Mediation in Texas

Introduction

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. The mediation process itself 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 (see complete list at the end of this article) 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 Required by Contract

Contracts of any type may require that parties mediate before litigating. An example is paragraph 16 of the TREC One to Four Family Residential Contract which states that “Any dispute between Seller and Buyer related to this contract which is not resolved through informal discussion will be submitted to a mutually acceptable mediation service or provider.” The intent is to provide a structured opportunity for the parties to air and resolve their grievances before resorting to remedies at the courthouse. This used to be an optional election on the TREC form. No longer.

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 generally 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 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 Versus Arbitration

The difference here involves the authority of a mediator versus 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? Because statistics show that it works. Depending on which numbers you believe, 70-80% of cases settle in mediation. Attorneys know this and encourage their clients to mediate with an open mind. In fact, when a client 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. Trial practice is a branch of chaos theory. No outcome is ever assured 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 often lose in the end.

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 readiness is the foundation of both mediation and dispute resolution generally, 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.

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 do and should settle; and second, it assures that another case will be added to an overburdened 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.

Qualifications and 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 vent their grievances, 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 $500 to $700 per side. Mediators often require payment by cashier’s check or money order since unhappy 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. One mediation this writer attended reached settlement only after the mediator broke out a bottle of whisky at 10 p.m.

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 attorneys before they leave.

Privacy and Confidentiality

Privacy and confidentiality are key elements in mediation. 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 said in mediation is admissible into evidence at trial. Recording of 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 be impartial in so doing. In the broadest sense, mediation is about communication—communication that may previously have happened only haphazardly or may never have happened at all. It is also a businesslike 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 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 comfort zones and into the zone of compromise. Mediators have the tough but essential job of overcoming the parties’ resistance if the case is to settle.

The Rules of Mediation

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 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 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 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.

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 7. Party representatives must have authority to settle and all persons necessary to the decision to settle shall be present.

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.

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.

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.

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 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.

Mediation Rule 15. The mediator is not a necessary or proper party in judicial proceedings relating to the mediation. Neither the mediator nor any law firm employing a 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 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.