What is a Mediation Contract?
A mediation contract is simply a written agreement between the parties and the mediator. It reflects the parties’ agreed-upon terms for their collaboration, and details how the mediation sessions will operate.
These contracts are important because they set the stage for how productive the mediation will be . The contract should establish what issues will be addressed during the mediation, and outline the various steps of the mediation process — including time for discussion, offers of compromise, and circumstances whereby a third-party mediator may need to step in to issue a decision.
Mediation contracts also clarify the role the mediator will play during the process, as well as other issues such as compensation for the mediator, how the mediation will be concluded, and whether the mediation sessions will remain confidential.
Key Elements of a Mediation Contract Template
Just like any other type of contract, it is important for a mediation contract template to include the parties involved, the specific rules of mediation, terms and conditions of confidentiality, and conflict resolution procedures.
Not surprisingly, the most common parties to include in a contract template for mediation are the two entities involved in the mediation. Some templates may even include third parties that would play a role in overseeing the process. Although the mediation parties are the most important, it is also possible to include information on how the mediator intends to conduct the session.
A standard contract template for mediation will almost always include rules for how the mediation should be conducted. Usually, these rules will outline how open negotiations will be respected, outline expectations for behavior, how the mediator will interact with each party, and how long the process will take. Many templates also state that the mediator will not be acting as a judge or deciding individual roles.
Most often, a mediation contract template will include a clause or paragraph explaining the confidentiality of these processes. This is particularly important because there may be some interaction between the mediator and the third parties involved in the mediation process.
Keeping in mind that mediation is about resolving issues peacefully, the main goal of all parties is to come to an agreement. However, if it becomes clear that a resolution is not going to be made, the mediation contract template should include instructions for how the conflict should be resolved by a third party, such as a court or association.
Modifying a Mediation Contract Template
Specific needs will vary depending on the circumstances of the action, but in general the following steps should be taken to customize a generic dispute mediation contract template. First, the parties must identify the scope of their mediation agreement and it’s duration. Issues covered by the mediation contract template and its enforceability once signed and executed should be taken under careful consideration by both parties so as to ensure they are not forcing themselves into more than they may be capable of or prepared to fulfill. Second, the parties should consider whether or not a standard mediation clause is in need of modification. A standard clause is generally sufficient in most cases, but some litigation matters require additional specificity. If one party deems that an amendment to the clause will be necessary, then the two parties must sit down and discuss it openly. Amendments may require deeper thought in the instance of multi-party litigation. Third, the parties should consider what confidentiality provisions would be necessary. The confidentiality clause that’s typically used in most contract templates is usually sufficient, but the specific parties involved will have to determine if alternative or supplemental language is required in order to have their confidentiality interests and requirements fulfilled. Certain actions, such as shareholder or partnership agreements, may call for stricter and more expansive provisions. Fourth, clauses that cover cost payment need to be customized. Agreement on who shall be responsible for what costs is among the most difficult mediation contract template issues to address. In all likelihood, the parties will have varying opinions on how this aspect of the mediation contract template should be addressed. The first step in addressing this aspect of the mediation contract template is to decide if it is necessary at all. If the parties agree that forgoing billing and payment is necessary, then that would suffice. However, if one or both of the parties insists that payment terms be set forth in the mediation contract template, then one or both of them must be prepared to discuss such terms in depth before those discussions turn into disagreements and result in mediation contract template dissolution. Fifth, the parties will need to consider whether mediation or arbitration is the correct conflict resolution method in their instance. Arbitration tends to be more formal and retains determinable qualities that may or may not be suitable for particular actions. Mediation, on the other hand, tends to be geared toward mutual interest rather than individual interests. Finally, the parties must consider whether their mediation contract template needs to contain a savings clause. In the instance of mediation contract template dissolution or invalidation, parties may need to rely upon a few carefully selected clauses that stand on their own.
Advantages of a Mediation Contract Template
The most important quality of a first-class mediation contract template is that it saves you time and that it ensures that you do not overlook any important provisions.
Saving time
In a typical situation, a lawyer will be approached by a potential client for assistance in resolving a dispute. The lawyer and client will begin to develop a strategy to resolve the dispute. The lawyer will most likely start with a pretty good idea of where the dispute is headed. However, before beginning, the lawyer realizes that their file for this type of case is missing (or perhaps that they have never been involved in such a case), so the lawyer starts creating a mediation contract. Even if the lawyer were to be able to successfully create a decent contract draft, the lawyer’s time and effort in drafting could take from 30 minutes to 1 hour (or more). In contrast, even a generic mediation contract template would only take a few minutes to fill out. The lawyer could then spend his or her time developing an effective strategy for resolving the dispute rather than getting bogged down in drafting.
Completeness
The second most important quality of a first-rate mediation contract template would be completeness. In other words, the template should include all of the clauses that are usually found in a mediation contract. It should provide guidance on what clauses are typically included although they may not be necessary based on the specifics of a particular case. Very few lawyers maintain a comprehensive contract library. Most lawyers are career litigators who may not have even seen a mediation contract worth talking about. As a result, the contractual precedents that they are used to don’t lend themselves to mediation contracts. It is also very important that the lawyer gets a quality mediation contract template from a reputable source so that the contract template is legally valid as a matter of law and is enforceable. A lousy mediation contract template may omit important clauses that could be critical to the success of the dispute. It may be that a mediation contract template will not be useful in all situations. But it can serve to remind us of the types of clauses that we may want to consider.
Common Pitfalls in Drafting Mediation Contracts
Many of the most frequent mistakes can be avoided with careful planning and collaboration with the other parties involved in the mediation process. Here are just a few common mistakes to keep in mind: Not having the contract reviewed by the other party-failing to allow the other party to review the contract before the actual signing can lead to an unintentional breach of contract and the subsequent collapse of the entire mediation process. To avoid this, promptly send the contract for review to all other parties involved. Not confirming important details for the contract-during the drafting process, double and triple check important details such as the start and end date of the mediation process, how long the mediation will last, the names, addresses, and phone numbers of all parties, and the amount of any monies that are being offered as part of the agreement. Not paying close attention to these details can quickly lead to confusion that will result in a failed mediation . Assuming that everyone agrees with all of the proposals listed in the contract-an experienced mediator will ask for the input and approval of the mediation contract template, so be sure to give each party enough time to review the contract before the final signing. This is particularly important if there is a signed affidavit and one party has significant power over the other parties. If that affidavit has been signed by all parties, no changes to the contract can be made without the appearance of all parties. Failing to obtain all necessary signatures on the contract-it should go without saying that the contract template should include the signatures of all parties. That said, not all parties will review the contract until it has been signed and will be sure that all are in agreement. However, research shows that more signatures from all parties increases the room for error related to the mediation contract and that these can be avoided by minimizing the number of signatures. If possible, all necessary contract signatures should be gathered using a PDF signing service for the quickest turnaround with the least amount of drafts and paperwork.
Legal Aspects of Mediation Contracts
Mediation contracts are not just an informal arrangement; they are legal documents subject to the laws of the jurisdiction in which the mediation occurs.
As such, it is crucial to ensure that the contract addresses all the legal considerations under the applicable law. This includes clauses, such as choice of law and forum, confidentiality, and enforceability of the mediated settlement.
The choice of law clause specifies which state or nation’s laws will govern the contract. For example, if the contract is silent as to the governing law, a court hearing a dispute may apply its own law if the contact has a substantial relationship to the forum. The mediators should insist on inserting a choice of law clause in the contract if one of the parties will have a substantial relationship to another jurisdiction.
The contract should also contain a forum selection clause, which requires that all litigation between the parties not resolved through mediation must occur in a particular court. This is especially important when the parties to the mediation may need to seek enforcement of the mediated settlement agreement in a foreign jurisdiction. An enforceability clause should also be included in the contract, stating that the mediated settlement agreement may be reduced to judgment and enforced in a court of competent jurisdiction if one of the parties defaults on the agreement.
Mediation confidentiality provisions should be included in most cases, but the enforceability of such a provision depends on whether the mediation is "court-ordered" or "voluntary." If the mediation is court-ordered, then the judge’s rules regarding mediation confidentiality will trump mediation confidentiality provisions contained in the mediation contract.
If the mediation is voluntary, then enforceability will depend on the jurisdiction. For example, in California, mediation confidentiality provisions are mandatory under Section 1119 of the California Evidence Code. (There is an exception for cases of abuse against children, spousal neglect, and elder abuse; mediation confidentiality is waived under those circumstances.)
Although many states and the Uniform Mediation Act contain provisions rendering mediation communications confidential, a mediation contract should include a clause mandating confidentiality when the mediated settlement agreement is not in writing. When the mediated settlement is contained in a written memorialization of the mediated settlement agreement, the confidentiality of the discussions should not be an issue, as long as the agreement contains a clause requiring that the document is not to be disclosed to third parties without the consent of the parties.
In some jurisdictions, breach of a mediation confidentiality provision may be subject to sanction. Careful thought should be given to the consequences of a breach and the means of enforcing the contract. A party seeking to enforce a mediation confidentiality provision may obtain an injunction requiring the other party to cease disclosing confidential materials. The extent of the liability of the breaching party is usually determined by contract law and will vary across jurisdictions.
All of the above are legal considerations of which the parties, mediators, and drafters of the mediation contract must be aware.
Mediation Contract Template Example
There are some elements or "red flags" to look for when evaluating any sample mediation contract template. It is important to keep in mind that a mediation contract is a contract. As such it must be clear, easy to read, specific, and set forth the parties’ express promises. In addition, a mediation contract should be comprehensive in that it should set out what the mediator must do in exchange for payment, and it should set out expressly what the parties are agreeing to and how the mediation process will actually work. A sample mediation contract template should always include strong language providing for confidentiality as well and set forth the law that will govern the contract, including the statute of frauds. Parties should also be required to expressly waive any conflicts.
For example, a good sample mediation contract template will provide in pertinent part: "This mediation shall be confidential and shall not be admissible in any litigation proceeding, and any mediator recording kept in the dispute, if any, shall not be admissible into evidence. Parties agree to keep the process confidential and not talk to each with other about what happens in the mediation. It is a good idea, however, to discuss what may be made public. For example, something that is made public is the fact that there was a mediation . Although it happens more often than people think, it is possible to accomplish a settlement and have no one know about the fact that the matter went into mediation. However, the parties should be careful not to go so far into the mediation, through discussions of implementation of the settlement, that the parties make public what has been discussed and -made a part of the settlement.
In addition, the parties may want the confidentiality requirement of section 1738.5 to go beyond the standard rule and not be limited to "evidence." Mediators may want this expanded to include pre-mediation communications. In addition, the parties may want the agreement to be made confidential so that neither the agreement itself nor those who helped draft the agreement, such as the mediator, can be subpoenaed by anyone. That process includes the rules of law that apply when the judiciary and adjudicative bodies demand the information, or when the information is demanded by a legislative body. The rules of privilege and rules of evidence or discovery are in that process. While some mediators do not like to have the results in a mediation be changed at the last minute (perhaps because they happen to feel sorry for one of the parties), that does not change the rules of the game.