Anyone with experience defending product liability claims has experience settling cases at mediation. Typically, a mediator will require the parties to sign a written mediation agreement prior to the mediation. Usually, the proposed agreement will state that the mediation is confidential. Some agreements are more detailed than others. Some go on to prohibit any attempts to call the mediator as a witness. Other agreements state that the mediator is not expressing any opinion about the merits of the case or providing any specific legal advice. In addition to the agreements that are signed before the start of a mediation, mediators also have form agreements that they ask the parties to sign after the parties agree to a settlement during the mediation.
Too often, experienced PL defense attorneys quickly sign the form mediation settlement agreement given to them by the mediator at the end of a successful mediation. Most mediation settlement agreements have a provision that the agreement is binding and that it will be admissible in court to enforce the settlement. It may seem that a simple provision stating that a mediation settlement will be binding is nothing to worry about, but, there are issues to keep in mind.
At the time of settlement at mediation, any sophisticated defendant contemplates the preparation of a long and detailed written agreement that includes provisions of value to the settling defendant. These may be confidentiality provisions, non-admissions of liability, choice of law provisions, documentation destruction provisions and so on. None of these terms will be included in the typical mediation settlement agreement that the mediator presents at the end of the mediation. After a defendant signs a mediation settlement agreement, disputes may arise with the plaintiff’s attorney. The plaintiff’s attorney may not agree to confidentiality or other provisions proposed in a detailed settlement agreement or release. There may be disagreements about how to address liens or Medicare set-asides. There are many areas of possible disagreement.
Clearly, the best practice at the end of any successful mediation is to revise a mediator’s form settlement agreement to state that any settlement is conditioned on the parties preparing a detailed release or settlement agreement of mutual satisfaction. The failure to do so will put defense counsel in a difficult position. If defense counsel signed a mediator’s standard form mediation settlement agreement, that is an enforceable agreement. The plaintiff’s attorney may refuse to agree to confidentiality provisions. The plaintiff’s attorney may refuse to accept any lienholder indemnity provisions. The plaintiff’s attorney could threaten to use the mediation settlement agreement to enforce a settlement without these terms.
Of course, many defense attorneys foresee these issues and will not sign a standard form mediation settlement agreement that a mediator may use over and over in many cases. It is remarkable how often mediators may resist efforts to revise their standard form settlement agreements by simply telling the parties that they can go ahead with the preparation of a detailed settlement agreement. Nevertheless, defense counsel cannot take a mediation settlement agreement casually. It has to be drafted based on the issues in the case at mediation. We have to keep in mind that the agreements that mediators ask the parties to sign before mediation and after a mediation settlement are intended, in part, to protect the interests of the mediators.