Increasingly, attorneys and law firms are looking for different ways of generating income. Seasoned attorneys, and by affiliation their law firms, seeking diversification often start a mediation practice.
Of course, not every litigator makes a good mediator. On the other hand, years of experience settling and trying cases can be the perfect background for an effective mediator.
While training and skill are important, appropriate systems for ethics compliance are also critical. The California Rules of Court govern the rules of conduct for mediators in court-connected mediation programs for civil cases. Rule 380.5 provides that “[t]he rules in this article establish the minimum standards of conduct for mediators in court-connected mediation programs for general civil cases. These rules are intended to guide the conduct of mediators in these programs, to inform and protect participants in these mediation programs, and to promote public confidence in the mediation process and the courts. For mediation to be effective there must be broad public confidence in the integrity and fairness of the process. Mediators in court-connected programs are responsible to the parties, the public, and the courts for conducting themselves in a manner that merits that confidence.”
Here are three things every attorney should know before acting as a mediator.
Understand the Rules on Preserving Impartiality
Rule 3.855 of the Rules of Court addresses conflicts of interest for mediators in the context of preserving impartiality. Rule 3.855(a). In that regard, the mediator “must make reasonable efforts to keep informed about matters that reasonably could raise a question about his or her ability to conduct the proceedings impartially, and must disclose these matters to the parties.” Rule 3.855(b). Such matters include “[p]ast, present, and currently expected interests, relationships, and affiliations of a personal, professional, or financial nature” and “[t]he existence of any grounds for disqualification of a judge specified in Code of Civil Procedure section 170.1.” Rule 3.855(b)(1). The rule further provides that “[a] mediator’s duty to disclose is a continuing obligation, from the inception of the mediation process through its completion …” Rule 3.855(b)(2).
The rule allows the mediator to continue if the parties do not object after disclosure of conflicts or potential conflicts. Specifically, Rule 3.855(c) states that “[e]xcept as provided in (f), if, after a mediator makes disclosures, no party objects to the mediator and no participant raises any question or concern about the mediator’s ability to conduct the mediation impartially, the mediator may proceed.” Even during mediation, if a party raises a question or concern about the mediator’s impartiality, the mediator is required to address the issue and then can only proceed if the parties do not object. Rule 3.855(d).
A mediator must withdraw in a two-way mediation, however, “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.” Rule 3.855(d). In a mediation with more than two parties, “the mediator may continue the mediation with the non-objecting parties, provided that doing so would not violate any other provision of these rules, any law, or any local court rule or program guideline.” Rule 3.855(e).
A mediator must recuse herself or himself, despite party consent, if “[t]he mediator cannot maintain impartiality toward all participants in the mediation process” or “[p]roceeding with the mediation would jeopardize the integrity of the court or of the mediation process.” Rule 3.855(f).
Attorney Mediators May Face Non-Traditional Conflicts
Despite these rules, potential conflicts may still arise in contexts that may not necessarily be anticipated. For example, imagine a situation where one of the participants in a mediation is an insured of an insurer client of the law firm where the mediator is employed. The insurer client of the firm might want to know that an attorney with the firm is serving in a capacity to facilitate a settlement, but not on its behalf. The participant in the mediation might want to know that the mediator’s firm represents the insurer.
Unfortunately, in many circumstances, no one knows any of the potential issues because the law firm did not check conflicts for the participants in a mediation involving the employed attorney/mediator. Most of the time, there is no problem. Other times, there is. Like many things, however, no one really cares until someone is unhappy.
A settling party with buyer’s remorse might think the mediator pushed them too hard to accept too little because of a conflict in which the mediator was actually looking out for the law firm’s insurer client. On the other hand, the party whose case never settled may think the mediator/attorney did not do enough to get the necessary money to settle because of an undisclosed relationship between the mediator’s law firm and an insurer.
On the other hand, it could be that the insurer client of the law firm is unhappy. The insurer might believe the mediator “pushed too hard” to get the offers high enough to get the case settled. Or the mediator/attorney might have raised bad faith, which the insurer thought was inappropriate for a law firm that otherwise represented it. This can create both a legal conflict and a client relations conflict. Either way, it is a problem.
The commentary for the rules provides that “[a]lthough (b)(1) specifies interests, relationships, affiliations, and matters that are grounds for disqualification of a judge under Code of Civil Procedure section 170.1, these are only examples of common matters that reasonably could raise a question about a mediator’s ability to conduct the mediation impartially and, thus, must be disclosed. The absence of particular interests, relationships, affiliations, and section 170.1 matters does not necessarily mean that there is no matter that could reasonably raise a question about the mediator’s ability to conduct the mediation impartially. A mediator must make determinations concerning disclosure on a case-by-case basis, applying the general criteria for disclosure under (b)(1).”
Always Do a Conflicts Check
Many attorney/mediators and law firms often ask whether they must do a conflicts check at all since a mediation does not involve the rendition of legal services—unless of course there is a claim and they want coverage from their legal malpractice insurer. The short answer is “Yes—do the conflicts check.”
The important point is that an attorney’s ethical obligations do not end when the attorney undertakes a non-legal service, especially when the services are provided by his law practice or law firm. As a result, attorney mediators should identify all participants in a mediation and any interested insurers. These names should be compared with the attorney’s/law firm’s client matter list to see if any of the participants are clients or adverse parties. If so, the attorney/mediator should either decline the mediation or disclose the potential conflict and follow the rules for a consent or waiver of any conflict. This includes written full disclosure and written consent.
The more difficult question is how mediation participants are listed for determining conflicts with other firm representations. Here, the important step is to confirm with the participants that they are not clients of the attorney mediator or the law firm. This can best be accomplished through a form to be signed by all of the participants at the mediations stating: “Each participant understands and agrees as follows: no attorney-client relationship exists between the mediator and any participant based on this mediation.” With this disclaimer, the attorney/mediator or law firm can designate mediation participants as just that, as opposed to listing them in the client database.
Practicing attorneys make good mediators and can supplement their practice with this important additional service. To mediate well, get trained. To do it safely, read and follow the ethics rules for mediators and comply at all times with the rules. This includes special attention to the identification and resolution of anything that looks like a conflict.
Randy Evans and Shari Klevens are partners at McKenna Long & Aldridge, which has six offices throughout California. Suzanne Y. Badawi is special counsel at Sheppard Mullin Richter & Hampton LLP. She is an appointed member of the California State Bar Committee on Professional Liability Insurance and represents insurance companies in courts throughout California. The authors defend attorneys and law firms and regularly speak and write on issues regarding the practice of law, including “The Lawyer’s Handbook: Ethics Compliance and Claim Avoidance” (ALM 2013), “Georgia Legal Malpractice Law” (ALM 2014), and “California Legal Malpractice Law” (ALM 2014).
This is the fourth in a series of excerpts from “California Legal Malpractice Law” which is available at: http://lawcatalog.com/ProductDetail/18034/California-Legal-Malpractice-Law.
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