It is always both enlightening and amusing to read about the travails of “Bob,” the hypothetical attorney who appears regularly in the bimonthly ADR columns of Charles Forer in this space. Bob is always representing clients in ADR proceedings, is convinced that he is fully familiar with their procedures but invariably ends up with an unexpected disaster. As a result, in March we read that Bob had decided that he had made so many mistakes as an attorney that he “was going to be an arbitrator and let attorneys know when they mess up.”
Sure enough, Bob’s career as an arbitrator came to an abrupt end when his first award was vacated because Bob knew of and failed to disclose a material relationship that might create the impression of possible bias. The relationship: He and his fellow arbitrator were involved in an earlier arbitration involving a common party and a similar issue.
As I read of Bob’s latest catastrophe, I started to muse about what activity he might next consider. Suddenly, it was clear! Bob, frustrated by the unexpected risk encountered as an arbitrator, would try his hand as a mediator, secure in the belief that no such problems could be confronted in that role. After all, mediators, unlike arbitrators, are not surrogate judges; they do not issue awards or otherwise make binding decisions that directly affect people’s lives; they are only facilitators who may help people seeking to solve their problems but, otherwise, are essentially powerless.
And so, I was confronted with a dilemma. Should I allow Bob to serve as a mediator, confident in his assumption that he faced no exposure or potential liability? Or, should I disabuse him of that notion and save us the distress of reading about his further misadventures in a future Forer column? I finally decided on the latter approach.
It is true, of course, that whether and to what extent mediators may be liable for actions ultimately taken by the parties themselves remains unclear; this is due to the very few cases that have been brought involving mediator misconduct, and particularly those that might expose the mediator to civil liability. Statutes and mediation agreements often contain privilege provisions which provide significant protection against disclosure of what actually occurred during the mediation. Moreover, any decisions reached at a mediation are presumptively viewed as those of the parties themselves so that assigning blame to the mediator for the result often requires proof of a standard that is very difficult to meet.
Nonetheless, while the risk is limited, care must be taken or the unwary mediator may find himself in an unexpectedly uncomfortable position by reason of some of the circumstances explained here.
Breach of Confidentiality
Perhaps the greatest risk for a mediator involves a failure to maintain expected confidentiality. Every code of conduct relating to mediators provides that the information disclosed at the mediation will be kept confidential. Such provisions are also routinely inserted into mediation agreements. Understandably, parties do not want to have publicized information relating to their business, such as their earnings projections, customer lists, production processes, or future plans. Similarly, individuals involved in disputes of a personal nature usually prefer that their situations not become public.
Moreover, the mediator’s pledge of confidentiality invariably is binding after the mediation has ended.
But what if the mediator discusses some of this information with outsiders in violation of those agreements; and, the party whose information is disclosed can demonstrate that she suffered financially as a result or that the disclosure violated a right of privacy which has caused her great embarrassment. In such circumstances, the mediator may find that a disclosure many months after the mediation is legitimately found to be a breach of the mediator’s obligations under the agreement for which damages may be awarded.
Pledges of confidentiality in mediation, of course, are not restricted to prohibited disclosure to non-parties. Virtually every mediator will assure parties that information disclosed in a private caucus with one of the parties will be kept confidential unless and until permission is given to disclose that information to the opposing party. In such caucuses, mediators often learn about the settlement objectives or business plans of a party; disclosure of those, however, might harm the party during the mediation as well as in its future activities.
Nonetheless, in complicated and lengthy mediations, a mediator may forget or become confused as to which details she may disclose to the opposing party and which, at least for the time being and perhaps for the duration of the mediation, are to remain confidential. For this reason, before concluding each caucus, many seasoned mediators will engage in a final review with the party to confirm exactly what they are permitted to disclose to the opposing party and what is to remain confidential.
Disclosing confidential caucus information, even if inadvertent, might be asserted to constitute a breach of contract or, perhaps, a tortious interference with a business opportunity.
Conflict of Interest
Yet another potential for liability lurks in the very area which ensnared Bob in his limited service as an arbitrator — i.e. the failure to disclose a conflict of interest. Impartiality and neutrality, of course are implied in the services of every mediator, without regard to whether reference is made to them in the mediation agreement. They are referenced in every code of conduct applicable to mediators.
Assume that a mediator has a relationship with one of the parties, professional, social or personal, that has not been disclosed to the opposing party. The parties engage in a mediation, and the unsuspecting party agrees to a settlement based in great part upon the urging, advice, suggestion or other form of persuasion of the mediator. Subsequently, information relating to this relationship becomes known and the aggrieved party contends that it has suffered financially by reason of a hidden bias of the mediator. Again, there is limited precedent in this situation, but one can envision a party contemplating a civil claim in such circumstances.
Moreover, a mediator may find that by reason of his service as a mediator in a particular case, both he and his law firm have a conflict of interest which will prohibit their providing legal representation or serving as a mediator in a subsequent substantially related matter, according to Pa. R.P.C. 1.12.
Such conflicts, in other words, resulting from prior service as a mediator, may carry with them unexpected and financially onerous obligations and restrictions.
Failure to explain the role
Finally, a mediator who is also a lawyer may find that he has exposed himself to a claim if he knows or reasonably should know that a party does not appreciate that he is acting solely in a neutral, facilitative role and not as a lawyer. A lawyer-mediator who has not made abundantly clear, particularly to unrepresented parties, that he is acting solely as a mediator may find himself facing a charge not only of engaging in the practice of law, but in doing so poorly.
It is true that mediators are regularly called upon to give their impressions or even their evaluations with respect to the legal positions of the parties, and that even errors in this regard will be unlikely to impose liability.
However, what if the lawyer-mediator has not advised an unsophisticated and unrepresented party (think of parties to a domestic relation dispute) of the nature of the mediator’s role and of the advisability of seeking independent legal advice? And then, the mediator insists on the correctness of an erroneous legal position, which causes one of the parties to enter into a disadvantageous agreement. In such circumstances, one can well envision a claim based upon the negligent practice of law by the lawyer-mediator, whose role in that regard was not clearly explained or understood by the party.
Other pitfalls may also be encountered. For example, even in jurisdictions which do not require certification as a mediator, consider the potential exposure of who one advertises untruthfully about experience as a mediator in terms of numbers of mediations or experience in a particular field. Has the mediator exposed himself to civil claims for false advertising or violation of consumer protection statutes, as well as criminal fraud charges? Similarly, statutes in certain jurisdictions may require that mediators serving in certain capacities (perhaps on behalf of the courts) disclose to public authorities certain information learned at the mediation such as child abuse
In short, Forer’s attorney friend Bob may be correct that the risks of exposure or sanction as a mediator are rare and limited. Nonetheless, these risks do exist, and I hope that, should Bob seek to serve as a mediator, he will exhibit particular care. If he doesn’t, I expect that we will be reading about him in future columns. •
Abraham J. Gafni is a mediator/arbitrator with ADR Options and
a professor at Villanova University School of Law.