In previous blogs, I have discussed the hullaballoo surrounding the introduction of AB 2025 into the California Legislature. As originally drafted and introduced into the California State Assembly, it provided that mediation confidentiality would not preclude the introduction of “… communications between a client and his or her attorney during mediation… in an action for legal malpractice or breach of fiduciary duty or both, and in a State Bar disciplinary action, if the attorneys’ professional negligence or misconduct forms the basis of the client’s allegations against the attorney.” In short, mediation confidentiality would not provide a shield to an attorney in a legal malpractice action, State Bar proceeding or disciplinary action where his alleged misfeasance or malfeasance arose during mediation.

There was much opposition to this bill, to the point that it was amended to provide that the whole matter would be referred to the California Law Revision Commission for study, review, and recommendations.

I have just learned that about two months ago, the Second Appellate District of the Court of Appeal in California issued an unpublished opinion (and thus one that cannot be cited or relied upon for any reason under California Rule of Court, Rule 8.115(a)) in a case where the attorney allegedly committed an egregious act and then used mediation confidentiality as a shield. The facts not only give me pause, but should give all of us pause to reconsider the notion that mediation confidentiality should be absolute. Perhaps, there should be some exceptions.

In Hadley v. The Cochran Firm, Case No. B233093 (issued August 3, 2012), (Hadley v. The Cochran Firm) plaintiffs appealed the dismissal of their lawsuit against their lawyer who worked in the Cochran Firm. (Los Angeles Superior Court Case No. BC 411326. ). According to Plaintiffs, they attended mediation on July 26, 2008, at which time that signed a confidentiality agreement.

On July 31, 2008, they went to visit their lawyer and were told for the first time, that their case had been settled. They were provided with a copy of a Confidential Settlement Agreement and General Release.

They sued their lawyer claiming that their lawyer had settled the case without their consent and had tricked them by inducing them to sign a supposed confidentiality agreement at the mediation and then appending that signature sheet to a settlement agreement.

On the eve of trial, the law firm filed a motion in limine, urging that the lawsuit should be dismissed because under mediation confidentiality (Evidence Code Section 1119), none of this was admissible. The trial court granted the motion and dismissed the lawsuit.

On appeal, plaintiffs argued that because they did not intend to settle at the mediation, “mediation confidentiality” was not involved. They also urged that their attorney should not be permitted to commit fraud and avoid liability by asserting the absoluteness of mediation confidentiality. Alternatively, plaintiffs claimed that mediation confidentiality was waived.

The appellate court rejected all of these arguments. Relying on Cassel v. Superior Court, (2011) 51 Cal. 4th 113, the appellate court noted that the provisions governing”….mediation confidentiality are clear and absolute. Except in rare circumstances, they must be strictly applied and do not permit judicially crafted exceptions or limitations, even where competing public policies may be affected.” (Id. at 5.) Consequently, even where, as here, mediation confidentiality shields an attorney from liability, it must be applied. (Id. at 6.)

Further, the appellate court did not find a waiver of mediation confidentiality with respect to what had occurred during the mediation. The Court found that although plaintiffs did waive mediation confidentiality with respect to the provisions of the settlement agreement pursuant to CaliforniaEvidence Code Section 1122, they had not waived it with respect to the mediation, itself.

Consequently, assuming that plaintiffs’ allegations are true- that their lawyer essentially forged their signatures to a settlement agreement- this outcome is very unsettling. Again, assuming the allegations can be proven, no one would dispute that the lawyer should be disciplined by the State Bar. But, due to “mediation confidentiality”, the lawyer will go free; nothing will happen to him.

It is cases like this that prompted the introduction of AB 2025 and hopefully, in its review of the matter, the California Law Review Commission will study and review this case and recommend ways that mediation confidentiality can be preserved without shielding miscreant attorneys.

…. Just something to think about!

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