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Mediation Proceedings in Good Faith - What are your thoughts?

By statute, rule, or agreement, many mediation proceedings require that the parties participate in good faith. How close to the line of "bad faith" does a defendant/respondent tread by coming to a mediation session with a "no-pay" position? To what extent does that party have to maintain an "open mind" about a possible resolution relative to its "no-pay" position before it is basically not participating in good faith?

Please provide your thoughts/comments below.

Comments (10)

Robert L. Cowles:

In Florida the good faith has been interpreted by the courts as attending the mediation. There is no requirement ot make an offer to be in good faith.

Deanne Wilson:

Because the essence of mediation is a consensual dispute resolution, the engrafting of a "good faith" requirement is difficult to conceptualize. If a party refuses to compromise due to a strongly held opinion of the worth of its position, is that "bad faith"? If a party compromises merely a token amount, is that "bad faith"?

That having been said, if a party fails to appear or subtantially backtracks on a former position after the adversary has responded in its own compromise, then the showing of "bad faith" becomes more evident. The standard varies also, depending on whether the obligation is imposed from the outside (statutory or rule-based) or arises from agreement. Usually the agreement to arbitrate involves some type of a quid pro quo from an adversary so the "good faith" requirement should weigh in at a higher level.

A skillful mediator, however, with creativity, patience and persistence, can usually open the mind of a recalcitrant party, no matter how obstinate the first appearance. Thus, it may be more productive to craft an acceptable resolution to the logjam than to delve deeply into the "good faith/bad faith" analysis.

Just a couple of thoughts. See what you think. Not from a particularly legal point of view, but, from an interest-based negotiation focus ---

Doesn't everyone come in - generally speaking - on a position? That is why the need for mediation. As we begin a mediation we are first hearing those positions. Finding the interests that are driving the parties to their positions is the job of the mediator, along with allowing the parties to 'hear' those interests. Then, the mediator has the opportunity to guide the process toward the reaching of effective and lasting solutions.

Simplistic, but, I suppose mediators must assume parties are attending in good faith. If there is reason during a mediation to find otherwise then something must be done accordingly.

If a party has expressed a "no pay" position, it is not that different from a "firm" low ball position that is known to be unsatisfactory to the other side. To say that "good faith" requiresagreeing in advance to be willing to depart from this position would be even more likely to entrench their position with arguments that would make a departure from the no-pay position even more difficult.

The beauty of a mediation, particularly where the parties stay together for the intro and opening statements, if not longer, is that the clients (who, by agreement have the authority to settle), get to listen directly to the best arguments of the other side. The mediator by open ended questions can both build the psychological atmosphere conducive to understanding, but can uncover interests that the lawyers have never addressed, since they are often only interested in evaluating the legal position, usually supported by confirmatory bias.

"Good faith" should be applied to the procedural aspects , such as whether the attorney and/or party show up, refuse to stop calling on their cellphone, or something egregious like surreptitiously reviewing the other side's papers when left in the room inadvertently, or warning witnesses of the other side with retribution.

Taking a "no-pay" or token payment position is not, by itself, bad faith in the mediation. It is up to the mediator to understand and address that party's position, and offer to convey the reasons to the other side. Being absolutely positive of your case, can be a motivation to make no offer; but the mediator needs to address that, and exchange enough information to make sure the other party understands the reason for the position. The other side may then try to persuade the no-pay party there merit, or at least that there is a risk, or that settling by paying a part of the costs of proceeding (because there is uncertainty in any outcome), is good business. Insisting on some payment (even "nuisance-value"), after seeing there is a very bad claim, can itself be bad faith. Reaching a mediated settlement does not require that a payment be made by one party to the other. A settlement can be achieved by agreeing to withdraw the claim.

Taking a "no-pay" or token payment position is not, by itself, bad faith in the mediation. It is up to the mediator to understand and address that party's position, and offer to convey the reasons to the other side. Being absolutely positive of your case, can be a motivation to make no offer; but the mediator needs to address that, and exchange enough information to make sure the other party understands the reason for the position. The other side may then try to persuade the no-pay party there merit, or at least that there is a risk, or that settling by paying a part of the costs of proceeding (because there is uncertainty in any outcome), is good business. Insisting on some payment (even "nuisance-value"), after seeing there is a very bad claim, can itself be bad faith. Reaching a mediated settlement does not require that a payment be made by one party to the other. A settlement can be achieved by agreeing to withdraw the claim.

The American Bar Association’s Standing Committee on Ethics and Professional Responsibility (the “Ethics Committee”) has expanded the scope of Rule 4.1(a) of the Model Rules of Professional Responsibility to included “caucused mediation.”

The Rule itself simply provides that:
In the course of representing a client a lawyer shall not knowingly: (a) make a false statement of material fact or law to a third person.
As now interpreted in Opinion 06-439, mediators fall among the “third persons” to whom lawyers may not make “false statements of material fact or law.”

Now that caucused mediation has been subsumed under Rule 4.1(a), attorneys have a justification for being “less than entirely forthcoming” with mediators about: estimates of value, the strengths/weaknesses of their case, and their client’s willingness to settle. In the words of the Opinion,
"Statements regarding a party’s negotiation goals or its willingness to compromise, as well as statements that can fairly be characterized as negotiation 'puffing,' are ordinarily not considered false statements of material fact.

Accordingly, in and of themselves, "No pay" positions do not constitute bad faith negotiations.

Tennessee is similar to Florida. There is no duty beyond attendance. I might add that even more troubling is the desire of some judges to have a backdoor to the mediator to find out what is happening in the mediation, and the desire of some lawyers to use the threat of punishing the opposing party by accusing them of bad faith mediation as leverage in negotiation. All of this is antithetical to the concept of consensual negotiation.

Robert E. Barras:

THANK YOU DEANNE WILSON

I start off every mediation explaining my goal, namely, that "you are together here, of your own free will, to reach a reasonable compromise, not to accomplish what each, or either, of you might consider your perfect outcome. If either is uncomfortable with that goal it would likely be better that we end this now before this process becomes a waste of all our time and of your money." I then explain how the process works and I emphasize my promise to listen to both sides with an open mind. I also hope and expect the lawyer for each side to guide their clients through the process by encouraging their client to be open to a reasonable (not necessarily perfect)agreement; and to not push the client too hard to overcome their sincerely held position. I also tell them that they need not rush into an agreement, because there is always an opportunity to have a second session if their is a well founded belief that time will be afford them an opportunity to arrive at the "right" agreement.
Justice George D. Marlow (Ret.)

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