Mediation Structure

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Good Faith:
The term good faith eludes precise definition and cannot be so defined by statute or court. Of course, some laws (and many contracts) require that a party make a “good faith effort” at some task. While this does not require that the party set out to accomplish the task at all costs, it is also not met by a party who makes only a perfunctory attempt. The task must be undertaken with an honest desire toward completion, without any intent to secure unfair advantage.

Although usually used in the context of political parties and elections, a caucus is a general term for a meeting closed to the outside, in which various matters are discussed and decisions may be made.

Mediation Structure – The Beginnings

As with every other facet of mediation, the actual operation of mediation in any given case can vary dramatically. Depending on which source one examines, there are anywhere from 3 to 13 distinct stages in a mediation.

“The major stages in any mediation include getting started, pre-session preparation, and the mediation sessions themselves.” -Dauer, 8-40
  •     In Chapter 9 of Folberg (pp. 224 – 225), the following subheadings appear under the heading What Is the Structure of Mediation?

                    a. Pre-mediation

                    b. The Joint Session

                    c. Private Caucusing, and No-Caucus Models

                    d. Moderated Discussions

                    e. Follow-Up Contacts

  • Nutshell (p. 69) points out that
  • “Professor Kimberlee Kovach describes…thirteen stages [4 are optional]….Christopher Moore describes twelve stages…Jay Folberg and Alison Taylor describe seven stages….” (We will spare you, in this chapter, from the complete lists of each of these!)

It would therefore be most helpful to develop our own list of the stages of mediation, bearing in mind what others have had to say about the subject, rather than try to determine which of the above-referenced authors is correct. Most likely, each is approaching the process from a slightly different point of view, and few would likely disagree on the fundamentals of mediation.

Also, it is important to note that we are discussing here only what some would automatically think of when they think of mediation: settlement proceedings with attorneys present. There are, however, other forms:

Generally, mediation falls within two categories: traditional or classic mediation on the one hand, and voluntary settlement conferences on the other hand. In classic mediation, attorneys are generally not involved. The mediator meets directly with the parties to facilitate negotiation. Saeta v. Superior Court, 117 Cal. App. 4th 261, 269 (Ct. App. CA. 2004) (citing Knight et al., Cal. Practice Guide: Alternative Dispute Resolution, supra, PP 3:10, 3:12, pp. 3-3, 3-24.11 to 3-24.12.)

In other words, it is conceivable that two parties in a dispute would sit down, absent counsel, to attempt to settle their differences (what the Saeta court calls “classic mediation.”) Some court plans involving ordered mediation for small cases are likely to result in such “traditional” mediation, but even in small cases today many parties seek the advice of counsel…as well they should. And while the Saeta court calls mediation with attorneys a “voluntary settlement conference,” this is actually what most people today would simply call “mediation.”

Small case, court-ordered mediation is a far more simple process than that which is discussed below. But in large cases, including most commercial litigation, the procedures for mediation are many and varied.

Mediation Structure Step 1 – Mediation Agreements  

Mediation always begins with a dispute between two (or more) parties. Either one of the parties suggests mediation, or a court or statute requires that the parties make a good faith effort at mediation before pursuing satisfaction in court. Ideally, if mediation is at the discretion of the parties, at this stage, the parties will enter into a written mediation agreement. No mediation agreement is required if a court has ordered mediation. As we shall see, however, a court may order mediation with strings attached, such as a strict order of confidentiality.

The mediation agreement itself is not the most difficult document to draft successfully, i.e., in a way such that both parties sign the agreement which gives your client the maximum possible benefit with the minimum possible risk. Far more contentious is the settlement agreement, if and when mediation results in a settlement.

A mediation agreement can be any document which evidences the intent on both sides to enter into mediation and to make a good faith effort to reach a settlement. This “good faith” language is to allow for some recourse (weak though it may be) should one party enter into mediation solely as a stalling tactic or in order to gain some other tactical advantage in the litigation. A written agreement is not required in order for parties to enter   into mediation. It is, however, always wise to secure it in writing.

Most commonly, when there is a written agreement to mediate, that agreement is just one part of a larger contract between the parties. In these cases, the clause is drafted, and the contract signed, in anticipation of a potential dispute arising from the contract. When a dispute does later arise, the mediation clause kicks in.

Although these clauses are sometimes turned into an issue at trial, with one party insisting that clauses wherein parties agree to non-binding mediation cannot be enforced, the courts are fairly well settled on the enforceability of these clauses. See Harrison v. Nissan Motor Corp. in U.S.A., 111 F.3d 343 (3rd Cir. 1997) (the New York Arbitration Act and the Federal Arbitration Act modeled after the New York act were meant to encourage courts to enforce parties’ agreements to arbitrate, and the principle holds true for non-binding mediation as well as for binding arbitration).

Not only will courts enforce these mediation clauses, but they will do so with full knowledge that doing so may be an exercise in futility. In United States v. Bankers Ins. Co., 245 F.3d 315 (4th Cir. 2001) the court dealt with an agreement to enter into nonbinding arbitration. Nonetheless, the reasoning in this holding can be extended to our current discussion of mediation. In Bankers Ins. (at 322), the court pointed out that while

“non-binding arbitration may turn out to be a futile exercise…this fact does not, as a legal matter, preclude a nonbinding arbitration agreement from being enforced.”
(citing Wolsey, Ltd. v. Foodmaker, Inc., 144 F.3d 1205 (9th Cir. 1998))

So the 3rd, 4th, and 9th Circuits, among others, have all established that they will enforce agreements to mediate (or agreements to enter into non-binding arbitration). Two points of caution must be made here. First, “non-binding arbitration” is not the same as mediation. While both are non-binding, a mediator’s role is to assist parties in reaching an agreement. On the other hand, an arbitrator’s role, even in non-binding arbitration, is to render a decision. Second, one must be careful in how the mediation clause is drafted, as language may affect later enforceability.

A recent 1st Circuit case (Brennan v. King, 139 F.3d 258 (1st Cir. 1998)) distinguished between a contract which gives a party the “right” to non-binding proceedings and a contract which requires that the parties enter into such proceedings. Following the court’s reasoning, the precedent to the Brennan case, wherein courts enforce agreements to mediate, would not apply to the first scenario (where the parties have only the “right” to mediate), as there has actually been no agreement to mediate.

EXAMPLE: Tenn and Peller enter into an agreement to put on a show together. Including in the agreement is the following language: “In the event of disagreement, either party shall have the right to commence mediation in an attempt to resolve the disagreement.” Part of the agreement was that Tenn would do all the talking. When Peller spontaneously breaks into song during one night’s performance, which he follows with a lengthy speech, Tenn tries to force Peller to mediate. Peller refuses, and Tenn begins a court action to enforce the contractual provision.

Because the contract merely gave the parties the right to mediate, it would not be enforceable under the Brennan holding. If instead the contract had read “In the event of disagreement the parties shall enter into mediation proceedings prior to seeking resolution in court,” the Brennan court would have enforced the clause.

Whether the agreement to mediate pre-dates the dispute or not, whether it is in writing or not, at some point we have an agreement to mediate. At that time, we must find someone to mediate.

Mediation Structure Step 2 – Choosing the Mediator  

Once it is settled that the case will be mediated, a mediator, or “neutral,” must be appointed. If the mediation results from a contract, there might be a clause concerning how the mediator will be picked (e.g., “an American Arbitration Association mediator shall be selected by the party against whom the action was brought, and all fees for mediation shall be paid by the party bringing the action, unless otherwise agreed upon during the mediation.”) Of course, while mediators are theoretically impartial and “neutral,” mediators are people too. Some thought should go into selecting a mediator who might be sympathetic to your client, or who might take a liking to some member of your legal team – something as simple as graduating from the same school can help forge a bond.

A quick internet search for “mediator” results in a great number of mediators who are more than happy to make themselves available…for a nice fee, of course. Some are more qualified and more experienced than others. This does not mean, however, that you should seek the most qualified, most experienced (and likely most expensive) mediator in every case.

Most mediators are practicing or former attorneys or ex-judges (judges currently sitting on the bench have their own code of ethics which would preclude their serving as mediators). Some mediators lack any formal legal training and are instead persons who have professional experience in areas such as medicine or science or other areas which serve as the context of the dispute underlying the mediation.

A mediator who is appropriate for one dispute might not be appropriate for another dispute. For example, if your client’s goals include some sort of reconciliation with the opposing party, it might be a good idea to seek a mediator who has some background in counseling. On the other hand, if negotiations between the parties have been particularly divisive and angry, and if the ideal result for your client involves only payment of money, a strong mediator who tends to impose a strict, formal process might be best suited to the task. Or, in yet another situation, if the conflict involves a highly technical dispute between an engineering subcontractor and a general contractor as to who is at fault for a multi-million dollar flaw in a major engineering project, a mediator with some knowledge of engineering would be best able to keep discussions moving while understanding the various points made by each party.

Sometimes, selection of the mediator is not at the parties’ discretion. The District Court for the Southern District of New York is just one of the many courts which have instituted various plans to reduce court backlogs by ordering parties to the different forms of alternative dispute resolution in certain cases. According to the plan guide,

“Mediation is a confidential ADR process in which a disinterested third party directs settlement discussions but does not evaluate the merits of either side's position or render any judgments. By holding meetings, defining issues, defusing emotions and suggesting possibilities of resolution, the mediator assists the parties in reaching their own negotiated settlement. The main benefit of mediation is that it can produce creative solutions to complex disputes often unavailable in traditional litigation.”

Orders to mediate under this particular plan can include orders which not only prevent the parties from revealing anything they learn in mediation to the outside world, but also prohibits them from revealing anything to the judge. Bernard v. Galen Group, 901 F. Supp. 778 (S.D.N.Y. 1995) deals with a case in which the parties had been ordered into mediation, and in which the order included the following:

"The entire mediation process is confidential. The parties and the Mediator may not disclose information regarding the process, including settlement terms, to the court or to third persons unless all parties otherwise agree. The identity of the Mediator is not to be disclosed to the court." -Bernard v. Galen Group at 780.

This plan, therefore, allows for a procedure whereby parties can be compelled to enter into mediation in which neither the parties, nor the judge ordering the mediation, has the power to select the mediator. Mediators under this plan are attorneys who perform the service pro bono, and there is no cost to the parties compelled to mediate. The great success of these plans is not the topic of this section but should be noted. In these cases, where there is no strategy involved in selecting a mediator, we perhaps come closest to securing a true “neutral” to act as mediator.

Mediation Structure Step 3 - Pre-Mediation

Before the actual mediation can begin, a number of “housekeeping” issues must be addressed. Decisions to be made might include who attends the sessions, to what extent there will be informal discovery, what information the mediator will receive in advance, the time and location of future mediation sessions, etc. The parties and mediator should also consider whether the mediator chosen has any conflicts of interest, and if so, a new mediator should be picked.

It is important to know that submissions to the mediator take a form very different from submissions (pleadings) to a court. In trial, any pleadings filed by one party are also provided to the other party – the judge never sees any information or argument from one which is not made available for inspection by the opponent. In mediation, however, a mediator might receive a summary of the case from one party which will never be seen by the other party. This is because the mediator does not have the power to make decisions. Of course, this does not mean that the attorneys will give the mediator private insight into their strategies – the mediator has the ability to shape the discussions and settlement, and the attorney who shows his hand too soon might cause harm to his client’s case.

Many of the court plans for ordered mediation involve mediators who are working for a small fee, or no fee, and who are as pressed for time as are the courts, for which they are supposed to relieve pressure. These mediators, especially in small cases, are unlikely to engage in lengthy pre-mediation efforts to become familiar with the specifics of the case. Private mediators, however, whose fee is paid by the parties in dispute, will sometime engage in lengthy pre-mediation activities.

Each party might submit something akin to a court brief to the mediator, explaining her side of the dispute. Alternatively, or even additionally, the mediator might meet with each party and his counsel in private. It is also possible for there to be joint sessions, in which the mediator meets with the parties simultaneously. Although the agenda for these joint sessions may differ from the agenda for the mediation sessions themselves, it is sometimes difficult to distinguish a pre-mediation joint session from a joint mediation session.

Mediation Structure Step 4 – The Mediation Session(s)  

There are innumerable possibilities for how the first session proceeds. Each party might meet individually with the mediator before the first joint session takes places, in which case discussion between the parties might begin immediately; moderated, of course, by the mediator. Or, the first joint session might serve as a brief opportunity for everyone to meet prior to individual sessions with the mediator. Still another scenario would have the first joint session take place absent any individual meetings with the mediator, but instead begin immediately with discussion.

While mediation is often less costly than a trial, it is not free, Mediators often charge from $1,000 per day to as much as $4,000 per day. While multi-day mediations are by no means uncommon, parties usually seek to maximize the benefits they receive from their mediators’ time. How to maximize these benefits, however, is by no means agreed upon by all.

Some parties will want uninterrupted discussion with the opposition, while others will feel that frequent “private caucusing” maximizes the mediator’s effectiveness (See Folberg at 225.). In some cases, the parties may be at such strong odds that no direct discussion will be possible, and all communication will be filtered through the mediator. Here is where the importance of wisely selecting your mediator might make the crucial difference in arriving at a settlement which is favorable to your client or returning to continue the battle in court.

In some situations, the workings of the mediation will be carefully delineated in the mediation agreement. It is generally preferable, however, to permit the mediator a good deal of latitude in directing the process. The mediator’s chosen course would then be explained to the parties during the first session.

The parties will continue to bargain and negotiate until one of the following results occurs:

  • The parties and mediator recognize that no settlement is forthcoming. In this case, mediation will end, and court proceedings will pick up where they left off.
  • The parties reach a settlement agreement. In this case, the potentially difficult process of drafting a mutually acceptable settlement agreement will begin.

In some cases, mediation can go on for years. And even then, settlement might not be reached or might not be enforced by a court.

For an example of a complex, lengthy mediation, consider the “Clergy Cases” discussed in the upcoming chapter.

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