Coda: The LRC’s November 2016 Memo of Possible Alternative Mediation Reforms
Since we submitted our original article, “Mediation Twenty Years Later: A Cautionary Story and Proposed Reforms,”1 the Law Revision Commission (“LRC”) decided to prepare (1) draft tentative legislation2 to address the original question of reforms in the context of attorney malpractice, and (2) a memorandum to the Legislature regarding alternative reforms, such as those proposed in our above original article (“Memo”). On November 23, 2016, the LRC released the Memo. This article addresses and summarizes some of the Memo’s proposed alternative reforms. These additional reforms could either supplement the proposed legislation, or else provide a basis for alternative legislation.
The LRC saw, during the lengthy course of its work, that these alternative options generated significant public interest despite the fact that they somewhat deviated from the Legislature’s original directive.
In considering whether the LRC should include multiple reforms in its tentative recommendation, it considered a number of factors, such as (1) whether a suggested reform would complement the LRC’s tentative legislation, such that the enactment of both reforms may better achieve the LRC’s policy objective; (2) whether there would be any potential harm in proposing an alternative along with the tentative legislation; and (3) whether it is advantageous from an efficiency standpoint to propose multiple alternatives in a single recommendation, rather than proposing only one and then starting over if the proposal is not accepted. The Commissioners were directed to keep these factors in mind when considering alternative proposals.
A. Proposals Regarding Disclosure Requirements.
One of the main alternatives considered (and one of the alternatives proposed in our original article) was the possibility of statutorily requiring that certain information be disclosed to parties before they decide whether to mediate. These suggestions assume that the mediation confidentiality rules will remain as is, with no new exception created, but rather that parties will be more informed before entering into the process. This concept was discussed in different ways, such as “written notifications,”3 “informed consent,” “safe harbor mediation agreements,” “a standard list of admonitions,” and “a warning to the parties.” Consistent with the original scope of the study, the LRC declined to discuss suggestions that focused on mediator misconduct rather than attorney misconduct.
But it did suggest a few disclosure requirements that may address the possibility of attorney misconduct in the mediation process, such as:
- Disclosures that California’s mediation confidentiality statute could prevent introduction of evidence that an attorney engaged in misconduct in a mediation, including evidence of private discussions between an attorney and a client relating to a mediation;
- Disclosures that California’s mediation confidentiality statute might prevent a client from pursuing a claim against an attorney for committing malpractice in a mediation;4
- Disclosures of examples of legal malpractice that might occur in a mediation;
- Disclosures regarding the holding in Cassel v. Superior Court,5 in which the California Supreme Court interpreted the mediation confidentiality statute strictly, allowing exceptions only in very rare circumstances;
- Disclosures that any modification of an attorney-client fee agreement during a mediation must be in a signed writing or otherwise memorialized to be enforceable;
- Disclosures that parties may “reserve the right to have the statements made by their attorneys and the mediation admissible in a lawsuit against an attorney for malpractice”;
- Disclosures of basic information about mediation confidentiality;
- Disclosures that any resolution of the dispute in mediation requires voluntary agreement of the parties and that either party may withdraw at any time; and
- Disclosures regarding the nature of the mediation process, the procedures, and the roles of the mediator, the parties, and the other participants.
One mediator suggested that all parties be presented with a sheet entitled “Information and Caution of Mediation Confidentiality,” a copy of which is appended to this article at Figure 1. Other suggestions assumed that an exception to mediation confidentiality would be adopted to address attorney misconduct, such as proposing that attorneys or mediators would be statutorily required to inform mediation participants that such an exception exists, or proposing mandatory disclosures about the potential difficulty of proving malpractice.
After considering who should make such a disclosure to parties, i.e., whether it should be the mediators or the attorneys, the LRC concluded that this should be an attorney’s responsibility. In the case of pro per litigants, the LRC states that there would not be a need for anyone to make disclosures, as there is no risk of attorney malpractice when there are no attorneys. The LRC did not address a situation where one party has an attorney and the other does not, but said that it must give “careful thought to this situation if it decides to go forward with a mandatory disclosure requirement of some type.”
The LRC also discussed various methods in which the disclosures could be communicated to parties, such as through an informational video, in the fee agreement for the mediator, or in a Judicial Council form.6 After considering these various proposals, the LRC concluded that if it is to propose a mandatory disclosure requirement, it should mandate that the disclosure be conspicuous, in writing, in plain English, using specific required language. The LRC determined that requiring the development of a Judicial Council form would likely be the best way to accomplish this, and that the parties, attorneys, and mediator should sign or initial the form and retain it for a specific period of time. If a Judicial Council form were to be adopted, the LRC would suggest an amendment to Evidence Code section 1120 to provide another exception to inadmissibility, expressly allowing the Judicial Council form to be received into evidence.
The LRC concluded its discussion regarding potential disclosures by noting that a statutory requirement to disclose specified information on mediation confidentiality and its potential effects might help alleviate the concerns that led the Legislature to request this study. The LRC will continue to consider whether it should propose actual legislation regarding disclosures.
B. Proposals Regarding Waiver or Modification of Mediation Confidentiality by Agreement.
In addition to suggested reforms regarding disclosure requirements, the LRC also considered revisions to the law to permit parties to either (1) waive mediation confidentiality or (2) modify mediation confidentiality by agreement of all participants. Under existing law, a waiver of mediation confidentiality generally requires the express agreement of all persons who conducted or otherwise participated in the mediation. However, an attorney subject to malpractice would not want to consent to a waiver of confidentiality. If the statute was amended to permit a waiver of confidentiality by all parties except an attorney accused of misconduct, as suggested by Justice Chin in his Cassel concurrence, the LRC feels that this would have little impact as mediation participants would have little incentive to provide such waivers.
Further, the potential prospect of having communications disclosed without the attorney’s consent may inhibit attorneys from communicating freely and effectively during a mediation.
To address these issues, the LRC suggests instead a reform to allow parties to contractually agree to a prospective waiver at the inception of mediation, which their attorneys could not block. This waiver would provide that the parties will cooperate in any action to assist a party in redressing their claims against an attorney engaged in misconduct.
Another approach would be to require an attorney representing a client in mediation to “agree that mediation communications directly between the client and his or her attorney may be disclosed in any action for legal malpractice or in a State Bar disciplinary action.”
Alternatively, instead of proposing changes to the waiver rules, the LRC also considered suggestions regarding the extent to which mediation confidentiality can be adjusted by agreement of all the mediation participants. The LRC memorandum cited the comments previously submitted by Herring Law Group, which proposed:
Parties should be presented with an express option to waive confidentiality…. In this manner, mediation confidentiality would become a real point of consideration rather than a tactic and apparently unavoidable expectation of the ADR “system.” It would hurt no one to provide the parties the opportunity to make an educated choice; rather, choice would be good. (Emphasis in original.)
The LRC is considering proposing an addition to the Evidence Code to make it explicit that nothing prohibits all participants in a mediation from entering into an express written agreement in which they all agree to a different customized set of confidentiality rules. However, in the event that the LRC proposes this type of provision, it would suggest allowing parties to only decrease, not increase, the current level of confidentiality. The LRC left open the question of whether it might ultimately propose such an addition to the Evidence Code in its ultimate recommendations.
C. Proposed Reforms to Safeguard Against Attorney Misconduct.
The LRC also considered alternate approaches focusing on decreasing the risk of coercion, fraud, duress, malpractice, or other attorney misconduct in mediation. One possibility that has been enacted into law in other jurisdictions is the establishment of a mandatory cooling-off period after a mediation. This would allow each party to think over the terms, obtain more information, and then rescind the agreement if they change their mind.
However, as noted in our original letter to the LRC, this cooling-off approach is not without drawbacks. An arbitrary reconsideration period of some few days would not have helped our client (referenced in our original article), as she did not discover the unfairness of her deal until two weeks after she signed it. A cooling-off period would not be successful in a courthouse mediation program, as getting back to the courthouse to put an agreement on the record days later would pose a burden on the people served by court mediation programs. Cooling-off periods could also cause issues in the face of an impending trial or discovery cut-off date.
Another considered safeguard is the suggestion that mediators should conduct the equivalent of a voir dire before a client signs a mediated settlement agreement. Questions of the parties could include the following:
- Have you read the proposed settlement agreement?
- Do you fully and completely understand the terms of the proposed settlement agreement?
- Do you understand that because this settlement is occurring in the mediation, nothing said, or written will be admissible in court?
- Are you satisfied with your representation today? Do you understand that because this settlement has occurred in mediation, you are giving up you right to later complain about this representation?
- Are there any other questions you wish to ask of me or anyone else?
One issue with this approach, as identified by the LRC, is how a disputant would prove or disprove that the mediator complied with the voir dire process and what consequences would there be for noncompliance. In particular, some of the questions may delve into the substance of the mediation. One idea to avoid this problem might be to use a written voir dire form consisting only of yes/no checkboxes, which would then be admissible as evidence through an amendment of Evidence Code section 1120.
Another proposal to prevent misconduct would be to ensure that key representations (i.e., those that are critical in convincing a disputant to settle) would be memorialized in admissible manner. For example, a simple form could be used, which would say (1) Party A is relying on the following representations made by Party B, and (2) Party B agrees to waive confidentiality with respect to whether Party B made the representations identified. This form would then be admissible in the event of a dispute.
The LRC has not yet decided if it will produce the ideas above as an alternative to its draft tentative legislation, a supplement, or both.
After considering the various possible approaches discussed above, the LRC needs to decide which reforms to include in its recommendation to the Legislature. It must decide whether it will propose just the draft legislation set forth in Memorandum 2016-58, the draft legislation plus one or more additional reforms, or some other approach. The LRC’s next meeting will occur on February 2, 2017, in Sacramento, during which it will further discuss the possibility of including additional reforms. Further public comment will also be taken.
INFORMATION AND CAUTION ON MEDIATION CONFIDENTIALITY
1. Summary of California Mediation Confidentiality Law. To promote communication in mediation, California Evidence Code sections 703.5 and 1115-1128 establish the confidentiality and limit the disclosure, admissibility, and court’s consideration of communications, writings, and conduct in connection with a mediation. In general, they provide:
a. All communications, negotiations, or settlement offers in the course of a mediation must remain confidential;
b. Statements made and writings prepared in connection with a mediation are not admissible or subject to discovery or compelled disclosure in noncriminal proceedings;
c. A mediator’s report, opinion, recommendation, or finding about what occurred in a mediation may not be submitted to or considered by a court or another adjudicative body; and
d. A mediator cannot testify in any subsequent civil proceeding about any communication or conduct occurring at or in connection with a mediation.
2. CAUTION. This means you cannot rely on statements made in mediation. They can’t be admitted in evidence in any later non-criminal proceeding UNLESS they are part of a written settlement agreement AND your settlement agreement is signed by all necessary parties and states that you want it to be an enforceable agreement (or words to that effect—see California Evidence Code section 1123).
You cannot rely on statements from the other side such as
“You need to accept much less money than you believe is fair because I only have the following assets and would declare bankruptcy if we went to court”
UNLESS you include this list of assets in your settlement agreement and make the accuracy of the list a condition of your settlement.
You cannot rely on statements from your own lawyer such as
“If you accept the proposed settlement, I (your lawyer) will reduce my legal fees by this amount”
UNLESS you ensure this is included in your settlement agreement.
1 Our original article was published in Winter 2017 issue of the Family Law Specialist, the Journal of the Association of Certified Family Law Specialists.
2 The LRC’s draft tentative legislation is set forth in Study K-402 Memorandum 2016-58, available on the LRC website,
http://www.clrc.ca.gov/pub/2016/MM16-38.pdf. Consistent with our original article, this article refrains from addressing the LRC’s draft tentative legislation concerning potential exceptions to mediation confidentiality. Rather, this article focuses on alternatives or supplements to the tentative legislation relating, for instance, to potential requirements for mediator neutrality and mediation disclosures.
3 Written notifications were suggested by Herring Law Group’s September 2016 letter to the LRC.
4 This was suggested by Herring Law Group to require pre-mediation presentation of written notifications that inform parties of the existence, scope, and potential ramifications of mediation confidentiality, such as warning that “post-settlement discoveries of misrepresentations, omissions, or fraud that might have been committed prior to or in mediation could be impossible to investigate or rectify.”
5 Cassel v. Super. Ct. (Wasserman, et al.), 119 Cal. Rptr. 3d 437 (2011).
6 The development of a Judicial Council form was one of the proposals suggested by Herring Law Group.