New mediation rule has narrow safe harbor

It's not easy to stay on top of all the changing laws. But it's essential. Nobody wants to get blindsided by some new case or statute that going to change the outcome of a case.

Equally important are changes to rules that govern the practice of law. On Nov. 1, 2018, California lawyers became subject to an overhauled set of 70 new and amended Rules of Professional Conduct. It was the first major revision to these rules in nearly 30 years. The revised rules are available on the State Bar website.

Lesser known is a new rule affecting attorney conduct that is not included in the Professional Rules of Conduct or the State Bar Act. Evidence Code Section1129 (effective as of Jan, 1, 2019) requires (with limited exceptions) that every attorney who mediates a civil case must, in advance of the mediation, provide a printed disclosure to their client about the "confidentiality restrictions" in Section 1119 and obtain from that client a signed and dated acknowledgment that the client has read and understands the disclosure.

Sounds simple enough. But there's complexity beneath the surface.

The new rule includes a "safe harbor" form that is deemed to satisfy the requirements of the new rule. The rule doesn't require that the "safe harbor" form be used. Instead, the rule only requires that the attorney obtain from the client an acknowledgment that the client understands the "confidentiality restrictions" of Section 1119. But the language on the "safe harbor" form is very, very specific. For example, it states that "all communications between you and your attorney" in connection with a mediation "cannot be disclosed or used ... even if you later decide to sue your attorney for malpractice." The safe harbor form also states that "[t]his disclosure and signed acknowledgment does not ... prevent you from ... reporting any professional misconduct by your attorney to the State Bar of California or ... cooperating with any disciplinary investigation or criminal prosecution of your attorney."

That's some fairly specific language.

Why would the Legislature include such language in a "safe harbor" form in the Evidence Code? And why is the Legislature now mandating that attorneys now disclose to clients the confidentiality restrictions of Section 1119 prior to mediation?

Because the Legislature is concerned about perceived attorney abuses and misbehavior at mediation -- as illustrated by the case of Cassel v. Superior Court, 51 Cal. 4th 113 (2011).

Cassel involved a businessman who sold a company and was later sued by that same company. The parties agree to mediate. However, Cassel found the mediation didn't proceed as expected. The company took a hard settlement position that was unacceptable to Cassel. But then Cassel's attorneys began pressing him to settle. The harassed him and shamed him. Though he felt "increasingly tired, hungry and ill, his attorneys insisted he remain until the mediation was concluded, and they pressed him to accept the offer, telling him he was 'greedy' to insist on more." At one point Cassel left to eat, rest, and consult with his family; his attorney called said he had to come back. On his return his lawyers "continued to harass and coerce" him to settle. They threatened to abandon him at an upcoming trial if he didn't settle. At midnight after mediating for 14 hours, Cassel was exhausted and "unable to think clearly." Seeing no way to find new counsel before trial and "believing he had no other choice" Cassel finally signed a settlement agreement. He later regretted in and filed suit against his attorneys for breach of their professional, fiduciary and contractual responsibilities towards him.

Prior to trial, Cassel's former attorneys filed motions in limine to exclude all evidence of mediation communications between them and Cassel. The trial court held that the mediation communications between Cassel and his former attorneys were protected by (and inadmissible due to) the mediation confidentiality statutes. Cassel obtained mandamus relief in the Court of Appeal which held that the confidentiality restrictions of Section 1119 are intended to prevent the admission of evidence of mediation communications between parties but not communications between parties and their legal counsel (otherwise the confidentiality statutes would effectively prevent a client from suing their attorney for malpractice relating to the mediation).

The Supreme Court granted review. In reversing the Court of Appeal's judgment, the Supreme Court held that the mediation confidentiality statutes are broad; that they encompass not only communications between parties but also between parties and their counsel, and that any incursions into the existing broad confidentiality protections should be crafted by the Legislature and not by the courts. In his concurring opinion, Justice Ming Chin invited the Legislature to look more closely at the effects of the mediation confidentiality statutes. Section 1129 is apparently the result of that closer look by the Legislature.

By enacting Section 1129, the Legislature passed on an opportunity to compromise mediation confidentiality that would make some mediation communications admissible at trial. Instead, the Legislature chose to require attorneys provide their clients a clear disclosure about the "confidentiality restrictions" provided by Section 1119.

The Section 1129 disclosure is not required in a mediation of a class action suit but no other exceptions are given. The disclosure must be provided "as soon as reasonably possible before the client agrees to participate in the mediation or mediation consultation." If the client has already agreed to mediate before retaining legal counsel, then the disclosure must be provided "as soon as reasonably possible after being retained." Section 1129 includes specific requirements regarding the printing and language used on the disclosure, and (among other things) requires that the disclosure not be "attached to any other document provided to the client."

It's a new day. The mediation confidentiality restrictions of Section 1119 have been preserved. But attorneys are now directly required to disclose those restrictions to clients and get back a representation that the client understands them.