Require Mediation Before Arbitration

Parties are increasingly including a mediation provision in their contractual arbitration clauses, requiring an aggrieved party to mediate before filing an arbitration. Although one might wonder about the success rate of mediations that take place when a party is forced to do so by contract, any settlements achieved so early in the process result in enormous cost savings. It would seem, therefore, that the downside of a contractual mediation requirement – a wasted day in an unsuccessful mediation – would be outweighed by even the slim chance of being able to settle before litigation is filed.

Courts have typically enforced contractual mediation clauses, dismissing arbitration claims if the party bringing the claim has failed to exhaust a contractual mediation requirement. Rodriguez v. Tex. Leaguer Brewing Co. (Tex. App., 2019), however, involved an interesting twist on this issue. The plaintiff ignored the contractual arbitration clause and filed a court case. When the defendant responded by moving to dismiss, arguing that the case should be sent to arbitration, the plaintiff argued that the defendant could not enforce the arbitration clause because it had failed to request a mediation. The plaintiff argued that mediation was a condition precedent to arbitration, and having failed to meet that condition precedent, the defendant could not enforce the contractual arbitration requirement.

The court was not impressed with plaintiff’s argument:

when the agreement requires the parties to mediate before arbitration, a party who proceeds first to litigation waives the right to mediation and cannot assert the mediation provision as a condition precedent to arbitration. … Because the Rodriguezes filed suit without first seeking mediation, they have waived their right under section 9.4 to insist on mediation before arbitration….

My takeaway: The plaintiff was in an untenable position when it tried to enforce a mediation requirement after having itself tried to sidestep the entire mediation/arbitration process by running to court. But absent egregious circumstances like this, contractual mediation requirements are enforceable, and also seem quite sensible.

Does It Make Sense To Use Two Mediators?

Using two mediators, generally referred to as the “co-mediation,” is fairly common in community mediation organizations, but less common in commercial cases. Using two mediators in a commercial case is more likely an option in larger value cases that justify the cost of hiring two mediators, but if all parties can agree to use that approach, it can provide a real boost to the process.

There are certain specific uses of co-mediation, such as multi-party cases, where the co-mediators can deal with more than one party at a time, or cases calling for multiple areas of expertise. But the primary advantage is much simpler: two mediators can generate twice the number of ideas and approaches for getting past an impasse. In complex cases you typically put together a team of lawyers, in part to bring the necessary brain power to deal with a challenging situation. Mediations, while shorter in duration, can nonetheless post challenging problems for the mediator, and with the right pairing, two can be a stronger force than one.

I have personally done a handful of co-mediations, and found it to be a very powerful tool because there were two minds observing the parties, two minds listening to what was being said, and two minds searching for ways to move forward.

If you’ve got a thorny case where settlement would be very beneficial, but you think the odds are against it happening, perhaps that would be the time to consider using a co-mediation approach. Here’s an article if you are interested in exploring this further:

Fulfilling a Requirement to Mediate

It is increasingly common for contracts, and in certain cases court orders (divorce decrees, for example), to require mediation before disputants can litigate. In K.S. v. J.S., No. A-4321-17T2 (N.J. App., 2019), a divorce decree required the parties to mediate before bringing an action alleging a breach of the decree. When the defendant demanded that the plaintiff attend a mediation, the plaintiff responded by asking for a list of the issues the defendant intended to mediate, which was really a request for a statement of what breaches were alleged to have occurred. The defendant refused to provide such a list and later sought sanctions for the plaintiff’s alleged refusal to mediate.

The appellate court sided with the plaintiff, ruling that no violation of the mediation requirement had occurred because the plaintiff was entitled to know what issues the defendant wanted to mediate before attending a mediation. On the one hand, this ruling could be questioned because the order required only that a party mediate before going to court; there was no requirement to also identify what issues would be mediated. But from a practical standpoint, the mediation requirement, whether in a court order or a contract, is intended to side-step gamesmanship and have the parties try to resolve a dispute on their own, and a statement of issues such as the Plaintiff requested here would seem to be consistent with that goal, and defendant’s refusal an attempt to avoid meaningful mediation.

My takeaway: In most disputes, the parties are well aware of the nature of the potential claim when a demand for mediation is made and thus a demand for a list of issues to be mediated would be unnecessary. If, however, there is any ambiguity on the question, a request for a list of issues the other side intends to mediate would seem both a useful and reasonable request.

Do You Need Pro Hac Vice Admission to Represent a Client in Mediation?

In In re Anne Elder Kershaw, No. 2018-031 (S.V.I), the Supreme Court of the Virgin Islands affirmed the denial of a motion for pro hac vice admission based on the following facts. The non-Virgin Islands counsel in question filed a motion in the trial court to be admitted pro hac vice that was granted, but subject to the attorney taking a required oath. After the motion was granted, but before the attorney took the oath, she represented her client at a mediation in the Virgin Islands. The Court not only vacated the prior order granting the pro hac vice motion, it also referred the matter to disciplinary authorities, ruling that pro hac vice admission was required for any “practice of law” in the Virgin Islands, and that representing a client in mediation in the Virgin Islands, even in a private mediation, constituted the practice of law. Since the attorney had not yet taken the oath, the attorney was not yet admitted and therefore violated the local rules of ethics by participating in the mediation.

Lest you think this a quirk of Virgin Island law, cases from many other states are cited:

See In re Roswold, 249 P.3d 1199, 1208 (Kan. 2011) (“Without admission pro hac vice, out-of-state attorneys appearing in Kansas courts, or actively participating in pretrial proceedings such as depositions or mediations, would be engaged in the unauthorized practice of law in this state.”); In re Dox, 152 P.3d 1183, 1187 (Ariz. 2007) (attorney not admitted in the state engaged in the unauthorized practice of law by representing a party in a private mediation in that state); In re UPL Advisory Opinion 2003-1, 623 S.E.2d 464, 464-65 (Ga. 2005) (representing a client in settlement discussions is the practice of law); Cincinnati Bar Association v. Telford, 707 N.E.2d 462 (Ohio 1999) (same).

Guided Choice Dispute Resolution – A New Approach That Might Boost A Mediation’s Chances Of Success

The earlier a case can be settled the better. But what is the right moment to attempt a mediation?  While it is good to try to mediate as early as possible, some mediations fail because the parties find out they were not yet ready to have a meaningful settlement discussion.

Guided Choice is a process where the parties retain a mediator early in a dispute, but, at least initially, not to conduct a settlement discussion. Rather, after confidential conferences with each side, the mediator makes a determination as to whether the case is ripe for a settlement discussion. If not, the mediator determines what issues preclude having a productive settlement discussion, and proposes a procedure designed to get the parties to the right point as quickly as possible. This could involve getting certain discovery done up front, presenting a motion on a key issue to a judge or arbitrator, getting other parties involved, or having one or both sides prepare expert reports on damages. Once those tasks have been completed, a mediated settlement discussion can take place.

Think you can decide for yourself when mediation is appropriate? Probably. Would having a neutral involved be useful? Probably. If you would like more information on this cutting-edge ADR process, give me a call or take a look at this web site: