Another Way of Making Sausage…… The California Law Revision Commission Studies an Exception to “Mediation Confidentiality.”
It was Otto von Bismarck who gave us the descriptive quote, “Laws are Like Sausages. It’s better not to see them being made.” Bismarck was a master of the game of strategic diplomacy, and as Minister President of Prussia, achieved the unification of Germany in 1870. Another gem attributed to him is “Politics is the art of the possible.”
One of the missions of ACFLS is to monitor California family law legislation and to comment in favor of, or in opposition to, bills as they pass through the judiciary committees of the Assembly and Senate, other committees, the legislative bodies themselves, and even when a bill reaches the Governor’s desk. Currently, there is heightened interest in a proposal to create an exception to “mediation confidentiality,” as set forth in the California Evidence Code, section 1119 et seq. A study is being made by the California Law Revision Commission (“CLRC”) as to whether to create an exception to mediation confidentiality in response to the California Supreme Court case, Cassel v. Superior Court, 51 Cal. App. 4th 331 (2011). The CLRC process is different from the usual legislative process and is conducted in relative obscurity.
This article will explain the role of the CLRC and will address its study of mediation confidentiality. At their August 7, 2015 meeting, after two years of study, the CLRC voted to have its staff begin the process of preparing a draft of a tentative recommendation that would propose an exception to the mediation confidentiality statutes in the Evidence Code to address “attorney malpractice and other misconduct.” So, it is probable that the CLRC will propose a statute to create an exception to mediation confidentiality, but exactly what the exception will be and what it will encompass has not been fully decided. The CLRC is now in the process of taking testimony and receiving information to formulate its tentative recommendation.
As those who follow California legislation are aware, the usual process for a bill to become law, the usual way to “make sausage,” is for a member of the Assembly or the Senate to sponsor it and guide it through the Legislature. Members of the California Legislature may decide to sponsor a bill for many reasons. It may be a bill the legislator generated himself/herself to reform an area of law or to create a new statute to address an area he/she perceives is in need of clarity or regulation, or in reaction to a court decision. Sometimes, bills are proposed to the legislator by a constituent or a special interest group. Sometimes bills come out of the Conference of California Bar Associations, which has a process for vetting bills proposed by its members and, when approved by the Conference, their lobbyists seek sponsors in the Legislature. In the area of family law, both FLEXCOM (Family Law Executive Committee of the State Bar) and ACFLS have in recent years begun to sponsor affirmative legislation, instead of just supporting or opposing what comes down the proverbial pike. They too have to find a legislator to sponsor the bill.
Mediation Confidentiality and the California Law Revision Commission
The CLRC is another way by which bills are proposed. This way of making sausage tends to take longer, is more deliberative, and its proceedings are somewhat inconspicuous. The CLRC has time to go into depth to study issues and public policy. The CLRC is an independent state agency created by statute in 1953. It assists the Legislature and the Governor by examining California decisional and statutory law and making recommendations as to defects, anachronisms, or need for clarity and recommends legislation to make needed reforms. In some cases, the Commission decides that no new legislation is needed. When bills are proposed by the CLRC, they have a very high success rate of being enacted into law. In fact, once the CLRC has made a final recommendation and proposes a statute, over 90% of its recommendations have been enacted into law.
The Commission performs its work in a series of open public meetings scheduled throughout the year in various locations around the State. Decisions made at Commission meetings are recorded in the official minutes for each meeting, and both the minutes and staff memoranda are available online (see http://clrc.ca.gov). The Commission is a body of ten members, with seven members appointed by the Governor with the advice and consent of the Senate, plus one Senator, one Assembly Member, and the Legislative Counsel. The Commission is supported by a small professional staff. On the current CLRC staff is Chief Deputy Counsel Barbara S. Gaal, a Stanford School of Law graduate, who has worked extensively on the study of creating an exception to mediation confidentiality.
AB 2025 in 2012
In 2012, a proposed bill to create an exception to mediation confidentiality emerged from the Conference of California Bar Associations, and it became Assembly Bill 2025. The bill was a response to the California Supreme Court case Cassel v. Superior Court, 51 Cal. App. 4th 331 (2011). The California Supreme Court has a long history of upholding the concept of mediation confidentiality, and the Cassel case followed precedent. California is one of eighteen states that do not allow any exception to mediation confidentiality. Mediation confidentiality is codified in California Evidence Code section 1119, enacted in 1997, which expressly states:
No evidence of anything said or any admission made for the purpose of, in the course of, or pursuant to, a mediation or a mediation consultation is admissible or subject to discovery, and disclosure of the evidence shall not be compelled, in any arbitration, civil action, or other noncriminal proceeding in which, pursuant to law, testimony can be compelled to be given.
In the Cassel case, the high court held that mediation confidentiality barred Mr. Cassel, the client of an attorney, from introducing mediation-related communications between him and his attorney in the client’s malpractice lawsuit against the attorney. Some expressed outrage at that ruling, saying that it “legalized attorney malpractice.” Assembly Bill 2025 was the result of that reaction. The bill tried to craft an exception to mediation confidentiality for an action of legal malpractice or breach of fiduciary duty, if the attorney’s professional negligence or misconduct formed the basis of the client’s allegations against the attorney. The language in the original bill, proposed to add section (b)(4) to Evidence Code section 1120, was a very specific response to the Cassel case. Section (b) states, “This chapter does not limit any of the following:”
(4) The admissibility in an action for legal malpractice, an action for breach of fiduciary duty, or both, or in a State Bar disciplinary action, of communications directly between the client and his or her attorney during mediation if professional negligence or misconduct forms the basis of the client’s allegations against the attorney.
There was a swift and powerful opposition to the bill, citing the strong public policy reasons for maintaining mediation confidentiality as essential to the effectiveness of the mediation process. In the end, Assembly Bill 2025 morphed into a bill, which, by a concurrent resolution of both legislative bodies, directed the CLRC to analyze the issue and to make a report to the Legislature regarding an exception to mediation confidentiality. In July 2013, the CLRC entered into the fray and commenced its study as Study K-402, which states:
(a) Analysis of the relationship under current law between mediation confidentiality and attorney malpractice and other misconduct, and the purposes for, and impact of, those laws on public protection, professional ethics, attorney discipline, client rights, the willingness of parties to participate in voluntary and mandatory mediation, and the effectiveness of mediation, as well as any other issues that the commission deems relevant. Among other matters, the commission shall consider the following:
(1) Evidence Code Sections 703.5, 958, and 1119 and predecessor provisions.
(2) California court rulings, including, but not limited to, Cassel v. Superior Court (2011) 51 Cal.4th 113, Porter v. Wyner (2010) 183 Cal.App.4th 949, and Wimsatt v. Superior Court (2007) 152 Cal.App.4th 137.
(3) The availability and propriety of contractual waivers.
(4) The law in other jurisdictions, including the Uniform Mediation Act, as it has been adopted in other states, other statutory acts, scholarly commentary, judicial decisions, and any data regarding the impact of differing confidentiality rules on the use of mediation.
(b) In studying this matter, the commission shall request input from experts and interested parties, including, but not limited to, representatives from the California Supreme Court, the State Bar of California, legal malpractice defense counsel, other attorney groups and individuals, mediators, and mediation trade associations. The commission shall make any recommendations that it deems appropriate for the revision of California law to balance the competing public interests between confidentiality and accountability.
The CLRC Process
After the Commission has made a preliminary analysis on how to reform a particular law, it issues a tentative recommendation and then solicits public comment on the proposed reform. The public input on the tentative proposal may take place over a number of months. Typically, the Commission makes a final recommendation, which is delivered to the Legislature and the Governor and then published. The final recommendation includes an explanation of the proposed law, proposed language for a statute, and further comments on other code sections that may be affected by the new statute. Once the recommendation is delivered to the Legislature, it then must go through the same process as any other bill, with hearings, passing through both houses, and then going to the Governor’s desk for signature, although, because of the CLRC’s record of success, such a bill is likely to receive expedited treatment.
As to the exception to mediation confidentiality, the Commission completed the background work requested by the Legislature and, in the summer of 2015, started drafting a tentative recommendation for an exception to the mediation confidentiality statutes to address “attorney malpractice and other misconduct.” Because the CLRC’s studies are not greatly publicized, this decision by the CLRC to proceed to propose an exception to mediation confidentiality set off an alarm in the mediation community.
On August 7, 2015, the CLRC issued a number of decisions demonstrating what its tentative recommendation would encompass. Although these have been voted on, they are tentative and may continue to be subject to reconsideration. For example, in August 2015, the minutes showed that the Commission decided that the exception should apply to misconduct in a professional capacity both by an attorney or an “attorney-mediator” during a mediation. Apparently due to a wellspring of opposition, at its October meeting, several motions were made:
- The Commission minutes reflect that at the October meeting, Commissioner Victor King moved to reconsider the CLRC’s August 7, 2016 entire decision to prepare a draft tentative recommendation for an exception to mediation confidentiality. His motion failed for lack of a second. Then, the CLRC did vote to reconsider its position that would have the exception apply to “alleged misconduct of an attorney or an attorney-mediator.” It voted not to have the exception to mediation confidentiality extend to an attorney-mediator, but only to “alleged misconduct of an attorney acting as an advocate.” The Commission also voted, however, to add language to the proposed statutory text to show that it did not intend to create “mediator immunity.” That language is: “Nothing in this section is intended to affect the extent to which a mediator is, or is not, immune from liability under existing law.”
- The Commission also reconsidered its August 7th position that the exception “should apply regardless of whether the alleged misconduct by an attorney occurred during a mediation or outside of it.” In October the CLRC decided that the exception should only apply to evidence of alleged misconduct that occurred in “the context of a mediation.” “During a mediation” includes misconduct that allegedly occurred at “any stage of the mediation process.” This would include not only the face-to-face sessions, but a mediation brief, a mediation-related phone call, a mediation consultation, or other mediation-related activity. The key consideration is to be that the alleged misconduct occurred in a mediation “context,” not the time and date of the alleged misconduct.
Also in October, Commissioner King moved for reconsideration of the Commission’s August 7th decision that the exception should apply both in a State Bar disciplinary proceeding and in a legal malpractice case. He moved that the exception should only apply in a State Bar disciplinary proceeding. His motion failed for lack of a second. So, the exception to mediation confidentiality, if created, is crafted to apply to both California State Bar disciplinary proceedings and to legal malpractice proceedings.
Besides exempting attorney-mediators from the exception and having the allegations of misconduct “in a professional capacity” to be within “the context of a mediation,” the following are other tentative decisions of the CLRC for its proposed tentative recommendation:
- The exception to mediation confidentiality will not extend to enforcement of a mediated settlement agreement or to a proceeding to rescind a mediated settlement agreement. The Commission deferred the decision as to whether the exception will apply to disputes as to attorney-client fee agreements.
- The exception should be applied even-handedly for both the defense of a claim of professional malfeasance as well as proof of the charge. In August, the Commission was unsure whether to allow the exception for “reporting” of a violation of a State Bar rule as well as to proving or disproving the violation. At the October meeting, it decided that the reference to “reporting” is not “necessary,” without further elaboration. This could be confusing to an attorney who is accused of professional malfeasance as to when to notify his/her malpractice carrier.
- Any proposed statute should have a provision similar to Uniform Mediation Act section 6(d), which limits the disclosure to “only the portion of the communication necessary.”
- Mediation confidentiality would apply to all types of mediation evidence and not just to a private attorney-client discussion, which appeared to be the issue in the Cassel case and to which the original bill, Assembly Bill 2025, limited the exception.
- Evidence Code section 703.5 should be left as it is, making the mediator “incompetent” to testify in any subsequent civil proceeding, but preserving the exceptions already stated in the statute, which includes that a mediator could be competent to testify as to a statement or conduct in a State Bar investigation.
No sanctions will be imposed against anyone who invokes the exception to mediation confidentiality and then fails to prevail.
- The proposed exception to mediation confidentiality would be prospective only, applying to evidence from a mediation that commences after the exception becomes operative in the Evidence Code.
An idea that was introduced at the August meeting is continuing to be explored. That proposal is that once there is a “claim” of attorney misconduct or malpractice that occurred during a mediation, the evidence covered by mediation confidentiality as to the misconduct/malpractice would be reviewed by a judicial officer in an in camera proceeding before determining whether or not the exception to mediation confidentiality should be allowed and the evidence admitted. The CLRC staff released a memorandum on April 5, 2016, which will be discussed more below, exploring the option of the in camera process. It is unclear exactly what constitutes a “claim.” Of course, the filing of a complaint in a civil suit for legal malpractice would be a “claim,” but it is not clear how else a “claim” would be asserted.
December 10, 2015 Meeting
I attended the CLRC hearing in Los Angeles on December 10, 2015, as part of a large group of mediators who were in opposition to creating an exception, and I wrote a letter in opposition to creating any exception that was included in the staff memorandum. At that meeting, two new commissioners attended, replacing two whose terms were completed. Accordingly, those two new members will need to study the minutes from the prior meetings and all of the staff memoranda to be able to make an informed vote. Bear in mind as well that the CLRC is usually studying a half-dozen or so proposals at a time. It may be that there will be more changes in the composition of the Commission before the CLRC’s final recommendation as to creating an exception to mediation confidentiality.
Numerous members of the mediation and collaborative law community were in attendance at the December 10th meeting to oppose any exception to mediation confidentiality, and there were a large number of letters in the record as well. Those who were present spoke very articulately as to the problems that they perceive will be created by any exception to mediation confidentiality. They believe it will chill the open and frank discussions that take place during mediation because of the assurance of privacy. The issue of the right to contract was also raised, that competent adults should be allowed to contract for the services they want, so long as the person understands the rights that may be waived. Opponents also raised the issue that if the exception is created, it may be that attorneys will decline to participate in mediation, so that many litigants who want to participate in mediation to resolve their case will not have the benefit of counsel. Concern was expressed that this could affect the voluntary settlement officer court programs, as attorneys would be reluctant for their clients to participate. Two people spoke in support of creating the exception, and their arguments reiterated the concern that mediation confidentiality may unjustly shield attorneys who are accused of misconduct or malpractice during mediation proceedings.
Many ideas were floated during the discussion, including having no exception for mediation confidentiality in family law cases and/or in collaborative family law cases. Because the process of collaborative family law is a form of mediation in which each party is represented by an attorney, concern was expressed that an exception to mediation confidentiality would severely impair the collaborative law process as well as deter attorneys from participating as consulting attorneys in mediation. The commissioners engaged with the speakers and asked many questions.
February 4, 2016 Meeting
There was another meeting held in Sacramento on February 4, 2016. There were two staff memoranda submitted to the CLRC, Memoranda 2016-8 and 2016-9, but no action was taken at that meeting.
Memorandum 2016-9 simply indicated that staff was going to do more intensive research into the aforementioned idea of the in camera proceedings in which the judge decides if an exception to mediation confidentiality should be made in a particular case.
Memoranda 2016-8 included a summary of a most important letter from Ron Kelly, who helped to draft the 1997 Evidence Code section 1119 that created the mediation privilege. Mr. Kelly made six suggestions in his letter as to how to implement procedures to protect mediation confidentiality.
Among Mr. Kelly’s suggestions, two were about limiting any exception to confidentiality only as to communications and/or conduct between the client alleging misconduct and the lawyer defending against the claim, and not allowing anyone else to be subpoenaed or to turn over documents created for mediation.
Another idea is to create a standard for pre-mediation disclosure to ensure that parties fully understand they may be waiving malpractice claims, giving specific examples.
Of these recommendations, the idea of limiting the exception only to the client and his/her attorney will still chill the participation of attorneys in mediation and in collaborative law as well. The more constructive idea is to create standards for pre-mediation disclosure to participants. As long as there is informed consent, the parties fully understand the contract being entered into, they are not entering into the contract under duress or coercion, and the contract is not unconscionable, consenting adults should be allowed to enter into such contracts.
Critical Need for Data As to Complaints
Ron Kelly’s letter also questioned the need for any exception to mediation confidentiality, since there have been relatively few cases in which attorney misconduct or malpractice during mediation has been asserted. He calls upon the CLRC to request that the State Bar provide anonymized statistical information or a way to search through the State Bar’s data on complaints against lawyers for misconduct during mediation. Over the past five years, Kelly reported that there have been 73,717 complaints against California lawyers for misconduct or malfeasance made to the State Bar. He reported that the Office of the Chief Trial Counsel made an informal email poll in 2014 to State Bar investigators and prosecutors about complaints against attorneys in mediation. That inquiry yielded only four or five cases that identified a problem involving the current mediation confidentiality protections. That is less than 1% of all State Bar complaints for attorney misconduct within the context of a mediation!
Kelly searched for the keyword “mediation” in all published State Bar Court appellate level decisions from November 2010 through May 2015. His search did not yield any cases alleging misconduct by lawyers in mediation.
To date, there are three published cases involving attorney misconduct or malfeasance within the context of a mediation. None of the three involves family law mediation or collaborative law. At the December 10, 2016 hearing, there was discussion about exempting family law mediation and collaborative law from the mediation confidentiality exception.
There is a significant question as to whether an exception to mediation confidentiality, that may deprive litigants who want to engage in mediation or in collaborative law of having attorneys to represent them, is truly needed. Ron Kelly states that there have been hundreds of thousands and probably millions of Californians over the past thirty years who have received the benefits of being involved in a less costly and more predictable process of mediation versus only a few cases where clients involved in mediation have sought discipline for their attorneys for misconduct by the State Bar or to sue them for malpractice.
April 14, 2016 and Future Hearings
As of this writing, there are five more CLRC hearings scheduled in 2016: April 14, 2016 (Sacramento), May 26, 2016 (Sacramento), July 22, 2106 (Los Angeles), September 22, 2016 (Davis), and December 1, 2016 (Los Angeles).
On April 5, 2016, the CLRC staff released an extensive memorandum concerning the proposed in camera proceedings in which a judicial officer would consider the allegations as to evidence covered by mediation confidentiality and decide as to whether or not to allow an exception for it to be admitted into evidence. There are many questions concerning this idea that must be answered, including the cost to the courts and burden on the judicial officers of such in camera proceedings, and whether it would apply in all cases whenever a person alleging misconduct/malpractice would invoke the exception.
In Memorandum 2016-18, the CLRC staff recognized the purpose behind mediation confidentiality and its importance to the mediation process. It stated that there is “broad consensus that confidentiality is essential to effective mediation.” It set forth the basic tenets of mediation that are served by mediation confidentiality:
(1) Confidentiality promotes candor in mediation.
(2) Candid discussions lead to successful mediation.
(3) Successful mediation encourages future use of mediation to resolve disputes.
(4) The use of mediation to resolve disputes is beneficial to society.
In considering the use of the in camera review by a judicial officer to protect this confidentiality, while at the same time, allowing the litigant an opportunity to seek to use evidence from a mediation to prove his/her claims, the staff goes into extensive discussion of the substantial body of case law concerning the First Amendment rights of citizens to observe their courts in action and obtain access to judicial records. It recognizes that in adjudicating an allegation of mediation misconduct by an attorney, “a court almost certainly will confront a panoply of issues relating to use of mediation evidence.” Among the issues identified would be the necessity of filing a redacted complaint for attorney malpractice as to allegations regarding the mediation context until the court decides on the admissibility of evidence covered by mediation confidentiality.
After some eighty pages, the staff does not reach a conclusion but cautions the CLRC to “think hard about whether to continue in this direction, and, if so how to proceed. The staff is eager for its guidance.” The Memorandum also states: “Stakeholders and other persons interested in this study could provide valuable assistance by reviewing this memorandum carefully, focusing on the substantive issues raised in it, and offering specific insights, comments, suggestions, and other concrete information pertaining to those matters.”
At this juncture, the CLRC is still receiving comments. There is no proposed statute as yet, only the various minutes of the meetings and some tentative provisions for proposed legislation. As the CLRC must first issue a complete tentative recommendation, and then have more hearings to receive comments, before issuing its final recommendation with a proposed statute, it does not appear likely that a bill will emerge this year. The more likely scenario is that the CLRC’s Final Recommendation will come out in late summer or fall of 2016 and any proposed legislation will be introduced in 2017.
The legislation to create an exception to the hallowed concept of mediation confidentiality is not sausage yet. Those who are concerned about the impact of any exception to mediation confidentiality on family law mediation and collaborative family law still have an opportunity to provide their comments to the CLRC either in the form of a letter or by appearing at a hearing. Because of publication realities, by the time this article appears, July 22, 2016 in Los Angeles will be the next meeting. (http://clrc.ca.gov).
There is still an opportunity to shape the CLRC’s proposal before it becomes a bill. It will be more difficult to influence it once it becomes a bill because of CLRC’s history of success in gaining passage of its proposals. The purpose of this article is to inform ACLFS members as to the CLRC process and the significance of Study K-402 making an exception to mediation confidentiality. After becoming informed, the public is invited to weigh in on these issues.
There is a lot more grinding to do before this sausage is formed!*
*On April 7, 2016, the CLRC staff sent out Memorandum 2016-19 for the April 14, 2016 hearing, which included a letter from the California Judge’s Association in opposition to creating an exception to mediation confidentiality. It can be accessed at http://clrc.ca.gov.