WHY THE RULE?

Here’s the Rule included on the Middlesex Mediation website:

…[A]ll parties are entitled to a clean slate when they come to Middlesex Mediation. Previous settlement discussions are treated as privileged unless the parties agree otherwise.

Have you been in a mediation when the first question the mediator asks is: “Where are you in settlement?”  This is a perfectly sensible question. An answer would give the mediator a starting point for further negotiations. Often, a party or counsel freely explains where settlement is or isn’t. Afterall, mediation is confidential.

Even though mediation is confidential, the privilege associated with pre-existing settlement conversations is not automatically waived.  

To be clear, if there had been settlement discussions, then there is a privilege at play as to those discussions and the privilege is not waived just by participating in a later mediation. The privilege obviously does not belong to the mediator, and he or she has no basis to ignore it even if the privileged conversations could advance the mediator’s management of negotiations. The first question should be “Do the parties agree to waive any privilege regarding previous settlement negotiations and then to tell me where settlement stood when those discussions concluded?”

A mediator is in no position to speculate about the course and outcome of earlier failed settlement discussions. It may be that one party in previous settlement discussions had exhausted all or most of the resources it could muster to make a deal. Without that party’s consent, why should it be forced to participate in a negotiation that begins from a point where it has already exhausted most of its bargaining capacity? And shouldn’t we encourage lawyers to maximize the prospects of a private settlement and not be forced to pick up the negotiation in mediation from the point of a previous impasse. Why shouldn’t negotiations in a new dispute resolution proceeding re-set the entire process? We believe they should if one of the parties does not affirmatively waive the privilege associated with earlier settlement discussions.

There will be little incentive for private settlements reached through counsel if parties expected their last best positions could have negative tactical consequence in a follow-on dispute resolution proceeding.

Being sensitive to the existence and importance of the settlement privilege in this context promotes the legitimate roles of both counsel and mediator and assures the fairest bargaining and result.

John Hanify