Contingency Fees in Mediation

In a recent discussion on Linked-In, the ADR Professionals Group was asked to respond to a question arising in a mediation where one of the parties said they would not pay the mediator unless the mediator procured a settlement of the matter (which was described as a “family modification” case).

One responder noted that the Model Rules for Mediation specifically prohibit contingency fee arrangements.

And so does common sense.

There are really two major ways for a mediator to get into trouble.  One is violating mediation confidentiality, and the second is losing one’s neutrality.  Continuing a mediation in the face of such a demand by one of the parties is a great way to get in trouble on that second point.

How could a mediator possibly remain neutral in that situation?  If a settlement is achieved, then the party not making that demand could easily seek to avoid the settlement by claiming that the mediator pushed them into it to assure his/her fee.

Recently, I received a phone call from a respected trial lawyer with whom I had worked in a mediation concerning a significant personal injury case a few weeks prior.  We did not settle the case at mediation.  But he wanted me to know that he regarded the mediation as a “great success”.  The parties reached a settlement after the mediation when they had taken the time to consider all they had learned during mediation.  They saw the wisdom of accepting the last proposal that was on the table when mediation was terminated.

Neutrality in truth and in fact is the cornerstone of mediation.  Mediators with “settlement-itis” quickly lose that neutrality.