Recently, a litigant refused to mediate their dispute, ultimately losing in court and paying the attorney's fees of the prevailing party.
Once again, I have a cautionary tale about the perils of NOT mediating a dispute.
Recently, I served on the “mandatory fee arbitration” panel for a county bar association. That’s a body that handles disputes between clients and their lawyers over the latter’s charges to the former.
In this recent case, the client did not want to meet with the other side to discuss settlement informally. And, he did not want to mediate. Instead, he wanted to litigate fully.
The problem was his claim against the other side was far from certain. And, the other side had a significant claim against him.
The client did not prevail on his claim. While he did defense the other side’s counterclaim against him, he was ordered to pay a significant portion of the other side’s attorneys fees and costs.
Naturally, the client did not want to pay his lawyers what he owed them. In other words, he wanted to convert the matter into a de facto contingency, thereby making his lawyers his partners on the downside, after the fact.
What should the lawyers have done, for both the client’s sake and for their own?
They should have insisted that the client meet with the other side to explore settlement and, if he did not want to, send written confirmation of their strong advice and the client’s decision not to follow it (i.e., a CYA letter). Later, it became clear that the matter had exploded in its scope. At that point, they again should have insisted that the client mediate. If he still did not want to, a CYA letter should have been sent along with a demand for a large retainer– that focuses the client every time.
The lawyers were not confrontational enough with the client, who was a “one off” – the kind that often proves problematic for a lawyer. Such clients have hidden expectations and are not above rewriting history. More to the point, they often don’t have the money to pay for full-blown litigation. So, the lawyer who early and often insists on attempts to settle a matter does the client and himself a big favor.
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