Mediation Confidentiality: Limits on Waiving It

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Competing and Turbulent Interests

By Donald L. Swanson

The case is In re Anonymous, 283 F.3d 627 (4th Cir. 2002).  It’s an attorney discipline action over breaches of mediation confidentiality in an arbitration.  The dispute in arbitration is between an attorney and his former client over litigation expenses.  This dispute arose after the attorney and client concluded a successful mediation in the Fourth Circuit’s mediation program.

Confidentiality Issues

Submissions to the arbitration panel, by the client’s former and new attorneys, disclosed mediation information, and the attorneys sought responses to interrogatories from the Circuit Mediator.  They also want a confidentiality waiver to use mediation information in the arbitration.

Upon learning of such things, the Circuit’s Standing Panel on Attorney Discipline ordered the former and new attorneys to submit briefs and present arguments on, (i) the propriety of their disclosures and interrogatories in light of confidentiality provisions in the Circuit’s Local Rule 33, and (ii) the requests for waiver of mediation confidentiality.

Competing and Turbulent Interests in Confidentiality

In order to address the issues, the Court says, “it is necessary to examine the relevant interests protected by non-disclosure.”

Here are highlights of the Court’s examination of the competing and turbulent confidentiality interests from the In re Anonymous opinion.

“The assurance of confidentiality is essential to the integrity and success of the Court’s mediation program.”

“If participants cannot rely on the confidential treatment of everything that transpires during mediation sessions then counsel of necessity will feel constrained to conduct themselves in a cautious, tight-lipped, non-committal manner more suitable to poker players in a high-stakes game than to adversaries attempting to arrive at a just resolution of a civil dispute.”

“On the other hand, we must recognize that under certain circumstances, non-disclosure may result in an untenable ‘loss of information to the public and the justice system.’”

“Thus, in determining whether waiver is appropriate, we must balance the public interest in protecting the confidentiality of the settlement process and countervailing interests, such as the right to every person’s evidence.”

“We believe that the balance between these interests is best resolved by disallowing disclosure unless the party seeking such disclosure can demonstrate that ‘manifest injustice’ will result from non-disclosure.”

“In most instances, an expense dispute between lawyer and client should easily be resolved without reference to settlement negotiations, primarily because the client is obligated to reimburse advanced litigation expenses as a matter of the state’s ethics rules, independent of mediation proceedings.”

“On the other hand, where an attorney seeks to establish his entitlement to reimbursement of expenses, the attorney typically is permitted to disclose confidential client information.”

The parties “agree that disclosure of information related to the mediation proceedings is critical to resolution of their expense dispute.”

“Further, any harm resulting from disclosure would be slight, in that the contemplated disclosures will be made to a non-public, confidential forum, and all of the attendants of the mediation, excluding the Circuit Mediator, have consented to a limited waiver of confidentiality for disclosures relating to the expense dispute.

Limited Confidentiality Waiver

After conducting such examination, the Court authorizes the attorneys to use the “following limited material” from the mediation session in the pending arbitration proceeding:

(1) communications regarding the settlement negotiations; and

(2) the settlement agreement and notes regarding the settlement agreement, but only to the extent that these materials explain or relate to the disbursement of the settlement funds.

Such authorization is “conditioned upon” securing from the arbitration panel its written agreement to abide by the Rule 33 confidentiality provision.

The Court cautions the attorneys “to adhere strictly to the parameters of this limited waiver.”  And the Court directs that “all previous submissions outside the confines of this waiver be withdrawn” from the pending arbitration.

Conflict of Interest Concerns

Additionally, the Court addresses a conflict of interest concern involving the new attorney’s participation in the prior mediation as follows:

–Submissions to the arbitration panel have detailed the recollections of the new attorney about conversations he overheard during and after the mediation session — “This submission allows [him] impermissibly to act as both an advocate and as a witness on behalf of Client in the expense dispute, which is forbidden by the Rules of Professional Conduct.”

–The Court refuses “to grant consent for him to violate his ethical obligation to refrain from acting as both an advocate and a material witness on behalf of Client.”  The Court adds that, if the new attorney withdraws as plaintiff’s attorney in the expense dispute, his disclosures may then be used in the arbitration.  But if he does not withdraw as advocate, he must “retract all documents previously submitted” to the arbitration in his capacity as a witness.

Conclusion

The Fourth Circuit Court of Appeals demonstrates, in its In re Anonymous opinionthat mediation confidentiality requirements are serious business, that any confidentiality waiver must be requested in advance of disclosure, that confidentiality waivers are rarely authorized and are limited in scope, and that confidentiality breaches raise the prospect of disciplinary action.

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