Mediation as a Substitute for Justice?

“Mediation is a complement to justice. It cannot ever be a substitute for justice.”

These are the final words of the Gordon Slynn Memorial Lecture 2010, given by Lord Neuberger of Abbotsbury, the Master of the Rolls. (The “Master of the Rolls” is the Monty-Pythonesque title given to the second most senior judge in England and Wales. He is the presiding officer of the Court of Appeal, Civil Division.)

Lord Neuberger assures his audience that he is a “keen supporter” of ADR; his worry is that the tendency to treat mediation as good and litigation as bad may be inconsistent with a commitment to equal access to justice. His argument goes like this: Equal access to the law is a fundamental component of democracy. The civil justice system is not merely a service offered in the marketplace; to regard it as such is to misinterpret its constitutional function. Mediation and ADR, in contrast, are not part of the state; they are services offered to those in dispute. To insist that disputants try mediation before litigation places an additional financial barrier to the justice system, thus compromising the principle of equal access to the courts. Disputants may accept a mediated solution that does not reflect their legal rights because they cannot afford both to mediate and to litigate.

Lord Neuberger gave this lecture on November 10, just days before the British government announced cuts to legal aid for civil cases and increased support for mediation and ADR. His remarks have to be interpreted in light of the current political situation in the U.K.

What does Lord Neuberger mean when he claims that mediation is not a “substitute” for justice? It sounds like he means that mediation is something different from and inferior to justice, the way a baker might caution one that nutrasweet or sucralose would not be adequate substitutes for sugar in the chocolate chip cookie recipe. And I fear that this is the meaning that will be assumed by those who hear this remark out of context and fail to read his entire lecture. I think it is fair to say that Lord Neuberger means that ADR is not a substitute for the justice system. He is using the word “justice” to mean something like “those decisions that are handed down formally through the legal system.” Now, while it is legitimate to use the word “justice” in such a way, this is probably not the meaning that most people have in mind when they use the word. We allow for the possibility that certain laws may be unjust and that the administration of the law itself may be unjust. Of course, Lord Neuberger recognizes this too. He even quotes Sir James Mathew’s ironic remark that, “In England, justice is open to all – like the Ritz Hotel.” Yet while Lord Neuberger acknowledges that equal access to the law is far from being a reality, I don’t think he makes enough of existing barriers – ones that have nothing to do with the proposed expansion of ADR.

No one would disagree that mediation is not a substitute for the civil justice system. Even the most enthusiastic ADR supporters recognize that some disputes are inappropriate for mediation. There are other reasons why “mediation” and “justice” should not be opposed to one another. Justice can be a quality of processes or of outcomes. Mediation and litigation are both processes of dispute resolution. As such, each can be conducted fairly (justly) or not. Litigation and the formal legal system do not have a monopoly on fairness. Similarly, the outcomes of either of these processes might be fair or not. The fact that a settlement has been voluntarily assumed or forced upon disputants does not tell us whether or not it is fair. Finally, mediation and the legal system need not be seen as in competition with one another. A mediated settlement may be formalized as a contract, a document with the power of the courts behind it.

Ethics and Insider Trading

This morning’s Globe and Mail brought the news that Mitchell Finkelstein, a partner in a prominent Toronto commercial law firm has been accused of “tipping” – passing along sensitive confidential information to an old friend from university, who in turn profited from the information. The friend, Paul Azeff, works for the Canadian Imperial Bank of Commerce in their “World Markets” division. He, along with Korin Bobrow (a high school friend and colleague) have been accused by the Ontario Securities Commission of insider trading and suspended by their employer. Two employees of TD Waterhouse were also charged by the OSC in connection with the investigation and have been suspended by the bank.

It is important to note that none of these allegations has been proven.

Insider tipping and trading are both immoral and illegal and certainly no laughing matter. Still, I couldn’t help smiling as I read the Globe’s earnest claim that:

“Nothing in Mr. Finkelstein’s background would have suggested this turn of events.”

Now, insider tipping and trading are, by definition, crimes committed by insiders. That is, by people with access to information that is not yet public knowledge. People without access to privileged information – outsiders – are unlikely to run afoul of the law here. So the very “background” that made Mr. Finkelstein an insider – his private school education, his membership in the same fraternity as Mr. Azeff, and his position of trust in a prominent law firm – are the same things that made possible the accusations against him.

The Globe’s claim is also naïve in its implication that we should be able to find something in Mr. Finkelstein’s background that would allow us to make sense of the allegations. Surely, the reasoning goes, there must be some character flaw or formative experience that separates the vast majority of honest and rule-abiding lawyers and brokers from those who seek to profit from insider information. This idea is comforting, because once we have figured out what that difference is, we should be able to protect ourselves from the cheaters and fraudsters of the world. It hardly needs to be said that the idea is dangerous as well. Men like Bernie Madoff and Earl Jones were able to dupe as many as they did just because there was nothing in their backgrounds to indicate that they would engage in criminal acts.

If an employer can’t tell from a person’s background whether he or she is likely to commit an immoral act or a crime, what is to be done? One answer is to reduce the opportunity that any employee has to get their hands on information that might be profitable if passed along. This passage in another article about Finkelstein jumped out at me:

“In the report the OSC alleges that between November 2004 to May 2007 Finkelstein “actively sought out and acquired” non-public information either through his role as counsel with Davies or by conducting searches on company system.

If the allegations are true, then Finkelstein was able to gain access to sensitive information that he strictly had no right to have. Reduce the number of people who have access to such information, and the potential for insider tipping and trading will also be reduced. Furthermore, taking a leaf out of the Security Services book, every deal file that is of potential value should be marked as such and then meticulous track kept of every person who reads it.

"Droit de suite" and the Canadian Art Market

A composer receives a royalty when her work is played over the radio. A writer whose articles are reprinted is paid a fee. A painter whose work is re-sold at a profit receives….. nothing.

This is the current situation for visual artists in Canada, most of the U.S., Asia, and New Zealand. However things are different in the countries of the European Union, Australia, and California. There artists receive a percentage of the re-sale value when their work is sold at auction. If the artist is deceased, his or her heirs are paid until copyright is expired, usually in seventy years. This fee, called “droit de suite,” is a way for artists and their families to benefit from the increase in value of their work over time. It is different from copyright, which visual artists usually retain over their work. Droit de suite originated in France in the years after WWI as a way to help the widows of artists killed in the war. The amount received by an artist depends on the price of the work at sale, but usually amounts to about four percent. The maximum royalty payment an artist can receive for each re-sold work is 12 500 euros, or about $17 500 Cdn.

The EU agreed on the adoption of droit de suite in 2001, although it was only put into effect in the U.K. in 2006. Australia adopted the Resale Royalty Right for Visual Artists Act in 2010, with the exploitation of aboriginal artists particularly in mind. Here, the Canadian Arts Representation (CARFAC) has been lobbying politicians to add a resale right to Canada’s copyright legislation. As European countries pay resale fees to artists of all nationalities, they would like to see Canadian auction houses respond in kind. The Globe and Mail recently discussed the issue of droit de suite with an article featuring the painter Mary Pratt. A painting she sold for $50 in 1966 is expected to bring between $10 000 and $15 000 at Sotheby’s auction of Canadian art later this fall. Pratt is now 75 and suffers from health problems; I imagine she might appreciate a financial windfall.

There was a lot of controversy in the UK when a harmonization of droit de suite across Europe was first suggested. Because few wanted to be seen as arguing against a measure that would benefit artists, most of the arguments put forth against resale royalty rights tended to be practical or pragmatic, rather than strictly moral. For example, it was said that the fees would be difficult to administer, and that the payments would tend to benefit the heirs of established dead artists, rather than impoverished living artists. It was also suggested that artists already benefit from higher re-sale prices for their work, as they tend to push up the prices for new work as well.

The strongest argument offered in the UK against the adoption of droit de suite came from the auction houses, who argued in effect that it would create an un-level playing field for them in comparison with auction houses in the U.S., Switzerland, and Asia. If the transaction costs for selling a work are higher in the UK than in these other markets, then collectors would be likely to move to these other markets. Imagine a Japanese collector with a Picasso to sell. If it would cost him an extra $17 500 to sell the work in Paris or London as opposed to New York, it is not difficult to imagine that he would opt to sell the work in New York.

It is too early to tell in what ways the adoption of droit de suite in the U.K. has affected the art market there. What would be the effect if Canadian politicians voted to adopt some form of droit de suite? It would be very interesting to see some industry projections. How much would living artists benefit? What percentage of the art market in Canada is made up of Canadian works, and how much is international? If the auction houses do most of their business with Canadian works, then droit de suite might have only a minimal effect on their bottom line.

Read This….. or Else

Ontario Superior Court Justice David Price has ordered an estranged couple to read three books on communication and parenting and to report back to him on what they have learned at their next court appearance. The books are: Difficult Conversations by Douglas Stone, Bruce Patton and Sheila Heen; Parenting After Divorce, by Philip M. Stahl; and Parenting from the Inside Out, by Daniel J. Siegel and Mary Hartzell.

As an educator, I’m a little uncomfortable with anything that might smack of reading as punishment. Family lawyers contacted by The Toronto Star and The National Post noted that the ruling was unusual and disagreed as to whether the “homework” assignment would have its desired outcome.

It is not difficult to understand why Justice Price might be frustrated with the couple. Their disagreements – over money and access to their twin sons – seem both intractable and unremarkable. I imagine that similar disputes play out in family courts on a daily basis. The mother is asking for her former husband’s share of the proceeds from their matrimonial home, and to deny him the right to see their children. The father is asking his estranged wife for $12 000 and accuses her of already denying him access to the children. She in turn says that the children are reluctant to see their father; while he seeks to end her sole custody of the boys, and prevent her from taking them for counseling to an abused-children’s group. Along with the reading assignment, the judge ordered the mother to provide make-up days for the denied access, the father to undergo an assessment for alcohol and drug dependency, and for both of them to seek counseling on communicating with one another.

The estranged couple in this case have at least one thing in common: neither was represented by a lawyer. So neither has the financial incentive to settle a case that is provided by the specter of imminent and increasing legal bills.

There are many different ways to solve disputes. When you elect to solve a dispute through litigation, as this couple has, one advantage is that there will be an eventual clear resolution. But going to court means giving up control over the outcome of your dispute, and the resolution imposed by the courts might not be to your liking. Perhaps people lose sight of this possibility, or are simply unable to imagine a court not seeing the situation exactly as they do. So they may refuse to comply with court orders they dislike, only to find themselves back in court. And on it goes. The law is a blunt instrument, as it is often said, and it is interesting to see Justice Price try something new, whether or not his measures have their desired effect. Just as a good mediator might, the judge is appealing to the couple’s better instincts, and trying to get them to see that they have a shared interest in the well-being of their children, and that they may even continue to share some important values related to their children’s upbringing.

There is also the slightest hint of public shaming in the judge’s order. In demanding that the couple read up on parenting, the judge makes a clear statement as to what he thinks of their behaviour and their parenting skills up to now. It can be uncomfortable to realize how others see us, but it might be the beginning of some positive change.

Asking for an Apology

One of the more bizarre items in the news last week was the revelation that Virginia Thomas, wife of U.S. Supreme Court Justice Clarence Thomas, had phoned Anita Hill, requesting an apology. Nearly twenty years ago Anita Hill testified against Clarence Thomas during his Senate confirmation hearing, accusing him of workplace sexual harassment. I was an undergraduate at the University of Toronto at the time, and remember the incident and the debates it provoked very well. The news of Mrs. Thomas’s early morning telephone call to Hill’s office made me think about the nature of apology, and in particular about the dynamics of requesting an apology.

Apologies are an example of what philosophers call “speech acts” In a speech act, one does more than just say something; one performs an action at the same time. There is something deeply mysterious about speech acts. Saying “I’m sorry” or “I promise” or “I forgive you” might seem like little more than uttering a phrase. Yet it is clear that someone who speaks one of these phrases has done something more than make a verbal utterance, although they have done that as well. Someone who says “I’m sorry” acknowledges that their previous conduct has harmed another and that they regret this. Someone who asks for an apology asks not just for a string of words to be spoken, but that another party acknowledge and regret an injury against them. The power of this acknowledgment is such that we tend to be very upset when we suspect that an apology is made insincerely. We don’t like it when a speaker seeks the recognition of making an apology without doing the hard work of examining his or her conduct and thinking about what it would meant to atone for it.

Asking for an apology means telling another person that their conduct has been hurtful, and this can be very difficult to do. Yet if one doesn’t request an apology, the other person may never understand the effect that their words or actions have had. The person who feels that he deserves an apology yet fails to ask for it may continue to feel hurt and resentment toward those who have injured him. If an apology is requested and granted, there is a chance that the relationship between the parties might yet be repaired. Parties in mediation may want an apology as much as they want other forms of restitution. Many people choose mediation over other forms of dispute resolution precisely because they expect to have an ongoing relationship with the other party, and mediation can actually help strengthen relationships.

If asking for an apology is sometimes the right thing to do, what was it about Mrs. Thomas’s request for an apology from Hill that struck many as unseemly? The first and most obvious answer is that it is far from clear that Hill owes anyone an apology. She stands by her testimony. Second, if she does owe anyone an apology, it isn’t Mrs. Thomas. While there may be special circumstances in which one may ask for an apology on behalf of another, this doesn’t seem to be one of them. If Justice Thomas feels he is owed an apology he is capable of asking for one himself. But some additional considerations are also important here. Asking for an apology is a gesture towards repairing a relationship. If you’ve hurt me and I tell you, you can make things right by apologizing, then maybe we can be friends again. However the way in which Mrs. Thomas asked for an apology is at odds with the goal of restoring a relationship. If you want to repair a relationship with another person you may have to face them directly, as difficult as this might be. Sneaking around and telephoning when the other person is almost certain to be unavailable is not the way to begin to mend a relationship. What we say is important, but the way we say it, and the circumstances in which we say it, may be equally as important.

Is "Mandatory Mediation" an Oxymoron?

One of the first principles impressed upon us in mediation training was that mediation is a voluntary process. The parties in a dispute come to mediation voluntarily and may leave it when they desire. But in several jurisdictions, including Ontario, mediation is now mandatory for certain types of civil disputes. What are the consequences when a process that is thought to work best if voluntary is made compulsory?

First, it should be noted that the regulations in Ontario commit disputants only to a good-faith attempt at a mediated solution. There is no requirement that a settlement be reached. Ideally, in mediation, there should be no pressure on disputants to accept a settlement that they do not feel is in their best interests. (That is why the ADR Institute of Canada Code of Conduct specifies that mediators must not base their fees on whether a settlement is reached, or the amount of any settlement. The mediator should not have a financial interest in getting either party to accept a settlement.) If mandatory mediation fails to resolve a dispute, then the parties involved meet again in court. The fact that mediation was attempted and failed is not supposed to be held against them.

Mandatory mediation has definite drawbacks. Mediation’s distinctive character may be compromised as it becomes more and more a part of the “official” system. People compelled to mediate may not be as motivated to make a real attempt to solve their dispute. They might feel less of a sense of ownership in the process and in any resolutions that come out of it. And as most mediators will tell you, mediation isn’t appropriate for every dispute or for every individual. If someone wants to maintain a reputation for never settling disputes out of court, or to establish a legal precedent, the only way to do so is through litigation.

My own view is that the disadvantages of mandatory mediation are liable to be over-stated. The fact that a process has been mandated by the courts does not mean that it is doomed to fail. Indeed, mandatory mediation of civil cases in Ontario has a decent success rate, with over half of the disputes settled or at least partially settled. The relationship between voluntary action and commitment is probably more complicated than we realize. After all, people voluntarily enter into marriages that they later voluntarily leave; they voluntarily quit jobs that they have voluntarily taken on. A good mediator will try to overcome disputants’ resistance to the process, and help them see that giving the mediation process a try is probably in their best interest.

There are good reasons to favour mandatory mediation, at least for some kinds of conflicts. If a dispute can be settled out of court, the costs are likely to be significantly less, both for the parties involved and for society as a whole. It is easy to forget that the administration of the legal system is a cost borne by all taxpayers, not just those involved in disputes. Mandatory mediation might increase awareness of mediation, so that people come to think of mediation as a way to solve disputes even before they consider going to court. Finally, parties in mediation are working together to solve their disputes; parties in litigation are adversaries. A little more cooperation and a little less antagonism might be better for everyone.

A Challenge to Confidentiality in Mediation?

Confidentiality is a basic principle of mediation. But what is to be done when it is used as a weapon in a dispute? This is the question that judges in California will have to decide.

The case at issue is the high-profile divorce of Elon and Justine Musk. Mr Musk is one of the founders of PayPal, and a very wealthy man. The couple have five children, and the main point of disagreement yet to be resolved is the level of support to which Ms Musk is entitled. Their dispute hinges on a post-nuptial agreement that Ms Musk signed in the early days of the marriage, and which she describes as “very harsh.” The agreement was reached by mediation, and so the negotiations leading up to it are confidential. At the same time that the couple was negotiating their agreement, Elon Musk was also in talks regarding the merger of his company, which eventually became PayPal. The merger raised the value of his stocks in by millions of dollars more than was reported in the post-nuptial agreement. It is not clear whether this was an oversight or a deliberate omission.

The fact that the agreement was signed after the couple married is significant, as married couples have a “fiduciary duty” to one another to be honest in their financial dealings. Lawyers from Ms Musk have charged that Mr Musk violated this fiduciary duty. His lawyers have argued that, since the agreement was mediated, and therefore confidential, Ms Musk has no right to challenge it. In order to defend himself against the charge of fraud Mr Musk would have to discuss his actions during the negotiation, the very period which is subject to confidentiality. In July, when lawyers for both sides presented their arguments before the court, the judge praised them for “excellent lawyering,” declared a “non suit,” and certified the case for appeal. A verdict from the California Court of Appeal could take a year or two. The two underlying legal principles in the case – mediation confidentiality and marital fiduciary duty – have not before been set in opposition to one another.

Reading about this case, I was reminded of the old adage that, “hard cases make bad law.” Confidentiality is important to mediators and to many other professionals, for a variety of reasons. Some of the reasons for mediation confidentiality are instrumental; that is, the presumption of confidentiality helps mediators to get parties in a dispute to speak frankly, and this is turn helps to keep negotiations focused on the parties’ interests. In this way mediation confidentiality is similar to the confidentiality between lawyers and their clients. A full and frank disclosure helps lawyers to present the best possible defense. Yet there are also intrinsically moral reasons for the presumption of mediation confidentiality. Parties in a dispute are entitled to their privacy and the right not to have sensitive information disclosed by third parties. In this way, a mediator’s duty to respect confidentiality of parties in a dispute is similar to the duties of confidentiality observed by doctors and therapists.

Justine Musk has harsh words for mediation. She writes: “When someone hustles you into mediation, and you yourself are a loving trusting naif without any business or financial experience who has never heard the word ‘mediation’ before, they can basically rape and murder you (figuratively speaking, of course) and get away with it, because it’s all confidential.” Reading her account of these events (both in her blog postings and comments, and in the October 2010 issue of Marie Claire), I was left with many unanswered questions. The negotiations began before the couple were married, and Ms Musk gives the impression that the lawyer who mediated the agreement was engaged by Mr Musk. (The ADR Institute of Canada National Mediation Rules prohibit a mediator from acting for any of the parties individually, unless all of the parties consent after full disclosure. Mediators are supposed to be independent and impartial.) Neither is it clear whether the couple’s mediator advised Ms Musk to seek independent legal advice.

Whatever the outcome of this dispute, mediators in California and elsewhere will be eager to hear the judges’ decision and their reasoning.

Should Mediators be Regulated?

When I began my mediation training, friends and family often asked, “Will you be qualified after finishing this course?” I had to tell them that, as mediation is a non-regulated profession, what it means to be “qualified” is not easy to determine. There is no equivalent in mediation of the bar admissions test that lawyers write, for example. Mediation is not regulated in Canada, in any U.S. state, nor in the U.K. Is mediation’s informal nature good or bad? Would it be better if mediators were subject to some kind of legal control?

There are reasons to think that regulation might be good for both mediators and their clients. Having some set of standards would assure consumers that their mediator had at least minimal qualifications, and perhaps familiarity with a specific area of law. In the area of family and civil mediation, where negotiations take place “in the shadow of the law,” some understanding of background law seems especially pertinent. The Law Commission of Ontario, in their recent report, “Voices from a Broken Family Justice System,” say that some of their informants expressed concern about mediators’ qualifications and about the regulation of mediation more generally. (I’m looking forward to reading the Commission’s recommendations, due to be released in November.) Regulation of mediation and of mediators’ qualifications might increase public confidence in the process of mediation, which would be good for everyone, consumers and mediators alike.

Yet there are good reasons to resist calls for greater regulation. For one thing, minimum standards of qualification do not guarantee excellence or aptitude. Legal standards of qualification have not protected the public from bad teachers, doctors, or lawyers. Indeed, the Law Commission’s report on the family justice system is full of complaints about lawyers and judges. Furthermore, while some lawyers also practice as mediators, mediators and lawyers generally offer different kinds of skills and have different roles in solving disputes. Mediators should not be seen as little more than a cheaper alternative to lawyers – the “Walmart” of the legal system, if you will. Making mediation a more official part of the legal system might threaten its distinctive character.

There are other ways, besides legal regulation, to increase acceptance of mediation and protect the public. A good mediator will advise the parties in mediation to seek an independent legal opinion before signing a mediated agreement. The process of mediation is “without prejudice,” meaning that if one party is unhappy with a mediated settlement, he or she still has the option of attempting to resolve the dispute through litigation. For family disputes, the Ministry of the Attorney General encourages people to choose mediators who meet the standards set by the Ontario Association for Family Mediation. These include specialized courses in family mediation, family law, and domestic violence, as well as a hundred hour internship with an accredited mediator. People looking for mediators for other types of disputes can check whether prospective mediators belong to a professional organization, such as ADR Institute of Ontario.

Finally, mediation is done in all kinds of contexts by all kinds of people. It is part of the job description for professions as diverse as clergy, real estate agents, municipal politicians and human resource professionals, as well as being practiced informally by community leaders and elders in different neighbourhoods all over Canada. Mandating the same training and requirements for all of these would not be practical or desirable.