WHEN MEDIATORS BECOME ARBITRATORS, SO COMES TROUBLE
WHEN MEDIATORS BECOME ARBITRATORS, SO MAY COME TROUBLE
By Gregg Bertram
It is common in mediated settlement agreements that the mediator is designated arbitrator of post settlement disputes in the CR2A settlement memorandum. Often this decision is made with little, if any, forethought.
Attorneys drafting CR2As may also give little consideration to:
1) The scope of post settlement issues that they wish to make subject to arbitration
2) Whether the mediator, if called upon to serve as arbitrator, has the necessary arbitration skills to serve skillfully in that role. Worse still are situations where the mediator drafts the CR2A and, generously, names her or himself as arbitrator with expansive jurisdictional authority.
First, attorneys should never delegate to the mediator the chore of drafting a CR2A. It is the lawyer’s job to make sure that the CR2A accurately reflects all material settlement terms. This responsibility in my view is non delegable. Equally important, when the parties wish the mediator to arbitrate post settlement party performance, there must be a clear description of the jurisdictional scope of the arbitrator. If a post CR2A dispute arises, was an enforceable arbitral process adequately described in the arbitration clause? What law is to govern? Must the arbitrator act within a definite time period? May the arbitrator award prevailing party attorney’s fees and costs? The foregoing are just a few important considerations. In a recent case, for example, the CR2A arbitration provision allows the arbitrator to award “prevailing party costs.” Do “costs” implicitly include attorney’s fees? The non- prevailing party will certainly contend otherwise.
Many mediators rarely, if ever, serve as arbitrators. If a neutral without prior arbitration service is appointed arbitrator in a CR2A, a coherent, efficient, fair arbitration process and arbitration award may not occur. A best practice is for counsel to investigate the mediator’s arbitration credentials, if any, well in advance of the mediation. In addition, well prepared attorneys also prepare template settlement agreements prior to the mediation that should include a carefully prepared proposed arbitration clause, if desired by the client.
In sum, careful pre-mediation attorney investigation and preparation will effectively limit the possibility of an aberrant post settlement arbitration process and result in cases where the mediator is also tasked to serve as post settlement arbitrator.