DAVID J. WILLIS ATTORNEY
Copyright © 2014. All rights reserved worldwide.
Mediation in Texas
by David J. Willis, J.D., LL.M.
Mediation is a form of settlement conference guided and supervised by a mediator who has either been chosen by the parties or appointed by a judge. The "Rules for Mediation" put it as follows:
Mediation Rule 1: Mediation is a process under which an impartial person, the Mediator, facilitates communication between the parties to promote reconciliation, settlement, or understanding among them. The Mediator may suggest ways of resolving the dispute, but may not impose his own judgment on the issues for that of the parties.
Mediation Rule 3. The parties consent to the appointment of the individual named as the Mediator in their case. The Mediator shall act as an advocate for resolution and shall use his best efforts to assist the parties in reaching a mutually acceptable settlement.
Mediation Called for by Contract
Contracts may require that parties mediate before litigating. An example is paragraph 16 of the TREC One to Four Family Residential Contract, so long as the "will mediate" box is checked. The intent is to provide a structured opportunity for the parties to air and resolve grievances before going to the courthouse. Generally, the seller should always check the "will mediate" box. The buyer, the reverse. Why? Because even though paragraph 16 goes on to state that it "does not preclude a party from seeking equitable relief from a court," a buyer wants to be under no limitation as to whether or not suit may be immediately filed in order to discourage or prevent the seller from conveying the property to someone else.
Mediation during Litigation
The docket control order, generated by the court’s computer for scheduling purposes, contains relevant dates and deadlines applicable to a case, and it usually includes a date by which mediation must be completed. It is usually down the road a bit, since most attorneys prefer to do at least preliminary discovery (requests for disclosure, interrogatories, and requests for production), and perhaps consult an expert, before mediating, so that "all cards will be on the table" when the parties meet to talk settlement.
Some judges will name a mediator, others leave it up to the parties to agree upon one. Even though mediation is usually ordered, the outcome (whether or not a settlement is reached) is entirely voluntary. The parties can choose to walk away without settling and go to trial instead, leaving their fate in the hands of a judge or jury. The mediator will report an impasse and all aspects of the mediation, including offers of settlement, remain private and confidential.
Mediation vs. Arbitration
The difference here involves the authority of a mediator vs. an arbitrator:
Mediation Rule 5. The Mediator does not have the authority to decide any issue for the parties, but will attempt to facilitate the voluntary resolution of the dispute by the parties. The Mediator is authorized to conduct joint and separate meetings with the parties and to offer suggestions to assist the parties achieve settlement.
By contrast, in an arbitration, the arbitrator makes a final ruling just as if he or she were a judge. Arbitration is never ordered by a court (unless of course the parties have an arbitration clause in their contract) but may be agreed upon by the parties.
Effectiveness of Mediation
Why is mediation popular? Statistics show that it works. Depending on which numbers you believe, 70% to 80% of cases settle in mediation. Attorneys know this and encourage their clients to mediate with an open mind. In fact, when a party is recalcitrant and unreasonable about settlement, attorneys can become quite annoyed – and the reason is that lawyers know better than anyone how a trial can consist of "rolling the dice," meaning that no outcome can ever be assured or guaranteed in the legal system, no matter how determined the client or how capable the attorney.
Mediation promotes predictability and certainty, but this requires compromise. You do not win your case at mediation. In fact, a good mediation is by definition one in which both sides leave unhappy. Clients find this difficult to accept. Remember, the "legal world" is not the same as the "real world." Clients who rebel against the mediation process and insist on total victory based on principle almost always lose.
It is a rare case when a party is justified in refusing mediation. However, if good grounds exist for doing so, the judge (after motion and hearing) can waive a mediation requirement. Judges do not like to do this for two reasons – first, they are seasoned realists who know that most cases should settle; and second, it assures that another case will be added to an already over-burdened trial docket. Do you want to alienate the judge? Object to mediation in your case. Many lawyers consider a party’s refusal to mediate in good faith to be grounds for attorney withdrawal.
Rules for Mediation
Several of these rules have already been cited in this chapter. Others include:
Mediation Rule 2. Whenever the parties have agreed to mediation, they shall be deemed to have made these rules, as amended and in effect as of the date of the submission of the dispute, as part of their agreement to mediate.
Mediation Rule 7. Party representatives must have authority to settle and all persons necessary to the decision to settle shall be present.
Mediation Rule 9. Prior to the first scheduled mediation session, each party shall provide the Mediator and all attorneys of record with an Information Sheet and Request for Mediation on the form provided by the Mediator, setting forth its position with regard to the issues that need to be resolved.
The mediator always asks if all parties are ready and willing to mediate in good faith and work toward a settlement with an open mind. This is the foundation of mediation, and the mediator will request that the parties make an unconditional commitment to do this. Additionally, it is important to determine that persons present have authority to settle the case. Otherwise, the process can be futile.
Impartiality of the Mediator
Mediation Rule 4. The Mediator will only serve in cases in which the parties are represented by attorneys. The Mediator shall not serve as a Mediator in any dispute in which he has any financial or personal interest in the result of the mediation. Prior to accepting an appointment, the Mediator shall disclose any circumstance likely to create a presumption of bias or prevent a prompt meeting with the parties. In the event that the parties disagree as to whether the Mediator shall serve on the basis of any of the foregoing conditions, the Mediator shall not serve.
Mediators may or may not be certified. They are usually experienced attorneys or retired judges who act as "shuttle diplomats" in attempting to resolve the parties’ differences. After a joint session in which both sides have the opportunity to make an uninterrupted statement, the parties retire to separate rooms, and the mediator goes back and forth in an effort to promote a settlement. In doing so, the mediator points out the strengths and weaknesses of each position, without taking sides.
Fees and Expenses of Mediation
Mediation Rule 17. The Mediator’s daily fee shall be agreed upon prior to mediation and shall be paid in advance of each mediation day. The expenses of witnesses for either side shall be paid by the party producing such witnesses. All other expenses of the mediation, including fees and expenses of the Mediator, shall be borne equally by the parties unless they agree otherwise.
Mediators do not have a financial stake in the outcome of the mediation (i.e., mediation fees are not contingent upon a settlement being reached). Mediator fees vary and are paid at the beginning of the session. Half-day mediations are common since all but complex cases can be settled in that amount of time. Half-day mediations typically cost $400 to $600 per side. Mediators often require payment by cashier's check or money order, since aggrieved parties have been known to go home and stop payment on their checks.
Time and Place of Mediation
Mediation Rule 8. The Mediator shall fix the time of each mediation session. The mediation shall be held at the office of the Mediator or at any other convenient location agreeable to the Mediator and the parties, as the Mediator shall determine.
Mediations are scheduled for half a day or for a full day, but may continue longer with consent of the parties. "Midnight mediations" are not uncommon, since the accumulated pressure of time will often force a compromise.
Using the location of the mediation as an opportunity to serve other parties with citations, pleadings, writs, and the like (however tempting that may be) is not allowed.
Rule 14 addresses when mediation may end:
Mediation Rule 14. The mediation shall be terminated: (a) by the execution of a settlement agreement by the parties; (b) by declaration of the Mediator to the effect that further efforts at mediation are no longer worthwhile; or (c) after the completion of one fully mediation session, by a written declaration of a party or parties to the effect that the mediation sessions are terminated.
After the mediation is terminated, the mediator has no further obligations other than to report the result to the court. If mediation was successful, a written summary of the settlement will be prepared and signed by the parties and their attorneys before they leave.
Privacy and Confidentiality
Privacy and confidentiality are key elements in the mediation process. Clients often ask if family members or others may attend, participate, or observe. This is not usually permitted.
Mediation Rule 10. Mediation sessions are private. The parties and their representatives may attend mediation sessions. Other persons may attend only with the permission of the parties and with the consent of the mediator.
Mediation Rule 11. Confidential information disclosed to a Mediator by the parties or by witnesses in the course of mediation shall not be divulged by the Mediator . . . The parties shall maintain the confidentiality of the mediation. . . .
Mediators do not testify in court. Nothing that is said in mediation is admissible into evidence at trial. Tape recording the proceedings (either openly or surreptitiously) is forbidden. If mediation fails, it is the evidentiary equivalent of its never having occurred at all.
The Psychology of Mediation
The mediator’s job is to promote settlement and to be impartial in doing so. In the broadest sense, mediation is about communication – communication that may previously have happened only haphazardly between the parties or may never have happened at all. It is also a business-like endeavor, meaning that it should be stripped of emotion. Each side is encouraged to examine the costs and benefits of the available options and perceive settlement as a cold business decision. Attorneys play an important part in this analysis. They may continue to advocate, but generally in a more muted way.
It is part of a mediator’s job to challenge each party’s cherished assumptions about the value of their cause of action or defense. Clients often misinterpret this and believe that the mediator is advocating for the other side. Not so. Mediation is designed to push the parties out of their respective comfort zones and into the zone of compromise. People who ardently believe in the rightness of their position naturally resist this process; but it must happen if settlement is to occur. Mediators have the tough but essential job of overcoming the parties’ resistance if the case is to settle.
Other Rules of Mediation
Mediation Rule 5. The Mediator does not have the authority to decide any issue for the parties, but will attempt to facilitate the voluntary resolution of the dispute by the parties. The Mediator is authorized to conduct joint and separate meetings with the parties and to offer suggestions to assist the parties achieve settlement. If necessary, the Mediator may also obtain expert advice concerning technical aspects of the dispute, provided that the parties agree and assume the expenses of obtaining such advice. Arrangements for obtaining such advice shall be made by the Mediator or by the parties, as the Mediator shall determine.
Mediation Rule 6. The parties understand that the Mediator will not and cannot impose a settlement in their case and they agree that a settlement, if any, must be voluntarily agreed to by the parties. The Mediator, as an advocate for settlement, will use every effort to facilitate the negotiations. The Mediator does not warrant or represent that settlement will result from the mediation process.
Mediation Rule 12. There shall be no stenographic record of the mediation process, and no person shall tape record any portion of the mediation session.
Mediation Rule 13. No subpoenas, summons, complaints, citations, writs, or other process may be served upon any person at or near the site of any mediation session upon any person entering, attending, or leaving the session.
Mediation Rule 15. The Mediator is not a necessary or proper party in judicial proceedings relating to the mediation. Neither Mediator no any law firm employing Mediator shall be liable to any party for any act or omission in connection with any mediation conducted under these rules.
Mediation Rule 16. The Mediator shall interpret and apply these rules.
Mediation is an opportunity for both sides to exert control over the outcome of their dispute rather than leaving it to an unpredictable and expensive trial process. In order for this to occur, the parties must put aside stubborn adherence to their respective points of view and be willing to compromise in a realistic way.
Information in this article is proved for general educational purposes only and is not offered as legal advice upon which anyone may rely. The law changes and any cases or statutes referred to should be check for updates. Legal counsel relating to your individual needs and circumstances is advisable before taking any action that has legal consequences. Consult your tax advisor as well. This firm does not represent you unless and until it is retained and expressly retained in writing to do so.
Copyright © 2014 by David J. Willis. All rights reserved worldwide. David J. Willis is board certified in both residential and commercial real estate law by the Texas Board of Legal Specialization. More information is available at his website, http://www.LoneStarLandLaw.com.