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A Company That Can’t Make Up Its Mind

Tue, 2015-11-10 13:45

I’m a consumer doing business with a company that can’t seem to make up its mind what the right approach is to handling disputes with its customers.

In the first instance, it provides in sort-of fine print that, if I have a beef about my subscription to its publishing products, I should sue them in New York:

These Terms of Service have been made in and shall be construed and enforced in accordance with New York law. Any action to enforce these Terms of Service shall be brought in the federal or state courts located in New York City.

In the second instance, however, it provides in much finer print that, if I have a beef about my purchase of one of its non-publishing products (tours to exotic places), I have to arbitrate pursuant to procedures that it chose, and (by virtue of my purchase itself) have waived the right to sue as well as certain other legal rights, such as the statute of limitations:

Arbitration and Waiver of Trial by Jury: You agree to present any claims against us within ninety (90) days after the Tour ends and to file any suit within one (1) year of the incident, and you acknowledge that this expressly limits the applicable statute of limitations to one (1) year. In lieu of litigation and jury trials, each of which is expressly waived, any dispute concerning, relating or referring to this Participation Agreement, the brochure, or any other literature concerning your trip or the Tour shall be resolved exclusively by binding arbitration in New York City, New York, according to the then existing commercial rules of the American Arbitration Association. Such proceeding will be governed by the substantive law of the State of New York. The arbitrator(s) and not any federal, state, or local court or agency shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability, conscionability, or formation of this Participant Agreement, including but not limited to any claim that all or any part of this Participant Agreement is void or voidable.

Now, in the first case (suing), I live in New Jersey so I guess it’s not as bad for me as it is for others to be forced to initiate a suit in New York state or federal court.  But this is a digital subscription.  I have accessed this publishing product in San Francisco, London, Prague, Nigeria, Paris, and lots of other places.  If I lived there, it seems kind of unfair that I would have to file a lawsuit in an American court located in New York City.

And as for the second case (arbitrating), I still have to get my tail into New York City.  And to add to my problems, any claim I have that this arbitration agreement (which, again, I had no idea I entered into) is unfair or unenforceable has to be brought before the very arbitrator who I claim I shouldn’t be in front of.  As a lawyer, I recognize this as a “delegation provision.”  As a travel nut, I understand it’s a “gotcha,” six ways to Sunday.

 So this one company forces me to sue in one instance and forbids me to sue in another.  And nowhere to they say what I would have thought was the easiest thing of all:

If something goes wrong, call us up or email us and we’ll try to fix it.  We make our money from having satisfied customers and we’re going to do our best to keep you as a customer. If you’re dissatisfied with our offer to fix, however, and if you decide to take the matter to court or arbitration, and if the court or arbitrator says we owe you more than we offered you in the first place, then we’ll pay you triple the amount awarded, plus the costs of your filing the case and the reasonable fees of your attorney.

Of course, that’s problem-solving, isn’t it?  And we wouldn’t want to stoop that low, would we?

P.S. The company is The New York Times.

Consumer Arbitration in Context

Wed, 2015-11-04 12:10

The publication by the New York Times of a series of highly-critical front-page articles on arbitration of consumer and employment disputes has stirred the pot among practitioners, academics, and others with a stake in Alternative Dispute Resolution.  The reportage was flawed, as some in our community were quick to point out.  Data took a back seat to anecdotes; perspectives of individual “victims” were given more ink than perspectives of companies; and the reporters failed to note that the Times itself engages in the very practice that the stories condemn — requiring purchasers of “Times Journeys” to waive both the right to sue and the opportunity to seek collective redress.

The practice of class action waivers in arbitration contracts of adhesion has been the subject of several recent Supreme Court rulings and, while perhaps novel to some Times readers, ought to be familiar to readers of this and other blogs.  Nevertheless, two of the many strands emerging from the froo-frah that has accompanied this publication have struck me as worthy of particular note.  One strand places the development of consumer arbitration class action waiver in the context of the dysfunctional American judicial dispute resolution system, suggesting that the practice did not arise spontaneously from the thigh of Zeus, but rather  is a response to — and an indicator of — much deeper problems that bedevil civil justice in this country.  The other strand prompts a dispassionate assessment of collective redress itself, questioning whether the practice of initiating a civil action on behalf of oneself and “others similarly situated” — whether in court or elsewhere — is in fact an exercise reasonably calculated to serve the goal of social justice.

As to the first, Michael McIlwrath has articulated a sound and thoughtful point of view from his site of tranquility in Florence, Italy.  He notes that, in Europe, pre-dispute consumer and employment arbitration “agreements” are unenforceable.  But, he points out, in most of those jurisdictions collective redress is not practiced; contingency fees for claimants’ attorneys is not known; fee-shifting for unsuccessful claimants deters the assertion of weak claims; punitive damages are not available; juries are not appointed for civil cases; judges are not subject to election and thus dependent upon public approval and private financial donations; and civil litigants are not required to engage in prolonged and costly discovery.  To this list, others might add that the “social network” that is available to individual citizens in many European countries is often more robust than in the United States, and regulatory initiatives in Europe are often both more intrusive and more effective in identifying and punishing unfair or abusive policies by companies having an adverse impact on consumers or employees.

When placed in this context, the “access to justice through the American courts” that the Times reporters seek to protect is, as a practical matter, illusory.  Guraranteeing a “day in court” may be like promising someone scrofula.  Not only will an individual not sue in court for $30.00, she may be ill-advised to sue for $30,000.00.  And if, to borrow Churchill’s analysis, private arbitration is the worst form of dispute resolution except for all the others, then the prospect of its prohibition — and the introduction into the state and federal courts of thousands of claims that are now being resolved in other forums —  is worth serious contemplation before being endorsed.

(I’d like to see some data on the number of broker/customer claims, Title VII and ADA claims, and product defect claims that would be filed in court if pre-dispute arbitration agreements were to be unenforceable.  It would be all the more helpful if the data would also include the probable costs of discovery, motion practice, and other transactional and attorney fees relating to litigating those matters.  I wonder whether the Times reporters would be so clear in their assumption that going to court is a benefit.)

As to the second strand, an article by Judge Jed S. Rakoff in the current issue of New York Review of Books lends a thoughtful and experiential perspective to the American practice of collective relief.  Judge Rakoff notes that in several recent high-profile cases involving corporate fraud, the SEC settled for a fraction of  the money that private civil class action attorneys were able to obtain, suggesting that “the private class action was a much better vehicle for bringing justice to the victims of the alleged fraud… than the relatively paltry efforts of the SEC.”  Yet the Judge notes flaws in that conclusion.  For one thing, those settlements are paid by the company’s blameless shareholders, not by any culpable individual.  As a result, writes Judge Rakoff, long-term shareholders, “are now punished twice for the fraud they had no role in committing, first by the decline in the value of their shares upon the fraud’s exposure and second by the large payments subsequently made by the company they own to settle the class action.”  And, of course, the “prime beneficiaries appear to be the lawyers who brought the cases and who typically receive very large fees in return.  In the Tyco case the lawyers obtained $464 million of the $3.2 billion [private class action] settlement.”

Judge Rakoff commends the recent book, Entrepreneurial Litigation: Its Rise, Fall and Future, by John C. Coffee, Jr., for a more nuanced assessment of the distinctly American practice of collective redress.  Class actions were introduced into mainstream practice in the 1912 and 1938 revisions of the Federal Rules of Civil Procedure, and went hand-in-hand with another uniquely American practice: Ccontingency fees.  By the dual operation of these methods, an enterprising attorney could bring jurisdictionally diverse claims arising from a single practice before a single judge in a single jurisdiction, and get paid for doing so.  Class actions came into maturity in the 1960s, as a necessary weapon in the judicial enforcement of civil rights laws, because judicial rulings regarding unlawful discrimination could be effective only if they applied to similarly situated black persons who were affected by the racism that the legislation was intended to correct.

Civil rights class actions, however, were soon overtaken by the filings of securities class actions and antitrust class actions, and the impetus for lawyers became less the vindication of legal rights as it was entrepreneurial: “By combining contingent fees with class actions involving monetary damages, lawyers created a situation where, if they were successful, the financial return to them could be huge.”  And the risk of failure is hedged if many such claims are in the pipeline, leading attorneys to aggressively seek out claims that sounded as class actions, in the hope that, if several dozen are in the works, at least one will result in substantial fees. Rakoff specifically laments the “strike suit,” by which “a corporation facing a weak class action that nevertheless will cost millions of dollars to defend and, if somehow successful, will result in possible damages of hundreds of millions of dollars is motivated to settle the suit, even if the company has committed no wrong.”

One can (and many do) resort to ad hominum attacks, concluding that lawyers bringing such cases are either “private attorneys general” or scum-sucking opportunists; Rakoff’s experience lands him somewhere in the middle.  He is less ambivalent, however, in his view that “class actions are no real substitute for criminal and regulatory prosecution of the individuals actually responsible for corporate misconduct.”  And he joins Prof. Coffee in advocating the combining of public and private incentives and accountability, by agencies’ engagement of the private bar.

The first (McIlwrath) and second (Rakoff) strands above simply point to a plain and (I hope) unexceptionable conclusion:  Just as in 1976 with the Roscoe Pound Conference, there is profound and experience-based public dissatisfaction with judicial dispute resolution in the United States.  To single out private arbitration, or class waivers, is to pull only one thread of a meticulously woven garment, where dysfunction is deeply embedded like a dye in the wool itself.  It is time that responsible commentators in this field take a holistic view of restitution and prevention of civil disputes and, at the very least, recognize that each of the practices we now question arose in response to something else.

New AAA Foundation

Wed, 2015-11-04 10:20

The American Arbitration Association has announced the establishment of the AAA-ICDR Foundation.  This development is a welcome enlargement of the already pervasive and salutary role and influence of this esteemed institution and its international affiliate, the ICDR.

In a recent press release, the AAA explains that the Foundation is a 501(c)(3) not-for-profit organization, and is able to solicit donations and provide grants to fund a range of worthy causes that promote the Foundation’s wide-reaching mission, which is to support the use and improvement of dispute resolution processes in the USA and internationally.

Among its mission goals are:

  • Fostering measures that reduce potential escalation, manage, and resolve conflicts.
  • Expanding the use of dispute resolution processes tailored to the conflict.
  • Supporting research, education and initiatives promoting high quality, efficient and fair dispute resolution.
  • Increasing access to justice in and through alternative dispute resolution.
  • Encouraging collaborative processes to resolve public conflicts.
  • Sharing expertise across diverse groups and cultures.
  • Partnering with others dedicated to advancing the Foundation’s mission

The Foundation has received  initial funding from the AAA/ICDR, AAA/ICDR Panelists and others, though it is independent of the AAA.  The Foundation is committed to funding critical projects in the ADR community to improve and expand the use of arbitration, mediation and other forms of dispute resolution.

The AAA-ICDR Foundation is now accepting proposals for its first funding cycle.  Interested organizations or individuals should submit a 1-2 page Initial Description of Grant Request no later than December 1, 2015. For more information on the AAA-ICDR Foundation and the grant-application process, please visit


Breaking News From NJ: Contracts Require Consent

Wed, 2015-10-28 19:44

A colleague has brought to our attention the October 26, 2015 opinion of the Superior Court of New Jersey Appellate Division in Barr v. Bishop Rosen & Co., Inc., which affirmed the denial of a motion to arbitrate on the ground that the arbitration agreement gave an employee insufficient notice that agreeing to arbitration meant waiving the right to sue.

Walking right into a concern that many of us have expressed, the court held that “an agreement to arbitrate must the the product of mutual assent, as determined under customary principles of contract law,” and that “mutual assent requires that the parties understand the terms of their agreement.”  That very proposition seems to run counter to broadly accepted practices in arbitration “agreements” in a consumer and employment context that have regularly been upheld.  In a prior post we noted that consumer arbitration “agreements” are regularly upheld despite the consumer party (a) not knowing they entered into an arbitration agreement, (b) not knowing what arbitration is, and in particular (c) not knowing that an arbitration agreement constitutes a waiver of a right of access to a court.

In New Jersey, an arbitration agreement must include language that “at least in some general and sufficiently broad way” serves to “clearly and unambiguously signal to parties that they are surrendering their right to pursue a judicial remedy.”  Examples of acceptable language include “Instead of suing in court, we each agree to settle disputes only by arbitration” or “The parties agree to waive their right to a jury trial.”  Because the arbitration agreement in Barr lacked that accompanying language, it was unenforceable.

I wonder whether the Judges have checked out their iPhone License Agreement recently?

Ombudsman at the CFPB

Sun, 2015-09-27 11:30

Wendy Kamenshine, Ombudsman for the Consumer Financial Protection Bureau office, along with her colleague Sharon Asar, conducted an interesting presentation at the recent ABA Business Law Section Annual Meeting on the role of the Ombudsman office at the CFPB.

The role of the office is to advocate for a fair process in individual and corporate interfaces with the agency.  Users are encouraged to engage the Ombudsman office whenever they seek assistance in their dealings with the agency. 

She drew a distinction between Ombudsmen and other ADR processes.  Although an Ombudsman is a third party neutral, the work involves stakeholders within and outside the agency, attending to relationships over a sustained period of time rather than at the moment of a particular problem.  Another distinction are the available resources – Ombudsmen engage in shuttle diplomacy, facilitated conversations, impartial evaluation, organizational procedure recommendation, and other jobs  that are unrelated to dispute resolution per se.  The office is authorized by a short passage in the Dodd -rank Act establishing a function that would act as liaison to persons experiencing problems with respect to the activities of the agency.

Five areas are focused upon: issues arising from the examination process, the enforcement process, the consumer complaint process, examination appeals, and relationships of the Bureau with other agencies, particularly those engaged in financial regulation.

Three basic tenants of the office are independence, impartiality and confidentiality.

  • The office is independent of the operations of the Bureau, and is not part of the agency’s organizational business line. It has a high-level reporting function, in keeping with its obligation to influence organizational changes as needed. Its direct report is to the Assistant Director, and then the Director.
  • Impartiality means that it takes no sides; its obligation is to the process. Consumer and trade groups, government agencies, congressional staffers, counsel to companies – all are equally served.  They are also not advocates for the operational activities of the agency, except that they have a mission to improve its processes.
  • Confidentiality is necessary to facilitate individuals’ willingness to reach out to the office without risk.

The goal is to resolve processes informally, to the extent possible.  The office has no authority to address internal disputes, such as employment or human relations matters, and notice to its office is not notice to the agency for purposes of statutory timing.  If a matter is in litigation, the Ombudsman office cannot assist in resolving it.

The office is approached by individuals, groups and organizations.  One of its fundamental jobs is to provide resources to those who approach the agency.  One example was a group of concerns about the examination process, and the lack of useful and consistent information provided to companies subject to examination.  As a result of the Ombudsman office’s work, more robust and uniform information is now provided to companies subject to examination.  Another example was the difficulty that visually impaired users experienced in engaging with the agency’s web site.  The office worked with groups of visually impaired users and greatly enhanced the ability of visually impaired users to file a complaint online.

The office opened in 2011.  Over 1,100 people from 47 states contacted the office during 2014.  The office’s web site and annual report are sources of further information.

Mediation in Turkey

Mon, 2015-08-31 09:24

A recent trip to Turkey included a delightful visit at the offices of leading Turkish law firm Hergüner Bilgen Özeke and several of its members, including H. Tolga Danisman.  Tolga and I met in the most recent convening of the UIA World Mediation Forum, in Amsterdam, and it was a privilege to have a chance to get to know him and his firm better.  It was also a chance to get an inside look at a rapidly developing legislative and judicial initiative in commercial mediation in this troubled and beautiful country.

Danisman, who is author of a chapter on Turkish dispute resolution in the most recent edition of The Dispute Resolution Review, explained to us that the Turkish Mediation Act on Civil Disputes was enacted in June 2012 and went into effect in June 2013.  Since that time about 2,000 mediators have registered with the Ministry of Justice, and about 720 cases (mostly labor/employment) have been mediated.

The Turkish civil courts suffer from substantial backlogs; Danisman estimated that over 1.5 million matters were currently in the courts.  About half of these cases transfer into the following year, so mediation was initially seen as a way to remedy judicial burdens.

But Turkish litigants are accustomed to obtaining enforceable court orders, and there is no tradition of consensual termination of litigated claims.  The new Act provides for the rendering of a mediated settlement to a court judgment, but the entire approach is new and unfamiliar.  The bar at first was reluctant to support mediation, but with the help of consultations with EU trade partners that resistance is waning.  Nevertheless, a viable mediation center in the form seen in Europe has not yet arisen in Turkey.  The Chamber of Commerce in Istanbul is focusing on the challenge, but there is still uncertainty on threshold procedural matters, such as how mediators from the approved pool will be assigned to those few cases where mediation is sought.  (Individual mediators have no purchase in the market.  Danisman observed that, with the procedure so unfamiliar, the parties and their counsel are simply unprepared to self-select mediators.)

There are discussions about making mediation a condition precedent to filing employment cases in court.  The Ministry of Justice strongly supports the Act and campaigns on the benefits of mediation.  Interestingly, the confidentiality provisions of the Turkish Act exceed the requirements of the 2008 EU ADR Directive, binding parties and counsel as well as the mediator.  DRBs and other dispute mechanisms are used in large infrastructure projects.  But the day-to-day commercial disputes are, so far, not affected by the new law.  Moreover, most of the approved mediators are young; the older, more respected and accomplished bar have not yet participated in the pool.  As a result, mediation lacks the authority or endorsement that sophisticated parties look for.

It’s a fascinating state of affairs.  Turkey is enormously influential, being the sixth largest trade partner with the EU.  It is facing political and military challenges at the same time it is experiencing rapidly changing cultural and religious developments.  It will be interesting to see how commerce, the law, and mediation combine over the next several years.

ADR-Related Legislation

Tue, 2015-08-11 07:27

Larson Frisby, of the ABA Governmental Affairs Office, recently offered an update on the status of federal ADR legislation and other related measures.  Some of the most interesting proposals are briefly described below.

The Dodd-Frank Act required the Consumer Financial Protection Bureau to conduct a study on pre-dispute arbitration agreements.  That study issued on March 10, 2015.  It was highly critical of both consumer mandatory arbitration and consumer class action waivers.  It seems likely that the CFPB will issue regulations limiting or even prohibiting such clauses to resolve consumer financial disputes.  (Of course, whether making the courts the sole avenue of redress for consumers is an improvement is another question.)

The Arbitration Fairness Act continues its (by now) perennial appearance and seems destined to another perennial defeat.  The Act would ban all mandatory pre-dispute arbitration “agreements” for employment, consumer, antitrust and civil rights disputes.  The current version does not ban pre-dispute arbitration clauses in franchise agreements.  The bill is in committee and not expected to be acted upon.

Mandatory arbitration of securities disputes are sought to be banned by a third bill, which — lacking any Republican support — is unlikely to advance.

The same fate is shared by a bill seeking to prohibit employers from requiring their employees to arbitrate rape claims.  Notably, this bill excludes from its coverage employees who are elected to public office, as well as their personal staff and immediate advisors.

The Court Legal Access and Student Support (CLASS) Act would invalidate all mandatory pre-dispute agreements to arbitrate enrollment disputes between a student and a college.  It too has been referred to committee and no further action has been taken.

A proposal to restructure the Surface Transportation Board, by contrast, is likely to be enacted.  And it proposes the establishment of a voluntary and binding arbitration process to resolve rail rate and practice disputes, once those claims have been filed with the Board.

Legislation seeking to improve the process involved in FOIA requests contains a provision that would require the Office of Government Information Services to offer mediation services to resolve disputes between FOIA requesters and administrative agencies.  The bill enjoys strong bipartisan support in both houses and is likely to pass.

Several measures address the establishment or reform of ombuds positions in certain federal agencies.  They include ombuds functions involving long-term care disputes, Medicare and Medicaid, small business procurement, the Federal Air Marshall Service, and the Transportation Security Administration.

Anybody out there taking note of this but not a member of the ABA?  Get with the program, please.

Okefenokee Lessons

Fri, 2015-07-31 13:56

My admiration for Walt Kelly has recently developed into an obsession, and over the past few years I have been gobbling up each volume of The Complete Pogo as it has trundled off the presses.  Churchy, Mam’selle Hepzibah, Albert and Pup Dog not being that far from my mind, the hot days of summer have kicked in to prompt a lemonade reflection.

The fruits of mediating are many, by no means restricted to whether disputes settle.  Working with indignant people as they wrestle with their sense of injustice or betrayal, or try to assess what is best for their business, or to determine how to manage the expectations of their colleagues, is a fascinating thing.  I value being around smarter folks than I am, and when I mediate everybody in the room knows more about the dispute than I do.

What’s fascinating is coaching the process of remove — of distance, assessment, judgment, risk, opportunity, and face-saving.  Observing who is willing to go forward and who needs to stay where they are for a bit.  Who defines themselves by solutions and who by problems.  And, of course, to have the luxury of doing this when it’s not your money on the table.

On the hot summer afternoon when I write this post, I am struck by the worthiness of it all.  Not the virtue of my skills, or even of the facilitative process itself, but rather of the way people tend to behave — sooner or later — when confronting such challenges.  Just about everyone I’ve worked with finds a way to reframe the event from an affront, or a wrong, to a challenge, or a problem.  Not everyone figures out how to fix it, right there in front of your eyes.  But almost all of them get to a point where fixing it becomes more attractive than punishing someone about it, or blaming someone for it.

Walt Kelly knew this, of course, years before I did.  And in case any of you mediators catch yourselves in an Okefenokee mood, I offer Pogo and Porky, leaning on a log, from October 17, 1953:



Colin J. Wall

Fri, 2015-07-31 13:16

The death of Colin J. Wall on July 16, 2015, is a crushing blow to our profession and a personal loss to me.

Colin was not a lawyer.  He was trained as a quantity surveyor, which (as he explained it to me) meant that he was good a figuring out what a construction change order would cost.   Raised in Birmingham, he found himself posted in Hong Kong by an early employer and was consulted by Queen Mary’s Hospital, which was undergoing an extensive revision.  The Hospital was receiving bids for the construction work that far exceeded its expectations.  Colin noted that the building had an asbestos condition of unknown scope and expense, and he suggested that the Hospital assume the asbestos removal itself, at its own direct cost, and bid out the job on a post-removal basis.  It did so, and the project went forward without a stumble.

Rebuilding a working hospital “without a stumble” turned out to be just the assignment for a person of Colin Wall’s persistent, collaborative, problem-solving, disciplined frame of mind.  He established a rapport with each stakeholder, from the physicians through the administrators to the vendors, to ensure that the work progresses in a sequence and at a rate that everyone had agreed upon, expected, and knew how to accommodate.  Working on building the Hong Kong airport, while it was fully operational, was a similarly revelatory example.  Colin was not a blamer, but rather a fixer, and his approach to conflicts on a construction project was less that of a lawyer than a life coach, or a midwife.

He worked closely with Eric Green and became a mediator and arbitrator in global demand.  He spent three weeks in Hong Kong and one at home in England, and accepted disputes in the hundreds of millions — even billions — of dollars in Asia and the Middle East.  So clear was his insight, and so easygoing was his manner, that he eased into the role of a leader among us.  Over the years he served as president of the Chartered Institute of Arbitrators (CIArb), co-president of the UIA’s world forum of mediation centers, and honorary professor at the University of Hong Kong. He was a pioneer of Dispute Advisory Boards.  He chaired the Hong Kong Mediation Council, and was on the panel of distinguished neutrals of CPR, the ICDR mediation panel, the CEDR-Solve panel of mediators and numerous other panels.

I first became aware of Colin through the St. Mary’s achievement, then got to know him at the UIA Forum (where we were set up to debate a provision of the Code of Ethics in 2003 or so), at the ICC Mediation Competition, and eventually simply as a friend.  When he came to the States for treatment of his cancer in the Spring, we took trips to the seaside, to the Shawangunk Mountains, and (when AMTRAK service was suspended the day before a preparatory procedure at Johns Hopkins) to Baltimore.  We sang Gilbert & Sullivan.  He lectured me about my practice of not contacting mediation parties except through their lawyers.  We talked about our children and our plans.

His devotion to learning was unremitting, and he was an enthusiastic teacher of young and old.  With Alan Linbury and Greg Bond, Colin was responsible for the recent publication of a book collecting past scenarios for the ICC International Commercial Mediation Competition, many of which he had drafted.  He was a stalwart of the VIS East Arbitration Competition, known for buying time for the judges while relating the story of the maritime arbitration involving the CSS Alabama and getting the students to sing the shanty “Roll, Alabama, Roll.”  A highlight of his trip to the States was the chance to view the sternpost of the USS Kearsarge, still bearing an unexploded shell from the Alabama during the Battle of Cherbourg.

In one of our last conversations, during the recent UIA Forum meeting in Amsterdam, Colin and I traded lines from Act One of The Mikado:

Katisha. (who is reading certificate of death) Ha!

Mikado. What’s the matter?

Katisha. See here — his name — Nanki-Poo — beheaded this morning. Oh, where shall I find another? Where shall I find another?

Where, indeed?

Colin Wall, Spring Lake, New Jersey

May 2015

Ethics: Disclosure Meets Confidentiality

Wed, 2015-07-29 16:49

Unmarketed, unheralded, and therefore largely unknown are the Model Standards of Conduct for Mediators, promulgated in 2005 by the ABA Dispute Resolution Section, the AAA and ACR. Even less well-known, one suspects, are the opinions of the Committee on Mediator Ethical Guidance that issue periodically interpreting those Standards.  Two recent opinions (available at the same link as the Committee, above) announced on June 22 are worthy of note.

The first addresses the inquiry: “Must a mediator disclose to prospective parties that she has conducted a number of previous mediations for one of the parties (or its attorney)?  What needs to be disclosed?” 

The opinion determines that a mediator is obligated to conduct a reasonable inquiry to determine whether she has conducted a prior mediation involving a present participant, and disclose the prior mediation and the name of the person(s) for whom the mediator worked in the past.  The opinion notes a concern that, where a substantial part of a mediator’s compensation comes from a single source, that relationship would reasonably raise a question of the mediator’s impartiality.  This obligation includes disclosing prior work involving an insurance carrier.

If, however, the mediator is asked what happened in the prior mediation, or whether the matter settled — and, by implication, whether the relationship does in fact form a substantial part of the mediator’s compensation — the mediator should refer the inquiry to counsel in the prior mediation.  This is because the Standards of Conduct apply to the mediator but not to the parties or counsel.  And here is where we come a cropper.

I frequently (well, maybe sometimes) get work because a party or counsel from a previous matter seeks to work with me again.  And I have no doubt that the prior party suggested me to the other side and vouched for my bona fides.  I nevertheless disclose at the outset that I have previously worked with so-and-so, and no one has ever objected or even expressed surprise to learn it.

But under the Uniform Mediation Act (enacted in my jurisdiction) and the terms of my own engagement agreement — and pursuant to broadly held best practices — no party or counsel may disclose any mediation communications for any purpose (other than narrow exceptions to prevent harm and so forth).  And urging them to do what I myself am barred from doing seems like an unacceptable way to maintain professional integrity or process reliability.  The proposed solution seems at odds with some fundamental principles.

The second opinion is noted just for the fun of it.  The inquiry was: “Is it appropriate for a mediator to advertise that he mediated ‘the largest settlement in the history of [the] county’?”

The opinion spends a good deal of analysis to conclude that the advertisement violates Standard VII (B), barring solicitations that give an appearance of partiality, as well as Standard V (A), requiring confidentiality of all information obtained in the course of a mediation.

It seems like overkill.  Boasting that you got a plaintiff a big settlement will surely drive every defendant away from your door.  The ad may or may not be ethical — but it sure is stupid!