For many years, I would have answered this question “no.” Now I’m a fence sitter. In the course of many years of practice as a full-time neutral, I have run across conflicts in which the parties want a solution using a single neutral who agrees both to mediate and to arbitrate. Accordingly, I have developed the ground rules for using it that I discuss here.
Mediator, then Arbitrator?
From the parties’ viewpoint, having a single neutral sometimes makes sense. Initially at least, lawyers and their clients are most interested in getting the dispute resolved using all of the tools at their disposal. Having a mediator who can also decide any issues that arise later is, of course, more cost effective for them, since the neutral who understands the case already does not need to be brought up to speed on the issues for decision after mediation.
On the other hand, most ADR neutrals are understandably wary, because we see the pitfalls. In mediation, we are acting as facilitators of the parties’ settlement discussions. While our style may be evaluative—in that we discuss the likely outcomes if one or more of the issues in the case were presented to a decision maker—we and the parties know that we are not serving in that altogether different, adjudicatory role. Moreover, an indispensable tool in our mediation work is the series of private caucuses we hold with each side alone; indeed, we may not ever meet in joint session. We tell the parties that we will keep in confidence the information they divulge in those private caucus sessions. Some of this information is admissible evidence, but much more is not and its reliability is untested. It is not entirely possible for me to forget the private information received in a caucus when deciding an issue that remains after the mediation’s conclusion.
In my experience, it is rare before the mediation session for the parties even to raise the issue that they might wish to have me act as arbitrator after the mediation. Usually, at some point during the session, many or most of the issues either have been solved or I see that they could be if a remaining issue or issues could be dealt with by a decision maker. The parties then express the conviction that it would be best for me to be that decision maker. Frequently, neither lawyer has had an earlier case using this procedure and neither has thought about the implications.
How to give the parties and counsel what they want while still preserving a separation between the role of mediator and that of arbitrator? There is little guidance in this area, for the most part. If the case is administered by the American Arbitration Association, when the parties to a mediation request the neutral to rule on issues that remain to be decided after the bulk of the case has settled, the Association requires the neutral to prepare new written disclosures and allow the statutory period (two weeks in California) to elapse before acting in the new capacity.
My first ground rule for neutrals is: don’t initiate this suggestion. Let it come from the parties instead. If they believe that you will bring value to the process, they will ask you.
Second, design the process with care. Be sure to work through in your own mind the implications for you of wearing two hats. Gather all of the tools you will need to accomplish each of your tasks. Have the parties agree to your roles, have the lawyers agree on a timetable for presentation of any facts and legal authorities, and decide how you will conduct both the settlement meetings and the arbitration after, if necessary. The more precision you bring to all of this at the outset, the smoother your service will be.
For example, in one recent international case involving claims submitted to escrow for reimbursement after the sale of a business, the parties chose me as their mediator. After a full day mediation session, the parties’ representatives were close to settlement on the majority of the claims against the escrow in the case, but three categories of claims were holding up complete agreement. When I suggested settling the issues that could be agreed to, while leaving for a later arbitration the remaining issues, the parties were interested. Then, one of the lawyers suggested that I serve as their arbitrator to decide those three categories of claims. When the other side agreed, the parties’ representatives set to work negotiating and documenting an arbitration procedure. The parties agreed on the content of the evidence to be presented (without oral testimony) to me. They also specified the award should be enforceable under the New York Convention. That stipulated dispute resolution process became part of the parties’ settlement agreement, drafted by the lawyers and signed by the parties’ representatives. Later, I received the evidence, deliberated, and then rendered a final award. My award referenced the earlier settlement and decided the three categories of claims the parties had submitted to me. The final award thus gave a comprehensive and enforceable framework to the entire dispute.
Arbitrator, then Mediator?
No doubt many of us serving as arbitrators have arrived at the evidentiary hearings only to discover that the parties want to attempt settlement beforehand. Sometimes they wish to do so alone, and I have sat in an empty hearing room, often with the court reporter, waiting to learn if they have been successful. If they are, they put the agreement on the record and my service as their arbitrator is over.
But what about the instance in which the parties want me to shift roles from arbitrator to mediator? Rule R-8 of the American Arbitration Association Commercial Arbitration Rules and Mediation Procedures states: “The mediator shall not be an arbitrator appointed to the case.” Is there ever an appropriate instance in which the arbitrator does so anyway?
In an employment arbitration some years ago, when I appeared at the evidentiary hearing, the parties’ counsel asked if I would first attempt to settle the case. Since we had a court reporter present to transcribe the hearing, I made a record, first describing the request, confirming that the parties themselves understood and agreed to my serving as a mediator before the hearing started. When all had agreed, I heard opening statements from each party and then mediated the case for several hours in private caucuses. The case settled.
That experience leads me to my third pointer: explain to the parties what you are proposing to do, get agreement to your new service in writing, drafted by the lawyers and reviewed by you, then signed by the parties themselves. If you are fortunate to have a court reporter handy, all the better. Put the agreement on the record and get the explicit consent of the parties themselves, not just their counsel. (Rule 4.5.6 of the CPR-Georgetown Model Rule for the Lawyer as Third Party Neutral specifically provides for the parties’ (not just their lawyers’) informed agreement to the process.) To the extent you can eliminate surprises in the process, you will find greater satisfaction with your service, and the parties and their lawyers will, too.
Ms. LaMothe is a full-time neutral, based in Santa Barbara practicing throughout California. More information about her practice is available at her website, www.dispute-solutions.com. She is available through www.pma-adr.com.