New CLRC rules unfairly criticized

In August, after nearly two years of study, the California Law Revision Commission (CLRC) voted to draft legislation to prevent attorneys representing clients from using California's absolute mediation confidentiality laws to insulate them from actions for malpractice and discipline by the State Bar. The CLRC's decision has been subject to much unwarranted and misleading criticism.

The CLRC's decision is not an effort to destroy confidentiality in mediation, but to prevent unscrupulous lawyers from using confidentiality as a shield against malpractice and professional discipline. There's a world of difference between the two.

California's mediation confidentiality statute, Evidence Code Section 1119, is the most protective in the nation, providing that "(n)o 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." The inflexibility of this statute too often has resulted in serious injustice to clients. This has prompted several appellate courts to try to create judicial exceptions to the statute. But each of these attempts has been shot down by the California Supreme Court, which has pointed out that the statutory language is clear, and unless a result is either absurd or clearly contrary to the Legislature's intent, no exception to achieve justice may be created.

Most recently, in Cassel v. Superior Court, 51 Cal. 4th 113 (2011), the court once again - with evident reluctance - allowed this statute to work injustice. In a concurring opinion, Justice Ming Chin expressed succinctly the problems with the mediation confidentiality statute: It barely avoids being absurd, and it shields "an attorney's actions during mediation, including advising the client, from a malpractice action even if those actions are incompetent or even deceptive ... This is a high price to pay to preserve total confidentiality in the mediation process."

In response, the Conference of California Bar Associations adopted a resolution (10-06-2011) to make communications between the client and his or her attorney during mediation admissible in a State Bar disciplinary proceeding or malpractice suit for professional negligence or misconduct, similar to the exception to the attorney-client privilege in Evidence Code Section 958.

The proposal was introduced in the Legislature in 2012 as Assembly Bill 2025, but ran into stiff opposition from the mediation industry. As a compromise, the Legislature directed the CLRC to study the "Relationship Between Mediation Confidentiality and Attorney Malpractice and Other Misconduct."

The CLRC began the study in July of 2013 and has been diligent, thorough and comprehensive in its charge. The work of the CLRC included studying mediation confidentiality in states that have adopted the Uniform Mediation Act (UMA) and non-UMA states, as well as statutes, case law, articles, and appellate court decisions and comments from across the country. CLRC staff so far have compiled 45 memoranda plus supplemental materials.

The CLRC also considered public testimony, including alarming public comment from legal malpractice attorneys and consumers about false or misleading statements by their attorneys to induce them to settle. Mediation confidentiality blocks these clients from exposing the misconduct and from obtaining a remedy. One firm said the confidentiality statute had the potential to create "an 'ethics-free zone' - a black hole from which evidence of legal malpractice, fraud and other actionable conduct cannot escape."

Ultimately, the CLRC acknowledged the need to protect confidentiality within mediations, rejecting arguments that the absolute confidentiality of California's current statute was required - particularly in light of the success of other statutory schemes around the nation, including the Uniform Mediation Act. The CLRC reasoned that different types of professionals involved in the mediation are subject to different types of disciplinary systems and other unique considerations. For example, mediators are entitled to quasi-judicial immunity. Therefore, the CLRC began preparing a proposed exception to the mediation confidentiality statutes that should apply to alleged misconduct of an attorney and should apply in attorney disciplinary proceedings and malpractice cases. The exception should apply evenhandedly, permitting use of mediation evidence to prove or disprove a claim, should utilize an in camera screening process, and should only permit disclosure of mediation evidence that is relevant to the malpractice case or disciplinary proceeding.

CLRC staff have yet to complete the first draft of the legislation, but the directions suggest that the result may be something along the lines of the current exception to attorney-client privilege in Evidence Code Section 958, which has long protected both clients and attorneys in malpractice and disciplinary cases.

In response, the opponents of any exceptions to mediation confidentiality have focused their efforts on a misleading campaign to generate public opposition to the CLRC's incipient proposal. They have sought to mischaracterize the CLRC's decision as authorizing fishing expeditions into mediation proceedings, deposing all mediation participants and subpoenaing all relevant documents in search of relevant evidence. There have even alleged that the CLRC proposal is part of a movement to repeal the mediation confidentiality statutes "in their entirety", or an effort at back-door regulation of the mediation process. These allegations are baseless, but demonstrate the lengths to which the opposition will go.

The opponents also have argued that it was the CLRC itself that initially proposed the current absolute mediation confidentiality statute some 30 years ago, and that the statute "has served us well" and therefore should not be changed. But the statute has not served us as well as it could or should, and reform and refinement are necessary. Thirty years ago, the CLRC and the Legislature did not anticipate that unscrupulous attorneys would exploit the statute's inflexibility to their own unfair ends, at their clients' expense. Like all statutes found to have major flaws, the mediation confidentiality statute should be fixed.

The CLRC process still has a long way to go, as the CLRC develops legislation that will preserve mediation confidentiality while providing the protection the current law lacks. It is a challenging task that can be best accomplished not with misinformation, but with accurate and constructive input from both sides.

The CLRC study can be found at www.clrc.ca.gov/K402