Daily Development for
Monday, January 19, 1998

by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law

ATTORNEY/CLIENT; MEDIATION; CONFIDENTIALITY: Under standard mediation confidentiality statute, attorney for plaintiff who participates in mediation and settles will not be disqualified from representing other plaintiffs regarding the same dispute.

Barajas v. Oren Realty and Development, 67 Cal. Rptr. 62 (Cal. App. 1998)

The issues in this case are not classically real estate issues, although they arise in a real estate context, but the choice of whether to mediate is one that all lawyers are beginning to face more frequently. Plaintiff One was a lender secured by a building that was damaged in an earthquake. Plaintiff One sued landlord and builder for faulty construction. Following mediation, the parties settled. Thereafter, Plaintiff One's counsel associated with counsel representing a tenant who also was suing the owner and builder for its damages based upon the same claims. The trial court, citing a California statute indicating that information disclosed during mediation must be kept confidential, ruled that Plaintiff One's lawyer should be disqualified in participating in the second proceeding.

On appeal, held: Reversed. The court reasoned that to read the statute in this manner would drive counsel in major cases with multiple plaintiffs to avoid mediation because they would then be disqualified to represent any other plaintiff .

The statute in question, which the editor is informed mirrors other statutes around the country, provided, in part, that "all communications, negotiations, or settlement discussions by and between participants or mediators [as part of the meditation process] . . . shall remain confidential." But the court also pointed to another subsection of the statute stating that "Evidence admissible or subject to discovery outside of mediation shall not become inadmissible or protected from disclosure solely by reason of its introduction or use in a mediation." This suggested to the court, apparently, that the participants should understand from the outset that their confidentiality rights are limited. Further, the fact that the statute nowhere mentions disqualification as a remedy and the mediation practice prior to the statute, in which it was common for lawyers to represent more than one party to a mediation, provide evidence that the legislature did not intend the disqualification remedy.

Finally, and perhaps most telling, the court pointed out that the argument for disqualification "proved too much," since it could also be used to prevent the parties to the instant mediation from using their lawyers in litigation if this mediation fell apart.

Comment 1: To the editor, the most telling argument that the parties to the instant mediation might be denied their choice of counsel if litigation became necessary. Certainly, faced with such a prospect, parties might not wish to participate in mediation. Further, there is something to the argument that the disqualification of counsel likely would not protect a great deal of information in light of the exception regarding discoverable and admissible evidence.

The argument that lawyers would be dissuaded from going to mediation if this meant they could not represent other plaintiffs in related cases is not an argument believes should be made. Lawyers have a duty to advise and participate in mediation if that would serve the best interests of their current client, even if that would jeopardize the lawyer's future ability to generate fees in other cases. To suggest that self-centered thinking by a lawyer who did not place the client's interest as paramount is a policy concern for mediation issues is implicitly to condone such thinking. Rather, such thinking should be condemned.

Comment 2: From an analytic standpoint, the greatest weakness in the court's opinion is that it does not make clear that the same freedom ought not to be available to the mediator. It points out that mediators often must seek the permission of either party to make any disclosure to the other side, and that consequently the risk of a serious breach of confidentiality is small. But mediators themselves are in a position of trust and confidence, and may receive all kinds of information that might prove useful later in a trial on the merits. The editor hope that when it finally confronts the issue, the court will recognize that a mediator himself or herself does become disqualified as to further proceedings once it hears information that arguably is classified.

The editor regards as somewhat bogus the argument that most critical information will be discoverable anyway. This assumes that the discoverer knows the questions to ask. A litigant should not be put in a position to decide whether to reveal such information to the other side or else to reject what might be a cheap and inexpensive way to avoid a lawsuit. On the other hand, there is reason to have rules that prevent a litigant from taking a "disclosure bath" by gushing out in the mediation information that the other side might have discovered later but that now is confidential. The section withholding discoverable information from the privilege is an appropriate safeguard preventing this.

Comment 3: The question remains, following all of this, whether mediation is ever a good idea. It is true that it might provide a cheap and easy resolution of the problem. But often settlement negotiations in the hands of skilled negotiator could do that anyway. Here, in the "spill your guts" school of dispute resolution, both sides are expected to empty their hearts out to the mediator in the hopes that the mediator can then be in a position to restore Humpty Dumpty and broker a settlement with the information.

When the heart has been fully emptied, and the mediation did not result in a settlement of the dispute, the plaintiff has an advantage now that it has been exposed to the personalities and the detailed data that turned up during the mediation. If its not going to be confidential, why go into mediation in the first place.

It's true that mediators are trained to withhold information from the other side unless specially so authorized by statute. Even if we assume that this actually occurs in practice, there is always the danger that the parties will not appreciate at the precise moment of disclosure how potent that disclosure can be. Later, the information, in the hands of a new plaintiff, can bite, and bite hard. It appears that the only protection from this conundrum is too avoid mediation altogether.

Comment 4: As Rodney King said (paraphrasing) - it would be best if we all just got along. But, since we're not going to get along all the time, we all will feel better about our dispute resolution system if it operates fairly and predictably and with as few as possible "game playing" options for the other side. The editor, knowing that his client's secrets aren't safe, would be unlikely to recommend that the client risk all by mediating.

Where mediation is going to happen, this case makes crystal clear that separate confidentiality agreements and provisions disabling the lawyers by contract from representing other clients on the same issues would appear to be fundamental to any dispute in the future resolved by mediation. If you can't get 'em, don't go in the room.

Items in the Daily Development section generally are extracted from the Quarterly Report on Developments in Real Estate Law, published by the ABA Section on Real Property, Probate & Trust Law. Subscriptions to the Quarterly Report are available to Section members only. The cost is nominal. For the last six years, these Reports have been collated, updated, indexed and bound into an Annual Survey of Developments in Real Estate Law, volumes 1-6, published by the ABA Press. The Annual Survey volumes are available for sale to the public. For the Report or the Survey, contact Stacy Woodward at the ABA. (312) 988 5260 or woodwars@staff.abanet.org

Items reported here and in the ABA publications are for general information purposes only and should not be relied upon in the course of representation or in the forming of decisions in legal matters. The same is true of all commentary provided by contributors to the DIRT list. Accuracy of data and opinions expressed are the sole responsibility of the DIRT editor and are in no sense the publication of the ABA. Parties posting messages to DIRT are posting to a source that is readily accessible by members of the general public, and should take that fact into account in evaluating confidentiality issues.