From the Blog of Phyllis G. Pollack.
On Monday, November 1, 2010, the California Supreme Court heard argument in Cassel v. Superior Court (Wasserman, Comden Casselman & Pearson, LLP – Real Parties in Interest), Case No. S178914. Therein, plaintiff Michael Cassel alleged legal malpractice against his former attorneys, Wasserman, Comden Casselman & Pearson, LLP, for allegedly forcing him to settle a case during mediation for an amount less than was acceptable. On the eve of trial, the defendant attorneys filed motions seeking to prevent certain communications from being admitted into evidence on the grounds that these communications occurred during a mediation and so were covered by mediation confidentiality. The trial court agreed, ruling that the conversations solely between attorney and client outside the presence of the mediator would be excluded by mediation confidentiality.
The California Court of Appeal (Cassel opinion) directed the trial court to vacate its order, determining that conversations solely between an attorney and his client during mediation but outside the presence of the mediator are not covered by mediation confidentiality.
The issue is now up to the California Supreme Court: when an attorney and client discuss things privately during a mediation but outside the presence of the mediator, are such conversations admissible in a subsequent legal malpractice suit or are they precluded under the rubric of “mediation confidentiality”?
I raise this issue because my mediation the other day brought this issue front and center. It was a “lemon law” case; however, the defendant, for the first time, at the mediation, raised the spectre that plaintiff had been committing insurance fraud and quite possibly was now committing “lemon law” fraud. As plaintiff’s counsel had no warning that this was an issue, she was caught by surprise. Naturally, when she talked to her clients about it, they denied it. (Realistically – who is going to admit that he/she has been filing fraudulent claims with insurance companies and/or filing fraudulent lawsuits?)
This surprising information at mediation put the plaintiff’s attorney in a difficult position: being bound by the Rules of Professional Conduct, she cannot knowingly participate in a fraud on the courts. So, should she stop the mediation and do some independent checking and due diligence? Or, should she continue with the mediation and advise her clients to settle for the very minimal amount being offered by the defendant manufacturer (which believed this case to be fraudulent). And, if she does continue with the mediation and the matter settles for minimal value, is she opening herself up to a subsequent legal malpractice action as in Cassel because she advised her client to settle for a lot less than the case was “worth” without independently investigating the “fraud” claim and determining whether it had merit?
As a result of the defendant attorney springing this information on the plaintiff attorney for the first time at mediation, the plaintiff attorney spent quite a lot of time discussing the issue with her client and figuring out what to do next; the defendant and her client sat around twiddling their thumbs.
In the end, the matter settled for a minimal amount. However, the whole thing left a very bad taste in the plaintiff’s attorney mouth to the point that she requested that I suggest to defense counsel not to engage in such tactics again; if defendant has such game – changing information in the future, she should share it before the mediation so that plaintiff’s counsel can conduct her due diligence, investigate and determine the merits and thereby protect herself from a potential malpractice suit when the settlement amount is lower than expected as in Cassel.
I wholeheartedly agree. This is clearly one of those situations in which one must view the events in the shoes of opposing counsel. If the parties want the settlement to be durable, they must make sure that it is not based on “surprises.” (Needless to say, the plaintiff could also sue to rescind this settlement based on the legal malpractice of her attorney.) “Surprises” simply do not lead to good settlements.
Besides,. . . parties need time to “process” new information and so to spring “surprises” at mediation makes it difficult, if not impossible, to reach a resolution, or, at least one, that is not extremely distasteful to all concerned.
. . .Just something to think about!