Mediation Tips and Arbitration Bits
| Publication year | 2021 |
| Author | By Alan R. Berkowitz |
By Alan R. Berkowitz
Alan R. Berkowitz is a mediator with Judicate West, specializing in individual and class action cases. He has resolved hundreds of cases involving all types of employment matters, including wage and hour class actions and PAGA claims, many of which resulted in seven-to-eight-figure settlements. Before retiring from the practice of law to become a full-time mediator, he was a partner with Bingham McCutchen, managing partner with Schachter Kristoff Orenstein and Berkowitz, and Regional Attorney at the NLRB, Region 32. He has tried over 50 cases in state and federal courts and administrative agencies on behalf of both defendants and plaintiffs.
Do current ethical rules require attorneys to be truthful in mediation? Rule 3.3 of the California Rules of Professional Conduct, "Candor Toward the Tribunal," prohibits lawyers from making a false statement of fact or law to a tribunal. But the term "tribunal" applies only to a court, arbitrator, or other body acting in an adjudicative capacity authorized to make a binding decision on the parties. On its face, rule 3.3 is inapplicable to mediations or to statements made to an opposing party. However, another rule has a much broader scope and does apply to statements made to a mediator and to an adversary.
California Rules of Court, rule 4.1, "Truthfulness in Statements to Others," prohibits a lawyer from making a false statement of material fact or law to a third person or failing to disclose a material fact when disclosure is necessary to avoid assisting in a criminal or fraudulent act by a client. This rule requires a lawyer to be truthful in dealing with others on a client's behalf. Rule 4.1 refers to statements of fact and does not include puffing, posturing, statements of opinion, or statements about a party's settlement goals. Significantly, the rule also imposes an affirmative obligation for a lawyer to disclose a material fact when disclosure is necessary to avoid assisting a fraudulent act by the client. For example, if the client makes an untrue statement of a material fact, the lawyer must correct the statement unless doing so would break a client confidence, in which event the lawyer may be required to withdraw representation.
Under rule 4.1 of the California Rules of Court, a lawyer must be truthful in settlement negotiations, whether the negotiations take place in the context of a mediation, settlement conference, or in direct dealing with the opposing party. Failure to do so can result in sanctions, including disbarment or suspension. Moreover, a settlement agreement induced by fraud may be set aside, assuming evidence of the fraud is admissible. Interestingly, whether a lawyer may be subject to discipline, or whether a settlement agreement can be set aside due to fraud, depends on the context of the settlement negotiations.
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