Can a Mediation Party Who is an Attorney Speak With a Non-Attorney Counterparty Outside the Presence of the Counterparty’s Counsel?

It’s a cardinal rule that an attorney cannot meet privately with a party represented by counsel outside the presence of the party’s attorney. But what if an attorney is a party to a mediation, and the counterparty is a non-attorney represented by counsel? Can the attorney meet one-on-one with the counterparty outside the presence of the counterparty’s counsel? The Idaho Supreme court recently entertained, but declined to answer that question. See Kosmann v. Dinius, No. 45779, 2019 WL 2098775 (Idaho May 14, 2019). Despite the lack of a ruling, the decision offers food for thought.

The facts of the case are important (and somewhat entertaining) so we’ll recount them in some detail. A certain David Kosmann retained Kevin Dinius, Esq. to represent him in a dispute with a third party concerning the sale of real property. After a bench trial, the court awarded Kosmann approximately $32,000, but he had difficulty paying Dinius’s fees pending receipt of the award, and so Dinius withdrew and filed a lien for his fees against the judgment. Kosmann then hired Loren Messerly, Esq. to replace Dinius as his attorney to oppose an appeal from the judgment by the losing party. The judgment was affirmed on appeal. One month later, Kosmann sued Dinius for malpractice. Dinius retained Yvonne Dunbar, Esq. to represent him.

The trial court ordered mediation and appointed a mediator. After several hours of negotiations, the parties reached a settlement under which Dinius agreed to pay $40,000 to Kosmann. However, before the agreement was finalized, Kosmann’s attorney, Messerly, demanded an unusual term: a release of all potential claims by Dinius against Messerly.

Dunbar and Dinius refused on the ground that Messerly’s request was unethical (as the Idaho Supreme Court later noted, Rule 1.7 of the ABA Model Rules bars a lawyer from representing a client if the representation involves a concurrent conflict of interest, which includes a situation where there is a significant risk that the representation will be materially limited “by a personal interest of the lawyer.” (emphasis added); in this case, the release requested by Messerly was of interest to him alone, and provided no benefit to Kosmann, and yet Messerly held up the settlement in an effort to secure a release for himself).

After considerable delay, Messerly met privately with Kosmann in a room, and advised him to inform the mediator that he (Kosmann) would accept the originally proposed settlement of $40,000 without the release for Messerly. The mediator was waiting in the hall, and so Kosmann exited the room to inform the mediator of his decision. After doing so, however, Kosmann asked the mediator if he (Kosmann) could meet one-on-one with Dinius (i.e., his former attorney). Messerly (still in the room) was apparently unaware in advance that Kosmann would make this request.

Without informing Messerly, the mediator communicated Kosmann’s wish to Dinius. Dinius initially declined to accommodate, but after being urged by the mediator to change his mind, agreed to meet alone with Kosmann. Neither Dinius nor Dunbar were informed that Messerly was unaware of the meeting. During the meeting, Dinius and Kosmann agreed to settle their dispute for approximately $32,000 (the amount still held by the court in the property sale dispute between Kosmann and the third party), with the stipulation that Dinius would not sue Messerly.

After about twenty minutes had passed without Kosmann’s return to the room, Messerly went into the hallway to see what was going on. The mediator informed him that Kosmann and Dinius were meeting alone. Messerly objected that, as an attorney, Dinius should not be meeting with Kosmann outside Messerly’s presence. The mediator reportedly responded that the parties to a mediation are allowed to meet alone, if they wish. Kosmann soon returned and informed Messerly of the new settlement terms. At that point, Messerly advised Kosmann that he could either adhere to the renegotiated settlement and end the litigation or continue to pursue the $40,000 settlement. Kosmann chose to end the litigation, explaining later on the record that he simply wanted to move on with his life, and “let bygones be bygones” with Dinius.

The parties and their counsel put the renegotiated settlement agreement on the record. In doing so, Messerly noted on the record that Kosmann had initially agreed to settle for $40,000, but that after meeting privately with Dinius without Messerly’s knowledge, Kosmann agreed to settle for approximately $8,000 less in exchange for the release for Messerly.

In the weeks following the mediation, Dunbar submitted several drafts of a proposed settlement agreement to Messerly. Messerly disagreed with multiple sections of the agreement and countered with his own draft. After the lawyers reached an impasse, Dunbar obtained a transcript of the oral settlement agreement put on the record at the conclusion of the mediation to confirm that her draft was consistent with the terms of the oral agreement. Several heated emails were exchanged whereupon Messerly advised Dunbar that Kosmann was withdrawing from the settlement. In response, Dinius moved to enforce the oral settlement for $32,000 and a release for Messerly, while Kosmann filed a cross-motion to enforce the $40,000 settlement with no release that the parties had agreed to before Dinius met privately with Kosmann.

Kosman also moved for sanctions against Dinius on the ground that Dinius violated Section 4.2 of the Idaho Rules of Professional Conduct by meeting with him alone at the mediation, and then moving to enforce the oral settlement based on that alleged ethical violation (Section 4.2 provides that “[i]n representing a client, a lawyer shall not communicate about the subject of the representation with a person the lawyer knows to be represented by another lawyer in the matter.”).

The lower court denied Kosmann’s motion for sanctions, and granted Dinius’s motion to enforce the oral settlement for $32,000. After affirming the lower court’s enforcement of the oral settlement, the Idaho Supreme Court turned to the question of whether Dinius (a party to the mediation, but also an attorney) violated Section 4.2 of the Rules by meeting privately with Kosmann at the mediation outside the presence of Kosmann’s attorney.

The Court cited one of its prior opinions, Runsvold v. Idaho State Bar, 925 P.2d 1118 (1996), which held that an attorney acting pro se in a matter is bound by Rule 4.2. Kosman argued that Rusnvold rendered Dinius’s conduct during mediation unethical even though Dinius was a party to the mediation represented by counsel. In this author’s view, there is merit to that position. Runsvold held that a pro se attorney is “representing a client” within the meaning of Rule 4.2 because he is representing himself, and therefore the rule applies. As support, the Court cited to commentary concerning the purpose of Rule 4.2, which is to “prevent a lawyer from nullifying the protection a represented person has achieved by retaining counsel.” The intent of the Rule, then, is to prevent any attorney – presumably even an attorney who happens to be a party represented by counsel – from taking advantage of a non-attorney. As the Court put it, an attorney’s status as an attorney should not be ignored just because she happens to be a party.

The Court, however, felt the evidence in the record was insufficient to determine whether Runsvold applied to Dinius’s conduct, and punted to the Idaho State Bar to make the call on a fuller record. In doing so, the Court did not leave Messerly unscathed, noting that he may have also violated the Rules by demanding a release for himself in the first place. Had he not done so, Kosmann would have had no reason to meet alone with Dinius.

Am interested to hear from readers whether anyone is aware of any additional caselaw or ethical opinions addressing the question posed, i.e., whether an attorney who is a party to a mediation can meet one-on-one with a non-attorney counterparty outside the presence of the counterparty’s counsel?