The Resolution Advocate: Tips on Getting to the Goal Line in Civil Litigation: The Three "C's" of Settlement Negotiations

By: Guy O. Kornblum
San Francisco, California

Three basic principles are at the heart of settlement negotiations, whether they are direct or supervised in the more formal setting of a mediation: candor, communication, and confidentiality.

The level of candor required depends on the parties, their relationship and the forum. That is, the parties may be more guarded in direct negotiations, whereas in a supervised mediation, the presence of the mediator and the use of such as an intermediary may persuade the parties to be more candid about their case during the negotiations.

Communication is critical to the process. Once the parties stop talking, then there is no chance of a settlement even with a mediator. As long as the parties are talking to each other, even if through a third party, there is a chance for a negotiated resolution. Of course, the potential for settlement is advanced only if the communication is diplomatic and professional and not adversarial and hostile.

Confidentiality is also critical to the process. It encourages both communication and candor. The parties must understand that they will not be prejudiced by their exchanges, and that such will not be used against them in subsequent proceedings in the litigation. This assurance of confidentiality is at the heart of negotiations, whether direct or supervised.

These are the three essential underlying principles which allow the parties to reach a point where they together decide if the matter can be resolved. It is the policy that the decision making rests with the parties that requires that the three “C’s” underlie and support the process of negotiation. Without an assurance of confidentiality, the parties are not going to candidly exchange information. Without confidentiality, communication and open discussion are stymied, as the parties will believe that whatever is said may end up being part of the other’s case at trial. The integrity of the process of negotiation in any format can only be assured if the parties are confident that their exchanges, disclosures and bargaining will be protected from being used against them in subsequent proceedings. The parties must believe that they will not be prejudiced if they engage in any settlement exchanges.

The Preface the Uniform Mediation Act states, “. . . [T]he law has the unique capacity to assure that the reasonable expectations of participants regarding the confidentiality of the process are met, rather than frustrated. For this reason, a central thrust of the Act is to provide a privilege that assures confidentiality in legal proceedings.”

The drafters of the Uniform Mediation Act, approved by the American Bar Association at its Mid-Winter Meeting in Philadelphia, Pa., February 4, 2002 [as amended 2003] (“UMA”) refer to these public policies underlying its adoption:

• Promote candor of parties through confidentiality of the mediation process, subject only so the need for disclosure to accommodate specific and compelling societal interests (internal citation omitted);

• Encourage the policy of fostering prompt, economical, and amicable resolution of disputes in accordance with principles of integrity of the mediation process,active party involvement, and informed self-determination by the parties (internal citation omitted); and

• Advance the policy that the decision-making authority in the mediation process rests with the parties (internal citation omitted).

The Federal Rules of Evidence do not contain any specific provision relating to communications during mediation. Rule 408 protects some communications during negotiations, but does not address a mediation itself. District courts have specific rules adopted to protect what takes place during a mediation and serve the purpose of carrying out the policies of encouraging candor and communication in supervised negotiations.

The protection of rules and statutes relating to direct negotiations is narrower than the confidentiality which attaches to the mediation process. For example, California Evidence Code section 1152 applies to an offer for compromise or to furnishing something for value to another person who has sustained, or claims to have sustained, loss or damage, and also applies to “conduct or statements made in negotiation thereof….”

Despite the legal niceties, the parties should approach any negotiations with the understanding that they will all cooperate in implementing a principle of confidentiality so that the negotiations can progress towards an agreed upon resolution of the case.

Good Mediating. . .