” reality check as to what actual fees and
costs might be, it is much easier for the client to eliminate the risk of being misled by an
overly optimistic attorney who is charging on an hourly basis.
Handled respectfully, overwhelmingly attorneys are ultimately pleased that their clients
are fully informed about the full range of fees and costs in a litigated dispute.
Q 21: Contingency Fee Conflicts: Should the mediator proactively intervene when it
appears a contingency fee based attorney exhibits conduct inconsistent with his or her
client’s interests?
A 21: Yes, the third area in which conflicts commonly arise is the “contingency fee”
case.
Most clients understand the obvious conflicts. An attorney who is worried about chances
of success will be “bad mouthing” his or her client’s chances of prevailing for any
number of pretext. On the other hand, an attorney who feels there is a chance for an
unusually favorable result will discourage a settlement that provides only a modest
premium for the “big win,” although the client is not really willing to risk the slight
chance of receiving little or no recovery.
In my experience, clients do not uniformly realize when a “contingency fee” attorney
may be urging settlement on a case that is expensive to try or is a low damage case.
Clients do not always consider that the expenditure of additional attorney time and
attorney money may not be justifiable to the attorney on a “contingency fee” basis,
although it may be beneficial to the client.
Also, some attorneys unwittingly, or possibly intentionally, discourage non-monetary
remedies when it appears it will reduce the amount of money that plaintiff would
otherwise demand for settlement. Hence, offers of continuing employment, or job
retraining, or continued benefits through a consultancy arrangement, or offers of
telephone calls to assist in a hiring by a competing employer, or a deferred compensation
arrangement or of employment of expensive new employee programs or letters of
recommendation that are tradeoffs for monetary damages may be discouraged, although
each is in the plaintiff’s interest.
One way to explore this conflict between attorney and client is to ask the client: “What
amount of money would be satisfactory to you [the client], if paid immediately?” Then,
ask the attorney, privately: “What amount of money would be satisfactory to you [the
attorney], if paid with certainty and immediately?” More often then one might imagine
this provides sufficient information for a mediator to resolve what otherwise seems to be
an impasse over money.
One way or another, I am convinced it is a “Better Practice” to always explore any
situation in which the conduct of the client’s attorney suggests to the mediator that the
attorney may be laboring under a conflict of interest with his or her client, including one
of the aforementioned conflicts.
Q 22: Attorney who Trashes His/Her Own Client: What ethical obligations does a
mediator have in private caucus, that excludes the attorney’s client, when an attorney
strongly urges the mediator that the attorney would really like the mediator to do an
aggressive “reality check” with his or her client because the attorney believes that his or
her client is being unreasonable about his or her chances of prevailing?
A 22: California has not adopted the ABA’s Model Rules of Professional Conduct, but
the following discussion raises important ethical issues for a California practitioner to
consider. In preparing these FAQ’s, I was surprised to learn an attorney who trashes his
client’s judgment abilities as a witness or chances of winning privately to the mediator is
likely to be in violation of both Model Rules of Professional Conduct, Rule 1.6 and Rule
2.1, unless the attorney has previously advised his client, and received informed consent
from the client, of the attorney’s intentions to reveal information about his own client.
Rule 1.6 requires informed consent in advance, each time an attorney discloses, even in a
confidential communication to a mediator, information that has been learned by the
attorney in confidential communications with his client! ABA Model Rules of
Professional Conduct 2002, Rule 1.6. See, ABA Section of Dispute Resolution, Dispute
Resolution Ethics: A Comprehensive Guide, Chapter III p 46-47 (2002).
On the other hand, some leading practitioners disagree. See: John W. Cooley: “Mediator
& Advocates Ethics” in Dispute Resolution Journal, February, 2000:
“A lawyer may not reveal information relating to representation of a client unless the
client consents after consultation, except for disclosures that are impliedly authorized in
order to carry out the representation (MR 1.6)…. For example, lawyers routinely share
confidences of clients with a mediator – with or without the client’s explicit
authorization. This convention is widely accepted because the mediator has an ethical
duty to keep such information confidential if instructed to do so. Even though the
mediator cannot disclose such information to the other side, the mediator can use such
confidential information to suggest solutions to the parties that would not be discovered
through the parties’ direct communication. Of course, a lawyer must honor his client’s
requests not to disclose particular information to a mediator.”
Rule 2.1 requires an attorney to be entirely candid with his client, even when an honest
assessment is likely to be one that his client may be “disinclined to confront”. The first
paragraph of the ABA’s Model Rule of Professional Conduct Rule 2.1 states:
“A client is entitled to straightforward advice expressing the lawyer’s honest assessment.
Legal advice often involves unpleasant facts and alternatives that a client may be
disinclined to confront. In presenting advice, a lawyer endeavors to sustain the client’s
morale and may put advice in an acceptable a form as honesty permits. However, a
lawyer should not be deterred from giving candid advice by the prospect that the advice
will be unpalatable to the client.” (emphasis added)
This situation of an attorney trashing his or her own client occurs most often when a
mediator adopts the somewhat common practice of meeting privately with each counsel,
in person or telephonically, before a mediation to ask the classic question: “How can I
help you and your client in today’s mediation?”
One simple way to avoid the dilemma of criticizing an attorney’s ethics when the
attorney is trying in good faith to assist his own client is to follow the procedures set out
in the Judicial Council’s CRC Rule 1620.7 (c) and (d) and Advisory Committee
Comments. This includes “at or before the outset of the mediation the mediator must
provide all participants” …”an explanation of the mediation process which should
include a description of the mediator’s style of mediation.” Also “at or before the outset
of the first mediation session,”…the mediator must indicate if he or she may choose to
engage in reality checks by “communicat[ing] what the law is or how it applies to the
subject of the mediation, provided the mediator does not also advise any participant about
how to adhere to the law or on what position the participant should take in light of the
[mediator’s] position.”
Additionally, if the mediator’s style permits, as many do, the mediator must advise all
participants that as mediator he or she may “discuss a party’s options, including a range
of possible outcomes in the ad judicatory process” …and “offer a personal evaluation of
or opinion on a set of facts as presented….”
At the time of these preliminary discussions, the mediator should obtain the express
permission of each participant that he or she is accepting the mediator’s style, as
described. Further, each mediation participant is to be advised that the principles of
Voluntary Participation and Self-Determination are so important that - at any time - the
mediation participant may ask the mediator to cease providing options, insight or
information or may even choose to simply terminate participation by leaving the
mediation room and going home or to a movie!
If this simple process of informing the mediation participants and gaining their initial
consent is obtained, many of the ethical dilemmas discussed in these rules will not be
significant to the mediator because the responsibility for objecting to providing
information or objecting to doing a reality check or objecting to any mediator proactive
behaviors will largely be shifted, for the balance of the mediation sessions, to the affected
mediation participants.
Questions Dealing with Conflicts Between Mediator Honesty and Effective Negotiating
Styles
Q 23: Mediator Expressing a False Personal Evaluation as to Opposing Side’s Intentions
in order to “Facilitate” Agreement: During a mediation, should a mediator ever agree to
assist one side by making, as if it is the mediator’s own belief, a specific negotiating
proposal from that side (e.g. “I believe that the most the defendant will ever offer is
$150,000, and if that offer is not accepted in ten minutes, we are leaving.”) to the other
side, if the mediator believes the defendant will actually offer more?
A 23: No.
It is a good idea for a mediator to be much more honest!
A mediator should not intentionally misrepresent a fact, a law or even a statement of
intention as true, when the mediator believes it to be false. And, except in the special
situation of a “Mediator’s Proposal”, a mediator should not agree to communicate a
defendant’s offer or a plaintiff’s demand as if it were the mediator’s suggested offer or
demand.
The “Better Practice” is to identify correctly an opposing side’s proposal as coming from
that side, particularly when the proposal contains an ultimatum or a threat.
After all, the party receiving the proposal is always able to ask the mediator if the
mediator believes the defendant’s $150,000 offer is really the defendant’s last best offer.
And, depending on the mediator’s style, the mediator may choose to respond with his or
her good faith belief on the veracity of the defendant’s ultimatum and/or a suggested
counter offer that will test the firmness of the defendant’s “final offer”.
An even “Better Practice” than permitting either side to make an ultimatum to the other
side, is for the mediator to either “coach” the offering party to make an offer which does
not contain an implicit threat or to obtain permission to make “a Mediator’s Proposal.”
Of course, the “Mediator’s Proposal” is only likely to be consistently effective if done
with the permission of the party, and possibly both parties, when impasse has truly been
reached and the usual methods of “breaking impasse” and restarting substantive
discussions have failed.
Q 24: Feigning Difficulty in Obtaining Negotiating Concessions: When a mediator goes
into private caucus and quickly receives a reasonable demand from the plaintiff’s side, is
it appropriate for the mediator to take several extra minutes with the plaintiff’s side
discussing their children, sports and exchanging war stories so that when the mediator
commences private caucus with the defendant’s side, the mediator may proclaim, “It took
me so long because I really had to beat up on Plaintiff and his counsel to make him give
me a reasonable demand.” ?
A 24: Clearly, this is dishonest conduct by the mediator.
To some, it falls into the “White Lie” category, but the fact there are social conventions
that permit “White Lies” does not make the use of the “White Lie” by the mediator an
ethical practice. Yet, many participants actually expect such conduct by a mediator.
Some mediation courses include the suggestion that to create the appearance of
neutrality, it is a good idea to spend roughly equal amounts of time with each party when
in separate caucus. Spending roughly equal time in private caucus with each party can be
done without the mediator using false statements to create a false impression that the
length of time in private caucus is directly related to the difficulty the mediator had in
obtaining concessions. Hopefully, the mediator will be disposed to be a little more honest
and not return to the other side with a false proclamation. Yet, most of us engage in the
conduct of dallying a bit with a side in private caucus when we feel the negotiation will
be expedited to a sensible resolution by creating the impression, without making a false
proclamation, that it has been difficult to get movement from the opposing side.
Actually, as often as not, a mediator can engage in a series of fast visits in “separate
caucuses” orchestrating a Mediation Dance that would be called “Rock and Roll”, rather
than “Rock Around The Clock.” Both mediator techniques can work depending on the
style of the mediator and the expectations that are created with the parties and their
counsel.
Sometimes simply stating to each side after both sides have made, respectively, “a
reasonable demand” and “a reasonable offer”, “This negotiation can be moved along very
quickly.” “Both counsel seem to know the Mediation Dance and are well skilled.”
By making such encouraging observations, the mediator often creates an environment in
which parties do move very quickly to a middle ground, often without ever experiencing
impasse, until the parties are well within an “Edgeworth box” in which exchanges
between the parties create a number of outcomes which are more or less in the range of
satisfactory outcomes in terms of the parties’ real life long-term interests.
Q 25: In Separate Caucus, Making Conflicting Evaluations to the Parties for the Greater
Good of Moving the Parties towards Settlement: Is it ever appropriate for a mediator “to
shade” an opinion or evaluation making conflicting evaluations in “private caucus” of
potential risks and rewards on the merits of the dispute, the relative competencies of the
respective advocates or witnesses, or the character of the parties or counsel, in order to
facilitate a settlement by either: (a) currying the trust of one or both sides, or (b) creating
greater uncertainty in the minds of one or both sides? In other words, is it O.K. to
misdirect and mislead one or both sides in order to encourage a psychological
environment in which a settlement is more likely to occur?
A 25: No, if “Shading an Evaluation” means engaging in a Deception as defined by
Cooley and Stark on FAQ #4. Yet, it is ethical on a case by case basis as part of a process
of “reality testing”.
“To shade” an evaluation so that it goes beyond “reality testing” and creates false
impressions is unethical. However, “reality testing” is common; and it is a mediator tactic
that frequently contributes to settlement.
The issue is whether such mediator tactics serve to make the parties less informed about a
material fact or a relevant law and are, therefore, conducive to creating an environment in
which one or more parties may settle based on misinformation or mis-impressions. When
this happens, the parties may be settling on terms which are not as favorable as would
have occurred with a “honest mediator”.
The ethical breach caused by a mediator occurs when implied “direction” and possibly
misleading “misinformation” through “shaded evaluations” results in one of the parties
being effectively “coerced” by material misdirections or omissions of material facts in
violation of the fundamental principles of a Voluntary and Informed Self-Determination
by the parties at a mediation. Joint Standards I and II, CRC§1620.3.
On the other hand, often the mediator’s statements of misdirection or the withholding of
information serves a sanguine purpose such as to raise the level of discussion from
unhelpful threats or ad hominem attacks, to a more fruitful exchange of options or
information. This negotiation skill is one a mediator is expected to understand and use,
ethically.
Q 26: “Mediator’s Proposal”: May a mediator offer as his or her own “Mediator’s
Proposal” a proposal that is truthfully framed in private caucus by one of the litigants,
and is essentially identical to a proposal the litigant would have made, but for the
willingness of the mediator to represent the proposal as his own “Mediator’s Proposal”?
A 26: Yes.
Technically this may be misleading, but it is a generally accepted, proactive practice and
preferred by most mediation participants.
The concept of a “Mediator’s Proposal” is one that is generally acknowledged in
CRC§1620.7(d) Advisory Committee Comment.
The Advisory Committee Comment states:
“Subdivision (d). Subject to the principles of impartiality and self-determination, and if
qualified to do so, a mediator may (1) discuss a party’s options, including a range of
possible outcomes in an adjudicative process; (2) offer a personal evaluation or opinion
on a set of facts as presented, which should be clearly identified as a personal evaluation
or opinion; or (3) communicate the mediator’s opinion or view of what the law is or how
it applies to the subject of the mediation, provided that the mediator does not also advise
any participant about how to adhere to the law or on what position the participant should
take in light of that opinion.”
The “Better Practice” in making a “Mediator’s Proposal” is to first check in with each
party to the dispute in order to ask whether it is that party’s desire that they wish to hear
the “Mediator’s Proposal”. Of course, a party that does not wish to hear the “Mediator’s
Proposal” should either be placed in a separate room or have a right to withdraw. Parties
who wish to hear a “Mediator’s Proposal” should have the right to do so, recognizing that
other litigating parties may withdraw if there is an objection to the mediator going
forward and making his or her proposal.
As a general rule, a mediator’s proposal is most effective when the following limited
situations occur: (a) the mediation has reached an impasse and discussions have broken
down between one or more of the litigants; (b) the “Mediator’s Proposal” appears likely
to be an improvement to one or more of the parties perceived BATNA; and (c) the
“Mediator’s Proposal” will be at least a likely basis for further discussion, and even
agreement, for each and all of the remaining parties.
A “Mediator’s Proposal” is often helpful because it overcomes a very real psychological
barrier to voluntary settlements between disputing parties. Often one party simply will
not trust or respect that an opposing litigant will make a “reasonable offer” or even a
“desirable offer”. Because of this lack of trust and respect that does occur between
intense adversaries, the party receiving a “desirable offer” from an adversary may suspect
that there is some “unseen trick”, or that the party making the offer knows something that
would explain to the party receiving the offer why the offering party has suddenly
become so apparently “reasonable”.
This psychological process of devaluing the offer of an adversary is known as “reactive
devaluation”. It is a well-documented barrier to parties in a dispute recognizing when one
party has made a cognitively reasonable and fair offer. Lee Ross and Constance
Stillinger: “Barriers to Conflict Resolution, 7 Negotiatian Journal, 389, 394-5 – (1991);
Lee Ross: “Reactive Devaluation in Negotiation and Conflict Resolution” pp26-43
(Kenneth J. Arrow et al, Editor, 1995); and M’nookian & Ross: “Introduction to Barriers
to Conflict Resolution” pp15-16 (Kenneth Arrow et al, Editor, 1985).
By simply re-casting a litigant party’s “reasonable offer” as if it is that of the mediator –
that is a “Mediator’s Proposal” – the other disputing party is largely freed from the
emotional burden of always distrusting what the adversary says or does. The “Mediator’s
Proposal” de-escalates the emotional overlay and allows a more cognitive-based
discussion.
Questions concerning Mediator Decision Making that can Lead to Withdrawal
Q 27: Standards for Mediator: Withdrawal: Under what circumstances is a mediator
required to withdraw and terminate an ongoing mediation; and when doing so, what type
of precautions must be taken?
A 27: A mediator is required to decline to serve or to withdraw from a mediation under
three statutory circumstances under California law: (1) The mediator cannot maintain
impartiality towards all participants in the mediation process; (2) Proceeding with the
mediation would jeopardize the integrity of the Court or of the mediation process; and (3)
in a two party mediation, if any party objects to the mediator after the mediator makes
disclosures or discusses a participant’s question or concern regarding the mediator’s
ability to conduct the mediation impartially. CRC Rules 1620.5 (e) and (f). Joint
Standards VI , par 6 and 7
Interestingly, CRC Rule 1620 (i) identifies three situations in which the mediator has the
discretion to withdraw, but is not required to do so. At least some of these situations
would otherwise seem to fall under the descriptions of required withdrawal under the
prior discussion. The three discretionary withdrawal situations are that the mediator
suspects (1) the mediation is being used to further illegal activity, (2) a participant is
unable to participate meaningfully in negotiations or (3) continuation of the process
would cause significant harm to a participant or a third party. Possibly, the difference
between subsections (e) and (f) which requires mandatory withdrawal and (i) which
permits discretionary withdrawal is the difference between a well formed belief that a
participant is incapacitated from drugs or alcohol and a mediator’s good faith “suspicion”
that such a circumstance exists and precludes meaningful negotiations.
In both situations, the mediator is strongly advised by CRC 1620.7 (j) that the mediator
must affect his or her withdrawal “without violating the obligation of confidentiality and
in a manner that will cause the least possible harm to the participants.”
Q 28: Performing Adjudicatory Functions: May a mediator perform in an ad judicatory
function such as a special master in a partition action or a discovery referee or an
arbitrator in a med-arb proceeding concerning the same subject matter and same parties
as an underlying earlier or ongoing mediation?
A 28: As a practical matter, this happens on a not infrequent basis.
In labor and employment matters, the mediator will want to review the “rules” of the
“National Academy of Arbitrators’ Code of Professional Responsibility”.
In addition, two of the most important cases involving Mediation Confidentiality,
Foxgate and Rojas, each involve situations in which a single individual served as a
mediator and as a discovery referee in a construction dispute. Many times, parties to
mediation gain such confidence in a mediator that the mediator is selected as a discovery
referee on key issues or even as an arbitrator in a med-arb process.
Both the Joint Standards and the CPR Georgetown Commission on Ethics and Standards
in ADR, Model Rule for the Lawyer as Third Party Neutral (2002) clearly condone such
processes with the full and informed consent of each of the mediation participants. The
Joint Standards VI also caution the mediator that when accepting an additional role (such
as acting as an arbitrator), there will be an increase in the mediator’s responsibilities and
obligations, some of which may be governed by differing standards.
CPR Georgetown Commission Model Rule 4.5, Definitions, Evaluative , p7 provides:
“…the third party neutral may engage in some evaluative tasks, such as providing legal
information, helping parties and their counsel assess likely outcomes and inquiring into
the legal and factual strengths and weaknesses of the problem presented. By agreement of
the parties or applicable law, mediators may sometimes be called upon to act as
evaluators or special discovery masters, or to perform other third party neutral roles.”
And, Definitions, Med-Arb , p8 : “A procedure in which the parties initially seek
mediation of a dispute before a third party neutral, but if they reach impasse, may convert
the proceeding into an arbitration in which the third party neutral renders an award.”
On the other hand, there is a well taken belief by many academic scholars and practicing
mediators that when a mediator also serves in an ad judicatory role, that the mediator’s
ability to effect the substantive outcome of a litigated dispute violates both fundamental
principals of Impartiality and of Self-Determination, even in situations in which parties
give their express consent.
Moreover, it is quite possible that a mediator who is serving as an arbitrator with the
same parties may inadvertently or involuntarily rely in making his or her decision on
information that was learned by the mediator during a confidential session, thus violating
the laws relating to Mediation Confidentiality, Evidence Code Section 1119-1122.
While a mediator may serve in an adjudicative role which is one that is often convenient
and less expensive for the participants, this adjudicative role may lead to some
unanticipated disputes, such as have occurred in the recent Rojas case, presently before
the California Supreme Court.
Under California law, there is an apparent split of authority on this issue. Evidence Code
Section 1121 appears to permit a mediator to act as an arbitrator or discovery referee in
the same matter by carving out an exception to a mediator’s strictly neutral role in that a
mediator may make an ad judicatory report to the Court “[When] all parties to the
mediation expressly agree otherwise in writing, or orally in accordance with Section
1118.” See also Section 1122.
However, the Law Revision Commission Comments to Section 1121 contradicts the
statutory exception, as follows: “Rather the focus is on preventing coercion. As Section
1121 recognizes, a mediator should not be able to influence the result of a mediation or
adjudication by reporting or threatening to report to the decision maker on the merits of
the dispute or reasons why the mediation failed to resolve. Similarly, a mediator should
not have authority to resolve or decide the mediated dispute, and should not have any
function for the adjudicating tribunal with regard to the dispute, except as a non-decision
making neutral.”(Emphasis added)
The Comments go on to affirm the right of the parties to expressly permit additional
information to the ad judicatory tribunal, but it is probably wise to be aware of the Law
Revision Commission’s “dicta” and be very careful about obtaining detailed waivers
before a mediator agrees to any ad judicatory role, such as commonly occurs in
construction defect cases and real estate disputes that may have a single mediator and
Special Master or Fact Finder Referee for the Court.
Q 29: Too Evaluative: When does a mediator’s proactive questioning or urgings for a
participant to make additional concessions cross the line and become an unethical
practice violating both the fundamental principles of Impartiality and SelfDetermination?
A 29: Please see FAQ #28. As a practical matter, assuming the participants are competent
and represented by counsel, a mediator may look directly to the mediation participants to
inform the mediator as to whether his or her style has “crossed the line” into conduct that
is “coercive”, partial (rather than impartial), or conflicts with a participant’s fundamental
right to Voluntary Self-Determination of the outcome of the mediation. Nevertheless, the
ethical mediator may not rely on waiting for a mediation participant’s objection to define
“the floor” of ethical practices. Instead, a mediator should recognize that whenever he or
she feels offering an opinion occurs to the mediator to be violating mediator
“Impartiality”, or “party Self-Determination”, it probably is!
One Final Practical Question on Mediator Malpractice
Q 30: Interaction between the “Shield of Mediation Confidentiality” and “Mediator
Malpractice”: Under what circumstances, in California, may the “Shield Protection” of
Mediation Confidentiality created by Evidence Code Sections 1119, et. seq. and CRC
Rule 1620.4 be pierced in order for one or more of the mediation participants to bring an
action of Mediator Malpractice?”
A 30: Justice is unlikely to regard kindly a “Wayward Mediator” who breaches a primary
Statutory Duty to a “mediation participant,” when the “Wayward Mediator” moves to
strike all allegations supporting a Breach of Duty and Causation based on the shield of
Mediation Confidentiality created by Evidence Code §§1119, 1126.
The Joint Standards permit mediation parties to waive confidentiality without the
mediator’s consent; and further, the Joint Standards provide that “confidentiality” may be
set aside if required by law “or other public policy.” Thus, Joint Standards V establishes
the rights of the parties to make their own rules with regard to confidentiality, which said
rules the mediator is required to respect. And further, the Joint Standards appear to permit
any party to use “public policy” reasons as a basis for setting aside “mediation
confidentiality.” Therefore, a party aggrieved by a Wayward Mediator would presumably
be able to testify in court in a “mediation malpractice” case against a mediator without
being muzzled by Mediation Confidentiality provisions in the Joint Standards.
California law differs substantially. The California Evidence Code Section 1122 (a) (1),
and the 1997 Law Revision Comments thereto, unconditionally require the express
consent of the mediator, before any mediation participant may disclose a mediation
communication described as “confidential” under Evidence Code Section 1119.
Therefore, a mediator would presumably be able to ask a court to strike any pleading and
exclude any testimony of a mediation participant, when such pleading or testimony had
been statutorily protected as “confidential” pursuant to Evidence Code Section 1119.
Interestingly, the one (1) reported California case on “mediator malpractice” does not
discuss the right of the mediator to bar a mediation participant’s testimony pursuant to
Evidence Code Sections 1119 and 1122 (a) (1). In that case, the “mediator” is alleged to
have failed to disclose fully an existing conflict of interest. David Furia vs Hugh N. Helm
III (2003), Cal. App.4th (No. A100102. 1st District, Division 3. August 29, 2003). The
evidence against the attorney was deemed admissible by the Court, based on an alleged
waiver of attorney-client privilege, without ever discussing in the judicial opinion that the
evidence was necessarily “confidential” in that it was a document expressly prepared for
the purpose of the mediation.
Is it possible that the issue of mediation confidentiality was never raised by the mediator
being sued for malpractice in that it is not discussed in the court’s opinion? However, it is
surprising that an appellate court would have failed to notice the applicability of so
significant an evidentiary exclusion, when – as a matter of “public policy” – Mediation
Confidentiality may not be waived without the consent of every participant, including
that of the mediator. Evidence Code §§1122, 1126.
Second, CRC Rule 1622 requires the establishment of “procedures for receiving,
investigating, and resolving complaints against the mediators who are on the court’s
list…”, and provides further:
“(b) the court may reprimand a mediator, remove a mediator from the court’s panel or
list, or otherwise prohibit a mediator from receiving future mediation referrals from the
court if this mediator fails to comply with the rules of conduct for mediators…”
Thus, the California Judicial Council promulgated CRC Rule 1622, effective January 1,
2003, to provide methods of sanctioning mediators for inappropriate conduct which may
have occurred during or in connection with a court-annexed mediation.
One must make the reasonable inference that California courts which have already
implied at least three exceptions to Mediation Confidentiality, may very well carve out a
“fourth” exception to require a fiduciary (such as a mediator) to be responsible for
damage caused by that fiduciary’s misconduct (i.e., “mediator malpractice”). See Foxgate
Homeowners Association vs Bramlea California, Inc. (2001) 26 Cal 4 1, 15; The Trouble
with Foxgate and Rojas by Max Factor III.
Southern California Mediation Association
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Glendora, CA 91740
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