Confidentiality Provisions: From Shield to Sword?

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Mediation may provide an efficient and effective path toward settlement. But, as we discussed in prior posts, settlements sometimes unhinge or litigants may have a change of heart. Despite the tools that we previously recommended to avoid this scenario, a litigant may ultimately conclude that her settlement was not the best option and turn on her attorney. Given that mediation sessions are confidential (whether by agreement or law or otherwise) and discussions during mediation cannot be utilized at trial, some attorneys on the wrong end of a malpractice claim have attempted to use the confidentiality shield as a sword. Does this work? Read on to find out.

By way of statute, rule of evidence or agreement, most mediations are considered confidential. As a result, a party may not disclose details about the mediation session, including any settlement terms or discussions, later in the proceeding. Some attorneys have referenced this confidentiality when defending a malpractice claim arising from a mediated settlement. But, in a recent decision Oregon’s appellate court concluded that this tactic doesn’t cut it.

In Alfieri v. Solomon, 2014 Ore. App. LEXIS 767 (June 11, 2014), the Oregon Appeals Court denied a motion to dismiss a legal malpractice suit. The court rejected the attorney defendant’s argument that the state’s confidentiality statute governing mediations barred the plaintiff from disclosing the terms of the underlying settlement and communications made during settlement discussions that would be essential to the plaintiff’s ability to prove damages against the attorney.

The plaintiff/former client, retained the attorney in a wrongful discharge suit which eventually settled through mediation. The plaintiff, now unhappy with the result, went back to his counsel and asked if the settlement could be undone. According to the plaintiff, his attorney failed to inform him that given the underlying defendants’ failure to comply with key settlement terms, the plaintiff could have stricken the settlement. In turn, the plaintiff sued his former counsel.

In the malpractice complaint, the plaintiff referenced settlement terms, communications that occurred during the mediation process, and post-settlement communications between attorney and client. Initially, the trial court struck all of these allegations pursuant to the requirement that mediation sessions be confidential. Since the plaintiff could not sustain a claim without these allegations, the trial court dismissed the complaint. The Appellate Court reversed.

On appeal, the court held that post-mediation communications regarding the settlement were outside of the mediation process and therefore not confidential. The court determined that the plaintiff’s allegation that his attorney provided negligent advice after the settlement was sufficient to sustain a malpractice claim without the disclosure of confidential communications.

This case suggests that mediation confidentiality clauses/statutes may provide a defense to a malpractice claim in limited situations. Some jurisdictions have revamped their statutes to include exceptions for those communications offered to prove or disprove claims of professional malpractice for the reason that the statutes deprive legal malpractice litigants of necessary evidence. Check your local rules to be sure. Accordingly, depending on your jurisdiction, the issue of whether confidentiality during mediation may bar a malpractice claim may provide a defending attorney with a sword, a shield, or possibly no defense at all.