An Attorney’s Obligations in Mediation
LACBA Update, May 2010
By Judge Michael D. Marcus (Ret.), member and past chair of LACBA's Professional Responsibility and Ethics Committee. Marcus is a mediator, arbitrator, and discovery referee with ADR Services, Inc. in Los Angeles.
Provide notice of cancellation or continuance of the mediation. From the perspective of a mediator, especially in court-connected mediations where the mediator is either performing without compensation or at a substantially reduced fee, it is galling for an attorney to cancel a mediation at the last moment or not show up at all. Although the plaintiff or the party seeking affirmative relief is required to notify court-connected mediators that the matter has settled or has been disposed of at least two days before the calendared hearing (California Rule of Court 3.1385(a)(1) and (2)), not all attorneys comply with this act of courtesy. The failure to provide this notice may result in monetary sanctions. (Ibid.) This is one of the few instances where sanctions can be imposed for noncompliance with mediation ethical standards because this particular conduct occurs outside the confidential mediation process.
Advise clients about settlement opportunities. In non-California jurisdictions, attorneys should advise their clients about all alternatives to litigation, including settlement opportunities. (See American Bar Association, Section of Litigation, Ethical Guidelines for Settlement Negotiations [ABA Guidelines], 3.1.1, which provides that “A lawyer should consider and discuss with the client, promptly after retention in a dispute, and thereafter, possible alternatives to conventional litigation, including settlement.”) Note that ABA ethical rules may be considered as a collateral source of proper professional conduct in California where there is no direct California authority and such rules do not conflict with this state’s policies. (State Compensation Ins. Fund v. WPS, Inc., 70 Cal. App. 4th 644, 655-56 (1999); see also Rule of Professional Conduct 1-100(A), stating that “Ethics opinions and rules and standards promulgated by other jurisdictions and bar associations may also be considered.”)
Although California does not have a rule comparable to the ABA’s 3.1.1, it can be argued that Business and Professions Code Section 6068(m) and Rule of Professional Conduct 3-500, which require lawyers to keep clients reasonably informed of significant developments relating to the representation, include the responsibility to advise clients of settlement opportunities, including the availability of mediation. There are, however, no cases that have interpreted these regulations to require California attorneys to advise their clients about the availability of mediation.
Serve a list of mediation participants. Rule of Court 3.894(b)(1) provides that the parties to a court-connected mediation shall, at least five court days before the first mediation session, serve a list of their mediation participants on the mediator and all other parties. Supplemental lists must be served promptly to reflect the presence of additional persons.
Parties and insurance representatives must personally appear. All participants to a court-connected mediation, including insurance representatives, unless excused by the mediator, must appear personally at the mediation. (Rule of Court 3.894(a)(1) and (2).) The party, attorney, or insurance representative whom the mediator has excused or allowed to participate by telephone “must promptly send a letter or an electronic communication to the mediator and to all parties confirming the excuse or permission.” (Rule of Court 3.894(a)(3).)
The four California federal districts have their own attendance requirements for parties, counsel, and, in the case of the Northern and Eastern Districts, insurance representatives for mediations conducted through the respective courts. (See Northern District ADR local rule 6-10 and Eastern District local rule 271(l)(1); Central District local rule 16-15.5(b) and (c); Southern District local rule 600-7(c).)
As a practical matter, all mediations work best when all parties, persons with settling authority, and insurance representatives are present. If an integral person or party cannot appear, effective lawyering suggests that the attorney for that person or party advise the mediator ahead of time about the unavailability of the individual or entity. Accommodations may be arranged for that person’s absence, or the mediation may have to be continued. Regardless, it is better to discuss this issue before the mediation rather than have it fall apart because a key person could not attend and no one was notified ahead of time of that problem.
Provide competent representation at the mediation. Attorneys must provide their clients with competent representation at the mediation. (See Rule of Professional Conduct 3-110(A) [“A member shall not intentionally, recklessly, or repeatedly fail to perform legal services with competence.”].) However, any remedy for ineffective representation, such as a motion to set aside the settlement or a malpractice action, is probably unavailing because of mediation confidentiality. (Note the California Supreme Court has granted a hearing in Cassel v. Superior Court, 179 Cal. App. 4th 152 (2009) to consider whether mediation confidentiality applies to premediation meetings between only the client and his attorneys, whom he thereafter sued for legal malpractice.)
Consult with the client during mediation. During mediation, attorneys must reasonably consult with their clients “respecting the means of negotiation of settlement, including whether and how to present or request specific terms.” (ABA Guideline 3.1.3.) The final settlement terms are within the client’s control and not the attorney’s. “A lawyer can exercise broad general authority from a client to pursue a settlement if the client grants such authority, but a lawyer must not enter into a final settlement agreement unless either (a) all of the agreement’s terms unquestionably fall within the scope of that authority, or (b) the client specifically consents to the agreement.” (ABA Guidelines 3.2.1.)
An exception to the requirement that a client’s consent to a settlement must be obtained occurs if the client is covered fully under an insurance policy that gives the insurer the right to settle the matter without the insured's consent. (Fiege v. Cooke, et al., 125 Cal. App. 4th 1350 (2005).)
Avoid conflicts in aggregate settlements. Attorneys who represent more than one party at a mediation must be careful not to enter into an aggregate settlement of a claim without the informed written consent of each client. (Rule of Professional Conduct 3-310(D).) For example, a $100,000 global settlement that is to be shared by two parties requires the informed consent of both. The better practice, to avoid the application of the above rule, is for each party to agree to a specific division of the $100,000.
Maintain the confidentiality of all mediation communications. Attorneys, mediators, and the parties cannot reveal the contents of communications made during mediation or related thereto. (Evidence Code Sections 1119 and 1121; Foxgate Homeowners’ Association, Inc. v. Bramalea California, Inc., 26 Cal. 4th 1 (2001).) Mediation confidentiality in California is excepted only where the parties have expressly waived its application or it might result in a due process violation. (Simmons v. Ghaderi, 44 Cal. 4th 570 (2008).) Otherwise, the legislature must create exceptions to such confidentiality. (Ibid.)
Mediation confidentially is less rigid in California’s federal courts. In a commentary to its local rules regarding mediations, the Northern federal district, while observing the confidentiality of mediation proceedings and relying in part on California precedent for that proposition, notes that the concept of absolute confidentiality, regardless of the circumstances, may be excused in “limited circumstances in which the need for disclosure outweighs the confidentiality of a mediation,” such as threats of death or substantial bodily injury, use of the mediation to commit a felony, and the right to cross-examination in a quasi-criminal proceeding. (6-12 Commentary.)