California Law Revision Commission Recommendations

The California Law Revision Commission has issued its draft recommendations for an amendment to the Evidence Code carving out a new exception to mediation confidentiality. This project has been about four years in the making, and was originally spurred by concern over the California Supreme Court’s decision in the Cassel case, which excluded evidence in support of a subsequent malpractice case, of alleged attorney misconduct in inducing their clients to settle a case in mediation. The Commission’s report, which runs to 158 pages, reflects a thorough process, but one that is probably going to be greeted with fear in the mediation community.

Many mediators support an “absolute” exclusion of any evidence of statements made by anyone in the course of mediation, even at the risk of denying parties the opportunity to seek a remedy for fraud or coercion. They believe that the number of cases where misconduct has infected the result is small, and that most of those really reflect only buyer’s (or seller’s) remorse, rather than genuine interference with parties’ decisions to enter into settlements. On the other side is the plaintiffs’ legal malpractice bar, which is understandably interested in removing impediments to proving cases of legal malpractice. The Law Revision Commission’s proposed statutory amendment supports opening the door to admitting this kind of evidence, but responds to some of the concerns of the mediation community by limiting the uses of this evidence to proceedings between lawyer and client, and also by shielding mediators from testifying in such cases.

This result may succeed in threading the needle politically, but may not solve very many real problems. For if fraud, coercion and other forms of misconduct are a real problem in mediation, why not open the door entirely to set aside settlements that are the product of such conduct? And if they’re not a big problem, why open the door at all to potentially vindictive litigation by parties seeking to create new problems resulting from their own agreements to settle cases. Such settlements are usually arrived at after an arduous process in which the parties participate every step of the way, and which they know is confidential going in.

Whatever happens to this proposal, I don’t believe it will represent the end of mediation, as some doomsayers fear. There are still plenty of good reasons to mediate, even if it does not provide as much finality as expected. And attorneys and mediators will adapt to new rules, perhaps in ways that further the goals of mediation. Also, I am skeptical of arguments that absolute confidentiality is needed to induce parties to talk freely. In my experience, even when I’m defending depositions where every word is taken down by a court reporter, I have trouble getting witnesses to stop talking so freely.

What I’m more concerned about is that by allowing parties to use evidence of what occurred in a mediation to support claims for legal malpractice, we are providing more opportunities to frame disputes in adversarial rather than more constructive terms. If mediation is supposed to teach parties a more cooperative form of dispute resolution, that purpose is undercut by rules that allow them to return to court and find something new to argue about, namely the way the mediation was conducted. Instead, we should be directing our efforts toward making sure that mediations are conducted in a fair and honest way, one in which parties are given a true appreciation of their alternatives, and are empowered to make their own choices. I question whether undermining confidentiality to assist claimants in attorney malpractice suits, is the best way to achieve those goals.

Comments on the Commission’s proposal should be submitted by September 1. 2017.

                        author

Joe Markowitz

Joseph C. Markowitz has over 30 years of experience as a business trial lawyer.  He has represented clients ranging from individuals and small businesses to Fortune 500 corporations.  He started practicing with a boutique litigation firm in New York City, then was a partner in a large international firm both… MORE >

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