Too often, mediated settlement agreements produce post-mediation litigation in which one party alleges that the mediated agreement was the product of fraud. By encouraging parties to employ standard contracting devices, mediators can help parties to avoid some of most challenging aspects of these fights—and hopefully avoid the fights altogether.
Last week, Professor Ellen Deason posted an Indisputably.org blog entry reporting on the recent Alabama Supreme Court case of BillyBarnes Enterprises, Inc. v. Williams, ___ So.2d. ___, 2007 WL 2812768 (Ala. 2007). In that case, the court set aside a mediated agreement, based on evidence the defendant discovered the day after the mediation that contradicted one of the plaintiff’s fundamental claims. In her thoughtful treatment of the case, Ellen concludes that parties should not “read this court opinion as a sign that when they try to settle their case through mediation they can set aside their adversarial vigilance.”
In litigation, adversarial vigilance frequently takes the form of extended discovery. I keep digging and asking and requesting and demanding until I get what I want or I am satisfied that it does not exist. Ellen accurately worries that applying this form of vigilance to mediation discussions would unhelpfully delay when mediation would occur. (“I can’t do mediation yet, because I haven’t completed discovery… And now that I’ve completed discovery, where are the time and cost savings I was supposed to get out of mediation?”)
But when crafting an agreement—even a settlement agreement—parties can use contractual representations as means of memorializing the assumptions upon which the deal rests. In short, representations can serve as a form of adversarial vigilance.
Representations provide at least three different kinds of benefits in this context. The first is the standard set of Contracts-related justifications—namely, that their existence makes certain aspects of the post-contract fight easier. The second, perhaps more specific to mediation is that suggesting their inclusion may make it easier to smoke out exaggerations, bluffs, and outright lies. (“What you’re saying is surprising, but you seem confident it is true. You won’t mind, then, if we include that as a representation in the final contract, right?”)
The third potential benefit relates to the otherwise complicated confidentiality aspects of alleging fraud in the formation of an agreement in mediation. Courts have varying degrees of reluctance to explore who-said-what in the course of a mediation session, but by and large, principles of confidentiality guard against such an examination. However, confidentiality typically protects only “mediation communications,” not the terms of any agreement reached in mediation. If mediation parties place representations in the terms of the deal, a post-mediation challenge on the basis of one of those representations will not need to peer into the contents of the mediation session. Instead, it will be entirely a fight about the accuracy of the representation (as captured in the agreement)—a fight that does not implicate mediation confidentiality.
More than a decade ago, as part of a study I was doing, I read through more than a hundred mediated settlement agreements. I can’t find the stack of agreements anymore. I can’t even find the report I wrote up. But what I do remember is that there was extraordinary variation in how these agreements were drafted. Some—but perhaps too few—included representations by one or both of the parties.
Might it be appropriate for mediators to encourage parties to include more representations in settlement agreements?