Monday, February 19, 2007
Unrepresented Parties in Mediation: Is It A Good Idea?
In my last post I discussed the fact that more and more contracts have "mandatory mediation" clauses requiring that the parties mediate their disputes before arbitration or litigation can be pursued. What this means is that more people are having to decide whether or when to hire an attorney if they are not planning to file a lawsuit right away but will be mediating the case first.
The Question: Is it a good idea to enter mediation without legal representation? The Answer: sometimes yes, sometimes no.
When the dispute involves unrepresented individuals on both sides of the table, there is generally a fairly even balance of power and knowledge. A mediator can work with both unrepresented parties to ensure all of the necessary information has been disclosed and that the agreements reached are inherently fair. This is an example of when legal representation may be unnecessary for a fair result.
When the dispute involves a "sophisticated" company with decades of experience in negotiating deals (think national corporation or real estate broker) on one side and an individual who has little to no experience negotiating such deals or little to no understanding of the extent of his legal rights in the event of a lawsuit, this often results in a serious power imbalance. There is a significant chance that such a power imbalance could only be corrected when the individual has his own attorney to provide advice before, during and/or after the mediation and before any settlement agreement has been signed because the mediator cannot give such legal advice.
Likewise, with two disputing individuals, if only one of the parties is represented, there is a good chance that the same problem of power imbalance may be present. This is because only one side is being told her rights and obligations and possible outcomes in court while the other side is ignorant of the possible remedies she might have. It is likely to be an unfair negotiation which can easily result in an unfair resolution. This might not happen if that party has the same benefit as the other party of legal representation and advice.
Mediators cannot provide legal advice because we are neutrals and not attorneys in our role as mediators. Therefore, the mediator who recognizes a clear power imbalance which cannot be rectified through the open exchange of all necessary information in the dispute or through other means available to mediators (separating parties to defuse aggressive behavior or working to improve the communication skills of the parties, etc.) generally will advise the unrepresented party or the relatively "unsophisticated" individual who is negotiating with a powerful company of the importance of seeking legal representation in that situation. Some mediators may even refuse to continue such a mediation where it is clear such a power imbalance will negatively impact the unrepresented individual.
Some parties come to mediation without attorneys but they have an attorney they are paying on an hourly basis to give advice before the mediation or to review the settlement agreement after the mediation. In fact, it is a requirement I have in divorce mediations that the parties get independent legal advice prior to signing the settlement agreement. This way everyone is assured that the agreements reached and settlement terms agreed to are fair to all parties and their own attorneys. Divorce cases involve specific complexities which, in my mind, require independent counsel's involvement, at least before the agreement is signed. This is not always the case in other civil disputes.
Some mediating parties consult with an attorney throughout the mediation process but don't bring their attorneys to the mediation itself. This can work very well in a case where the legal issues are not too complex and the dispute is more fact-based. The parties may choose to call their attorneys from the mediation and run potential agreements by their attorneys and get legal advice during the mediation in this way. Other parties only consult with an attorney to review the proposed agreement. Sometimes, the extent of an attorney's involvement in mediation just depends on how much money the party was able to scrape together from the change jar to pay for a portion of the mediation and several hours of the attorney's time. The more complex the legal issues or power dynamics, the more it makes sense to get and keep attorneys on board throughout the process.
The flexibility of the mediation process is one of the things I love the most about mediation as a dispute resolution method. Whether or when to bring in independent attorneys depends on the nature of the dispute, the complexity of the issues and possible remedies, the relative sophistication of the parties and their interactions together as well as what the parties themselves are comfortable with and what the mediator sees as a fair negotiation.