Forming a Successful Mediation Agreement: A Guide

Mediation agreements: a primer

A mediation agreement is the document that is prepared at the end of a mediation session typically by the mediator (or in some rare occasions by one of the parties). The agreement will list all of the issues that have been resolved by the parties so far. It will also include a list of all unresolved issues, as well as any other issues that require further action such as things like paying off a mortgage, car loan, or credit card, etc. A mediation agreement is not the same as a case settlement agreement that is prepared by a divorce lawyer. Unlike a mediation agreement , a case settlement agreement is created by an attorney, with the assistance of a client and is usually drafted outside of the mediation process. Unlike a case settlement agreement (that is normally signed by the parties and notarized), a mediation agreement is a working document. It is a tool for the mediator to use in keeping track of what has been discussed, agreed upon, and what still needs to be discussed. Since the point of mediation is to reach a settlement, once reached, a mediation agreement becomes the basis for a case settlement agreement.

What does a mediation agreement contain?

A successful mediation agreement is essential for achieving resolution. The key elements of a mediation agreement are as follows:
Confidentiality – Generally, mediations are confidential proceedings and as such there are certain things that are not admissible in Court in subsequent proceedings. Typically, the only exception to this privilege of confidentiality, or for prohibiting a witness from testifying is in the context of future litigation. So, for example, if a Corporation sues another Corporation for Trademark infringement and then attempts to call the mediator as a witness at trial, the mediation privilege would exclude the testimony of the mediator. Before you agree to a mediation you should familiarize yourself with your jurisdiction’s mediation rules. Whether the mediation will be governed by mandatory rules for a Court Annexed (Court ordered) arbitration or voluntary mediation differs from jurisdiction to jurisdiction.
Terms of Settlement – A successful mediation agreement would outline the terms of settlement. This may include payment terms, performance obligations or specific tasks for each party.
Role of Mediator – It is important to understand what the role of the mediator will be in a given matter. The mediator should be a disinterested third party that serves to facilitate communication and offers no opinions as to the merits of the case. In most jurisdictions, the mediator has no responsibility for preparing the final form of the settlement agreement, unless specific arrangements have been made.
A good mediator will always follow the court sponsored mediation rules from beginning to end, ensuring a successful outcome.

How to construct a mediation agreement

To ensure that the resolution of a dispute through mediation is enforceable and binding on all parties, it is critical to accurately and thoroughly document the outcome in a written settlement agreement. A poorly drafted agreement can leave significant issues unresolved or impose obligations on the parties without appropriate consideration. Moreover, without an enforceable agreement, parties may be unable to implement the outcome of the mediation or may return to court to resolve the remaining issues. A comprehensive mediation agreement should include: • Full legal names and correct spellings of all individuals and/or entities (e.g., corporations, partnerships) involved in the dispute or negotiation; • Legal capacity of individuals, i.e., adult or minor; • Jurisdiction to provide clarity regarding governing law; • Affirmation of the voluntary, cooperative and collaborative nature of the process; • Express agreement of the parties not to commence future litigation with respect to issues that were raised at the mediation (or agreed to be raised in the future) or to continue existing litigation after the date of the mediation; • Additional provisions may be included which address particular issues or concerns of the parties, e.g., confidentiality, non-disclosure of trade secrets, use of an outside mediator or arbitrator for subsequent dispute resolution, or escalation disputes prior to resorting to litigation. The parties should carefully review the language of the final mediation agreement before signing and avoid using terms that are vague or ambiguous. Failure to take these steps may result in unintended consequences or in an unenforceable agreement.

Common mediation agreement clauses

A mediation agreement typically contains a scope clause, a payment clause, a confidentiality clause, a dispute resolution clause, and a closing clause.
Scope Clause. The "scope" clause limits the mediation to the issues identified by the parties, in the context of the mediation. For example: "The scope of this mediation is: breach of contract; assessment of damages; contract interpretation."
Confidentiality Clause. The mediation agreement needs to provide for a confidentiality clause – protecting the mediation communications and mediation documents, so that they cannot be used in any subsequent litigation or arbitration. For example: "The parties agree that all communications made in the course of the mediation shall be confidential and inadmissible in any subsequent ADR proceeding or at trial in court or arbitration."
Payment Clause. The mediation agreement should also include the following provisions: "Party A agrees that it shall pay the fees and expenses of ADRA as set forth on the website www.adra.com, including a non-refundable filing fee, a case administration fee, and an hourly rate for the Mediator’s compensation. Party B agrees that if they still wish to mediate despite not being able to pay the mediation fees, they may seek assistance from [name] or other third parties. Party A agrees that it will pay, in addition to their own fees, the fees and expenses of the Mediator and ADRA if Party B is unable to do so, provided that Party A will, of course, have the right to recover these expenses and fees from Party B in any litigation or arbitration stemming from the mediation. The Mediator’s fees are charged in three-minute increments, unless otherwise agreed. The Mediator will invoice the parties every [30 days/60 days], unless something unusual happens sooner. The parties will notify the Mediator, in writing, not less than [number of days] before the next scheduled session, of their intention to continue with the mediation, request documents be provided in advance of the session, or discuss any other concerns about the mediation process."
Closing Clause. The closing clause might read as follows: "The parties agree to enter into a confidentiality agreement to protect their intellectual property rights and confidential information before the appointed mediator may begin mediation. Any contract disputes which arise shall be determined under the laws of the State of ______. The signing parties have registered their signatures.

Example of a mediation agreement

The mediation agreement is the end product of a mediation. It confirms that the parties have participated in the mediation process, details all of the issues that were the subject of the mediation, and sets forth the terms of settlement of the case.
The following is a sample of the essential terms and provisions that should be included in a typical mediation agreement for the settlement of a divorce case:
Mediation Agreement
"We, the undersigned, have participated in a mediation or conciliation session with (Mediator’s Name) to attempt to settle our dispute. We have discussed the (issues, Child Support Guidelines, probable effect of a trial on the parties and their children, if any, and have agreed to the following settlement terms: (list all terms & conditions agreed upon as a result of mediation)).
The resulting contract is as follows:

The custody arrangements for the parties’ children shall be as follows (list).
Child Support shall be in the amount of (list amount of support).
Health care coverage shall be as follows (list coverage).
The plaintiff/mother shall have medical documentation signed by the (child’s name) doctor.
The plaintiff/mother shall receive a check for $xxx.xx representing the pension money in defendant’s PSPP account.
The plaintiff/mother shall release the defendant from all claims with regards to her interest in the defendant’s retirement account.
The defendant shall maintain the plaintiff and the children on his medical insurance at his own expense.
The defendant shall not move more than 25 miles from the current residence address.
The defendant shall provide the plaintiff with proof of clear title if financing a vehicle in his name.
The defendant shall be responsible for paying the mortgage for the marital residence which is pending a short sale until the residence is sold.

11 . Each party understands that by signing this agreement he or she releases the other party and is thereafter barred and estopped from raising, making or asserting any claim, demand, obligation or liability whatsoever relating to the matters described and referred to in this Agreement.

This Agreement shall not be construed or interpreted as superseding any order previously filed with the Court, nor shall it release, void, or impact any order of support previously issued by the Court unless otherwise specifically stated.
The parties hereto acknowledge and affirm that they have each had an adequate opportunity to review and to discuss this Agreement prior to signing.
In the event that either or both of the parties breach any of the terms or conditions contained under this Agreement, the non-breaching party hereto shall have the right to exercise any and all of his or her rights at law or at equity to enforce this Agreement and to recover his or her reasonable attorneys fees, costs and expenses incurred in the enforcement of this Agreement.
This Agreement is irrevocable and shall be binding upon the parties herein after it has been signed by the parties in court and filed with the Court.

It is understood and agreed to that this enclosed agreement is only a draft and that the parties hereto must consult with counsel prior to executing same. In the event that the parties hereto fail to consult with counsel prior to executing the same, the agreement will still be legally enforceable.
This Agreement may be executed in any number of counterparts which shall be taken together and shall constitute one document. A facsimile copy hereof or a copy of this Agreement executed and delivered by facsimile transmission shall have the same effect as an original.
The foregoing Agreement was reviewed and discussed with each party prior to the execution thereof.

Advantages of mediation agreements

Attorneys generally agree that mediation agreements have a number of advantages over other forms of dispute resolution. The process is invariably less expensive than the litigation alternative: no discovery period, no depositions, no subsequent formalities – it’s just the parties around a table with a neutral mediator. In addition to saving both parties a considerable amount of money, the mediation process saves time. With the clock ticking on the court calendar, mediation can advance toward resolution in a matter of weeks or even days. The mediation agreement also helps preserve relationships between parties, particularly those who will continue to work together in the future, by giving them a sense of control over the outcome.
One final word on the mediation agreement: although working toward resolution is highly recommended, be aware that the parties are not obligated to use mediation to settle a dispute. Mediation simply provides another way for parties to resolve their disputes that is less formal than the litigatory process.

Pitfalls and considerations

One challenge to creating an effective mediation agreement stems from the issue of enforceability. Just because a mediation agreement may be enforceable under one state’s laws does not mean it is enforceable under an opposing jurisdiction’s laws. This is particularly true if the other party lives in a foreign country. The other party may not be able to enforce a mediation agreement in that foreign country and may find another way to settle the case without ever having to follow the mediation agreement. Thus, part of the drafting process for your mediation agreement must include recognition of local, state, and international laws.
Another challenge when drafting a mediation agreement lies with the potential for a party to ignore the terms set forth in the agreement. A mediation agreement is similar to a contract in that one party may not abide by the terms; however , instead of pursuing litigation to seek relief or sanctions, mediation is a completely voluntary process. Thus, unless stated otherwise in the mediation agreement and depending on the amount of the terms violated, the offending party can simply refuse to return to the mediator and ask that the mediator determine specific actions. Then, only after the mediation process has fallen apart is the party in violation at risk of litigation. However, if a mediation agreement is entered into as part of arbitration, the agreement will be binding, and the parties will be required to follow the terms or risk contract damages or other contractual penalties.