Alternative Dispute Resolution
Jul. 27, 2002
Control Issues
Column by Palmer Brown - Madden Mediators often begin mediation sessions with an opening statement that includes an explanation that they are "neutral."
Mediators often begin mediation sessions with an opening statement that includes an explanation that they are "neutral."
They often explain that, unlike the parties who have a monetary interest in what occurs at the mediation, the mediator has no interest in its outcome.
This description is inaccurate. By making such an obviously inaccurate statement at the beginning of the mediation, mediators undercut the very credibility they are trying to establish.
More important, by styling themselves as neutrals instead of recognizing the interest they bring to the mediation process, mediators may raise unnecessary ethical issues. A frank disclosure by mediators of their interest in the outcome of the mediation will mitigate these ethical issues and enhance their credibility.
Everyone recognizes the interests that the plaintiff and the defendant bring to the mediation. The plaintiff wants to maximize the value of his or her claim. The defendant wants to minimize the value of the plaintiff's claim.
And, contrary to the usual assurance by the mediator of neutrality, the mediator also brings an interest to the mediation.
Mediators pride themselves on the cases they have settled. After tough negotiations that do not result in a settlement, mediators do not go home thinking what a swell time they had during their unsuccessful mediations. Mediators go home thinking that they have had a successful day when they have helped to settle a cases.
In an effort to drum up more business, mediators frequently advertise the high percentage of cases that they settle. Mediators strive to settle cases.
To some extent, the parties share with the mediator the goal of settling the case, albeit with different visions of what a settlement should entail. Knowledgeable attorneys speak of the desire to hire a mediator who is "tenacious" and a "closer."
The mediation process, the attorneys, the parties and the marketplace all drive mediators to have a strong interest that is at stake in the mediation: the interest in reaching settlement.
The fact that mediators have an interest in seeing a case settle affects the way that they conduct mediations.
Some mediators style themselves as doing "facilitative" mediations. By this, they mean that they see their role exclusively as arranging a process that allows the parties to reach their own settlement.
Some mediators characterize themselves as "evaluative," meaning that, in addition to allowing the parties to have a process through which they can negotiate, mediators also offer personal opinions to the parties, (usually in separate caucuses) in an effort to promote a settlement.
Most mediators style themselves as partially facilitative and partially evaluative. Once mediators begin offering evaluations, their interest in the case can play a large role in the mediation process. Three examples considered below demonstrate how this occurs.
It is not unusual during the course of a mediation for a mediator to conclude that one side or the other has a loser of a case. For the sake of this example, suppose that after several hours of discussion the mediator concludes that the plaintiff is going to lose. What will the mediator do with this information?
A neutral mediator might decide to hold a joint caucus and announce her view that the plaintiff will lose. But no mediator with a reputation for being a closer would do this.
Instead, most mediators during a private caucus with the plaintiff tell the plaintiff that the plaintiff's case is very weak. But, in private caucus with the defendant, while the mediator certainly acknowledges the weakness of the plaintiff's case, the mediator continues to point out to the defendant why it may make some sense for the defendant to settle at some modest price.
This happens every day in mediations across the state. Is the mediator in this example behaving in a neutral manner?
Consider another example. Say that the mediator is confident that the plaintiff will take $35,000 to settle the case. The last demand by the plaintiff was $50,000, and the last offer by the defendant was $30,000.
Splitting the positions would be $40,000. But, because of what has occurred during a private caucus with the plaintiff, the mediator is confident that $35,000 will do the trick. Does the mediator go to the defendants and say, "I believe that the plaintiff will take $35,000"?
Not likely. If the mediator does this, the defendants likely will say, "Well, we offered $30,000, and plaintiff is likely to take $35,000 - so we'll offer $32,500."
In this example, the $32,500 is below the plaintiff's minimum demand. This happens all the time. So what does a closer do?
The closer goes to the defendants and says, "Well, the midpoint is $40,000. I know you don't want to go there, but if I can talk plaintiff down to $35,000, would you do that?"
The defendants will go for this 10 of 10 times, holding the view that the hard work of the mediator saved them $5,000. Was such manipulation by the mediator the act of a neutral party?
Consider finally the following fact pattern, which comes up occasionally during mediation: As the mediation proceeds, the mediator realizes that both sides have missed a key issue. For example, both sides may have concluded that the prevailing party will not be awarded attorney fees.
But the mediator becomes aware of a theory that will enable the prevailing party to win fees. What does the mediator do with the fact that he has identified a key issue that has a substantial impact on the outcome of the case and therefore could have an impact on the settlement value of the case?
A neutral mediator might do one of two things with this key information. A neutral mediator might hold the view that it is up to counsel to develop legal theories and therefore would say nothing to either party about this theory. Alternatively, a neutral mediator might tell both parties about this new theory.
Mediators across California use a third approach. If they identify an issue that the parties have missed that favors one side, they use the discovery of this new legal theory only in a private caucus to lower the expectation of one party in order to move that party closer to the other party's position so that a settlement can be achieved.
Mediators across the state agree that it is highly unlikely that the mediator, having come across this new piece of information, will share it with both parties. This is what mediators do. But how can this conduct be justified if the mediator's role is to be neutral?
Would not a truly neutral mediator have a duty to share this information with both sides? Does it not at least appear that the mediator's self-interest in closing a settlement is motivating the mediator to manipulate one side in order to achieve a settlement?
These three examples of mediators manipulating the mediation process to achieve a settlement raise troubling ethical issues. How can it be proper for a mediator to use information to drive down the price of one side without revealing the same information to the other side, which certainly would increase that side's demand?
Would not a truly neutral mediator have a duty to do so, even if doing so meant destroying any chance of settling the case?
Everyone agrees that it is unethical for a mediator to lie to a party. But, given the shared view that a mediator must tell the truth, why is it that everyone expects a mediator to use information to move one side or the other toward settlement? How does one draw the line between a misrepresentation by omission and expected selective use of information?
When the mediator tells one side, but not the other, about a new theory by which attorney fees might be awarded, is the mediator's failure to tell this same information to the other side a misrepresentation by omission? Or is it just the sort of selective use of information that the parties to the mediation anticipate?
The answer to this ethical conundrum is found by examining the premise that the parties expect the mediator to be a neutral participant with no interest in the outcome of the mediation.
If the parties' expectation were that a mediator would be neutral, it would be unethical for the mediator to use such information in a one-sided fashion. Doing so would break the underlying bargain of the parties for a neutral mediator.
But this is a false premise. The parties know from the onset that they are not retaining a neutral person. They don't want a neutral person. They seek out closers. And who are the closers? Closers are those mediators who are driven by self-interest to bring about a settlement.
Closers are the least likely people to view their role as neutral. Closers share a common understanding with the attorneys and the parties that they are not participating in the mediation as a neutral. Closers are retained by the parties for one reason: to close the deal.
Consider then what really is the perspective of all participants in the mediation. Everyone there knows that the mediator has an interest in closing a settlement.
While no one expects the mediator to lie to them, people do expect that, in pursuit of settlement, the mediator will focus with each side on the information available to the mediator that will move that party toward a settlement that the other side may accept.
If mediators describe their roles as neutral, they set up ethical problems that will not occur if, instead, mediators make a frank disclosure at the beginning of the mediation of their interest in driving the case toward settlement.
Palmer Brown Madden, an East Bay mediator, may be reached at www.adrservices.com. Madden was a partner at McCutchen, Doyle, Brown & Enersen and is the immediate past president of the State Bar of California.
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