Mediation of Legal Disputes-The Basic Law

Mediation refers to one of various formal methods used to attempt resolve legal disputes other than through formal court trial or arbitration. Mediation and arbitration constitute methods of “alternative dispute resolution” (ADR). Arbitration is essentially a private trial, often under the auspices of the American Arbitration Association (“AAA”) or JAMS and the decision of the arbitrator is enforceable in a court of law.  Mediation, on the other hand, is an attempt at having the parties reach a voluntary settlement utilizing a trained person who seeks to convince the parties to resolve the issues between them.  That person is known as the “mediator,” and most are trained professionals who have numerous techniques to help achieve resolution.

Instead of a judge or jury rendering a judgment or verdict, or an arbitrator rendering a binding decision, a “mediator” merely facilitates open discussion and tries to assist the parties in resolving their differences on their own. Mediation thus avoids the “win-lose” set-up of a trial or arbitration.

Those who go through formal mediation achieve settlement by mutual compromise. For that reason, mediation may be particularly helpful or appropriate in situations where parties have an ongoing relationship (neighbors, business associates, divorcing parents of minor children, etc.) and do not want that relationship destroyed by the adversarial process of trial. In addition to being less adversarial than trial or arbitration, mediation tends to be less expensive, faster, and requires the mutual consent of all parties to achieve a settlement. No one can be “forced” to settle.

Required and Voluntary Mediation:

Mediation of a dispute may occur as a result of voluntary private agreement, a community program, or court order (which includes statutory mediation of some matters prior to trial). However, the term “mandatory mediation” is misleading. The parties are not forced to settle. Instead, they are “forced to the table” to try to resolve their dispute prior to trial. Often court systems, in an effort to eliminate some trials, impose mandatory mediation as part of the litigation process.  The decision to accept the outcome of the mediation and settle the matter remains voluntary. If the attempt at mediation fails to resolve the dispute, the parties continue to litigate the matter.

A voluntary agreement to mediate a dispute may exist prior to the dispute, as in a contractual provision in which the parties agree to mediate any dispute that may arise in the future. Alternatively, a decision to mediate may come about after a dispute has already occurred and the parties consent to mediation as an effort resolve the matter without going to court.

Statutory mandatory mediation usually governs disputes concerning certain subject matters, such as labor relations, family matters (e.g., custody disputes), or consumer matters. Many states also have mandatory mediation provisions for civil disputes in which the dollar amount in controversy falls within a certain range. In those circumstances, mediation becomes an integral part of “pre-trial procedure,” promoting the resolution of the dispute at a stage before the cost of litigation has begun to accrue.

The Procedure of Mediation:

Unlike arbitration, mediation is not similar to a private trial. In voluntary mediation, there is no “decision,” judgment, or verdict rendered. Rather, the neutral mediator acts as a go-between and should not take sides or advocate the cause or defense of any party. The setting is often informal and the parties may or may not be represented by attorneys (usually, court-ordered mediations are handled by the attorneys representing the parties). Often, the mediation takes place in a conference room at the premises of AAA or JAMS; sometimes at a local hotel, law office or court building.

Usually there is generally no formal presentation of evidence, and generally no witness testimony. More commonly, each party summarizes its position in written papers filed with the mediator(s) prior to the mediation. Such summaries may be confidential to the mediator or may be exchanged with the opposing party. In the written summary, each party describes the evidence it intends to produce at trial, if mediation is unsuccessful.

The mediation papers may include photographs, declarations from witnesses who will appear at trial, formal opinions or reports from experts, etc. There is a summarized statement of the issues and the respective positions of the parties, as well as factual/legal arguments identifying the strengths and weaknesses of the opposing position(s). The mediator(s) will review the premediation documents in order to become familiar with the issues and arguments, and thus be able to facilitate settlement.  The exchange of information and results of the mediation is kept confidential, either by express agreement or by law, so as not to affect trial of the matter if the mediation is unsuccessful.

Typically, the mediator has each party sit in a separate room and goes from room to room negotiating the possible settlement. Often a party sits in the conference room while the mediator is in the other room with the other party, often for hours. It is “shuttle diplomacy” between rooms more often than not.

At times there is a single, neutral mediator who facilitates and encourages open discussion and negotiation between the parties. However, in court ordered mediation, a panel of mediators may be selected. In many states that utilize mediation panels, the preferred number of mediators is three, one of whom is neutral in role and the other two serve as advocates for the causes of the opposing parties. In such cases, the mediators, after listening to both or all sides of the dispute, render a mediation recommendation (which sometimes is referred to as a mediation “award” or a mediation “decision,” but in fact is not binding). The parties will have a set number of days to accept or reject the recommendation of the mediation panel.

In many states that have court-ordered mediation, there are consequences for rejecting mediation recommendations, and/or for failure to negotiate in good faith. For example, if a party rejects a mediator’s recommended “award” of a certain dollar amount to settle the case, and instead goes on to trial, that party must succeed at trial and/or improve his/her position with a substantially better verdict than that recommended in mediation. In other words, the rejection of a mediation settlement offer must be premised on a good faith belief that the party has a reasonable chance of substantially improving its position at trial. If the party fails to do better at trial, a monetary penalty for rejecting the recommended mediation amount may be imposed. The justification for this rule is that by rejecting mediation, the rejecting party has caused the other party to sustain the cost of trial even though the rejecting party has not ultimately obtained a better result at trial. It follows that the rejecting party should bear the cost of this. This is not the law in California.

Selection Criteria for Mediators:

The parties are free to agree on any mediator but most want a person trained in the process with a good track record of resolving disputes. Mediation is a difficult skill to achieve and the typical aggressive attorney often makes a poor mediator. Most mediators have gone through years of special training.

One of the more established mediation providers, such as the American Arbitration Association (AAA) or JAMS provides trained mediators. These organizations will be able to supply individuals with a list of mediators, a set of rules for the mediation, and a date and place for the mediation hearing.

Key criteria the parties should consider involve:

• The appropriate experience
• The appropriate training
• The appropriate site (neutral)
• The fee schedule
• The “neutrality” (absence of bias or conflict of interest on the part of the mediator).

If the parties cannot agree on a mediator, the general procedure is to alternately strike names from a list (either provided by an outside source or created by the parties) until only a single name remains. Other alternatives (for panel mediation) include each party choosing any person at all (whether or not on a list) and then both parties choosing a neutral third mediator from the formal list.

Once the mediation date, time, place, and mediator(s) have been decided upon, as well as an agreed procedure and/or rules, the following should assist individuals in completing the process:

• People should confirm that confidentiality provisions have been included in their mediation agreement.
• They should make sure that, prior to the mediation, the subject of allocating the costs of mediation has been resolved. Mediations can be expensive in terms of the mediator’s fees and the attorney’s time in the mediation. Often, mediations last a full day; sometimes several days. Some famous mediators charge tens of thousands of dollars to attend, though most charge between $300-$500 an hour for their time. It is still usually far less expensive than a full trial.
• If the type of mediation allows the appearance of witnesses, individuals should make sure everyone knows when and where to be and are committed to attend.
• They should ensure that the person who has authority to settle the matter will be present at the mediation hearing (if that person is not the actual party, such as a representative from an insurance company).
• They should make sure that their mediation summary contains a concise statement of issues and positions.
• Try to identify both weaknesses and strengths of opposing positions. But keep an open mind to counter arguments.
• They should know in advance the least favorable offer they are willing to accept, and be prepared to consider even less than that if arguments or disclosure of previously unknown facts alters their present position.

See the article on this website for an experienced mediator’s perspective of what he is looking for as parties come to a mediation.

Federal Mediation Law:

The Alternative Dispute Resolution Act of 1998 (ADRA) (28 USC 651 et seq.) mandates that courts establish and authorize the use of ADR, including mediation and arbitration, in all civil actions. Courts maintain their individual discretion to decide at what stage in the litigation process a court offers mediation or other ADR to the parties. Local rules establish ADR procedure in the federal courts.

The Federal Mediation and Conciliation Service was created by Congress in 1947 as an independent agency poised to assist and promote sound labor-management relations. It offers ADR services in a variety of formats, including dispute mediation and preventive (issue) mediation.

The U.S. Equal Employment Opportunity Commission’s (EEOC) mediation program began as a pilot experiment in 1991 in four field offices. The EEOC’s program has greatly expanded since that time. EEOC continues to develop and train internal mediators employed by EEOC as well as external mediators hired on a contract basis, to promote mediation as a possible resolution for some EEOC claims.

The federal government also encourages mediation and arbitration internally. Federal agencies are encouraged to create their own procedural ADR programs for the handling of both internal and external disputes. The Administrative Dispute Resolution Act of 1996 provides a mediation forum for handling disputes within agencies, or between citizens and agencies (claims against the government).

California Mediation Statutes:

California’s Code contains extensive provisions for the arbitration and/or mediation of many types of disputes. Labor disputes are addressed under Sections 65, 66, and 3518. Family disputes are covered in Sections 5180 to 5183. Education matters are covered by 48260.6, 48263, 48263.5 (truancy), and 56503 (special education). There is even a special provision for the arbitration of cable TV franchise disputes under 53066.1(n)(1). Environmental regulatory disputes, including issues involving pesticides, are covered under 13127(c)(1). Water rights disputes are handled under 1219. Community disputes of a business or professional nature are covered under 465 to 471.5.

Many of the Courts have local rules encouraging mediation and many courts have mandatory mediation (settlement conference) before judges specially trained to mediate disputes. Those judges cannot act as trial judges if the mediation is not successful.

The Practicality of Mediation:

One client put it well when we discussed mediation as a means to resolve the matter. “If we were able to settle this, we wouldn’t have gone to lawyers in the first place.”  While that is a very good point, it misses the essential differences in the mediation process.

1. A trained mediator is able to facilitate communication and compel the parties to face facts about their cases that otherwise they might ignore.
2. The very fact that both parties are seeking to mediate the dispute in a formal setting can often open up minds previously convinced that the opponent is incapable of rational consideration of a settlement.
3. It allows the parties a forum to clearly state their position before a knowledgeable expert and to determine whether a neutral party is truly convinced of the rightness of the position.
4. Since mediation often (and should) occur after the parties exchange evidence, often after discovery has been completed, they are often in a better position to consider appropriate settlement than they were at the beginning of the fight.
5. It allows inventive approaches to a resolution other than a simple monetary transfer of money. In one instance, the parties agreed to immediately help a third party who was a dependent on one of them in exchange for a transfer of a future interest. That type of result would have been impossible absent mutual agreement.
6. Above all, there is little risk. One can explore settlement and if the matter does not settle, revert to litigation and know that the added cost of the trial or arbitration is faced without worrying that it could have been settled. Mediation does cost money, but if there is any good chance for settlement, is often worth it.
7. That said, if the parties are truly far apart and hostile, mediation seldom works and the matter should be considered carefully before the money is spent.