Three tips for attorneys acting as neutrals

Increased competition and sluggish demand for legal services has meant that attorneys and law firms are exploring different ways of generating revenue. Seasoned practitioners, and by extension their law firms, may consider starting a mediation practice to diversify their expertise and offerings.

Although not every litigator makes a good mediator, years of experience trying and settling cases can be the perfect background for an effective mediator. However, a new role as a mediator also brings additional ethical considerations, particularly with regard to conflicts.

The California Rules of Court govern the rules of conduct for mediators in court-connected mediation programs for civil cases. In particular, Rule 3.850 provides that "[t]he rules in this article establish the minimum standards of conduct for mediators in court-connected mediation programs for general civil cases. These rules are intended to guide the conduct of mediators in these programs, to inform and protect participants in these mediation programs, and to promote public confidence in the mediation process and the courts."

Here are a few tips for attorneys who are considering acting as a neutral.

1. Complete a Conflicts Check

A first step for an attorney asked to act as a mediator is to identify all participants in a mediation and any other interested parties, such as insurers. These names may be compared with the attorney's and law firm's client matter list to see if any of the participants are clients or adverse parties. If so, the attorney-mediator may either decline the mediation or disclose the potential conflict as addressed below.

The more difficult question is how mediation participants are treated when running a conflicts check for future firm representations. Most attorney-mediators will take steps during the mediation process to confirm with the participants that they are not clients of the attorney-mediator or the firm. Many will obtain a waiver signed by the mediation participants stating: "Each participant understands and agrees as follows: no attorney-client relationship exists between the mediator and any participant based on this mediation."

With this disclaimer, mediation participants can be designated as just that, rather than having to identify them as clients to whom the law firm may not be permitted to be adverse at a later date.

2. Preserve Impartiality

Rule 3.855 of the Rules of Court addresses conflicts of interest for mediators in the context of preserving impartiality. In that regard, the "mediator must make reasonable efforts to keep informed about matters that reasonably could raise a question about his or her ability to conduct the proceedings impartially, and must disclose these matters to the parties." Rule 3.855(b)(1). Such matters include "[p]ast, present, and currently expected interests, relationships, and affiliations of a personal, professional, or financial nature" and "[t]he existence of any grounds for disqualification of a judge specified in Code of Civil Procedure section 170.1." Id. The rule further provides that "[a] mediator's duty to disclose is a continuing obligation, from the inception of the mediation process through its completion." Rule 3.855(b)(2).

The rule allows the mediator to continue if the parties do not object after disclosure of conflicts or potential conflicts. Specifically, Rule 3.855(c) states that "[e]xcept as provided in (f), if, after a mediator makes disclosures, no party objects to the mediator and no participant raises any question or concern about the mediator's ability to conduct the mediation impartially, the mediator may proceed." Even during mediation, if a party raises a question or concern about the mediator's impartiality, the mediator is required to address the issue and then can only proceed if the parties do not object. Rule 3.855(d).

The rule mandates withdrawal from a two-party mediation "if any party objects to the mediator after the mediator makes disclosures or discusses a participant's question or concern regarding the mediator's ability to conduct the mediation impartially." Rule 3.855(e). In a mediation with more than two parties, "the mediator may continue the mediation with the nonobjecting parties, provided that doing so would not violate any other provision of these rules, any law, or any local court rule or program guideline." Id.

A mediator must recuse herself, despite party consent, if "[t]he mediator cannot maintain impartiality toward all participants in the mediation process" or "[p]roceeding with the mediation would jeopardize the integrity of the court or of the mediation process." Rule 3.855(f).

3. Identify Non-Traditional Conflicts

Conflicts may arise in contexts that may not necessarily be anticipated. For example, imagine a situation where one of the participants in a mediation is an insured of an insurer client of the law firm where the mediator is employed. The insurer client of the firm might want to know that an attorney with the firm is serving in a capacity to facilitate a settlement, but not on its behalf. The insured might want to know that the mediator's firm separately represents the insurer.

The settling insured with buyer's remorse might think the mediator pushed too hard to accept too little because the mediator was actually looking out for the law firm's insurer client. Similarly, if the case does not settle, the insured could then think that the mediator did not do enough to get the necessary money to settle because of an undisclosed relationship between the mediator's law firm and the insurer.

Separately, it could be that the insurer is unhappy. The insurer might believe the mediator pushed too hard to get a high offer to settle the case. Or perhaps the mediator raised bad faith, which the insurer thought was inappropriate for a law firm that otherwise represented it. This can create both a legal conflict and a client relations conflict.

The rules commentary provides that "[a] mediator must make determinations concerning disclosure on a case-by-case basis, applying the general criteria for disclosure under (b)(1)."

Practicing attorneys make good mediators and can supplement their practice with this important additional service. To mediate well, get trained. To do it safely, carefully read and follow the ethics rules applicable to mediators.