Med-Arb: Benefits, Risks and Safeguards – By Laura A. Athens

Med-Arb: Benefits, Risks and Safeguards
by Laura Athens

Introduction

Med-Arb combines mediation and arbitration into a single, seamless alternative dispute resolution (ADR) process that blends collaboration and flexibility with finality. When efficiency is the goal, parties may choose to select the same ADR professional to serve as both mediator and arbitrator. If the dispute does not resolve during mediation, it proceeds to arbitration before the same neutral. This article explores the benefits and risks associated with a single neutral serving in this dual role and identifies safeguards to maximize advantages while minimizing potential drawbacks.

Features of Mediation and Arbitration

Mediation is a voluntary, confidential, and collaborative process facilitated by an impartial mediator. It provides a forum in which parties actively engage in problem-solving to reach their own resolution. Confidentiality is a key characteristic of mediation, allowing parties to explore settlement options without fear that proposals will be used against them in subsequent legal proceedings. Self-determination is equally important, as it permits informed decision-making regarding both process and outcome.

In mediation, key participants discuss interests and concerns, brainstorm options, and evaluate potential settlements. The emphasis is on future-oriented solutions rather than past conduct. The mediator lacks authority to impose a decision but by skillful questioning, may offer new perspectives on strengths and weaknesses of the case, likely potential outcomes, or reasonable settlement ranges. Mediation typically includes both joint sessions and private, confidential caucuses with each party and their legal counsel.

Arbitration, by contrast, is a private, efficient, quasi-judicial alternative to litigation. More formal and retrospective in focus than mediation, arbitration involves a neutral arbitrator, or arbitration panel, who reviews evidence, hears testimony, considers legal arguments, and issues a binding decision. Arbitration is particularly useful when mediation fails, compromise is unlikely, or parties seek a final resolution.

The arbitration process can be tailored to meet the needs of the parties.  It may be as short or long, simple or complex, and as formal or informal, depending on the parties’ preferences.  This flexibility allows arbitration to conserve time and resources while ensuring finality.

Benefits of Med-Arb

As a hybrid ADR model, Med-Arb has the potential to combine the strengths of mediation and arbitration by allowing the parties to initially attempt to resolve the dispute collaboratively. If they cannot achieve full resolution, the matter proceeds expeditiously to arbitration before a neutral who is already familiar with the case.

Although mediation and arbitration require distinct skill sets, an experienced ADR professional can effectively transition between roles. The mediator-arbitrator has been described as combining the analytical precision of a judge with the insight of a psychologist.[1]

Med-Arb promotes collaborative problem-solving and may preserve ongoing relationships by offering a meaningful opportunity for voluntary resolution before shifting to a more adversarial phase. It maintains privacy and party autonomy, as both processes are private, confidential, and can be structured to meet the parties’ specific needs.

The structure of Med-Arb creates additional incentives to settle. Knowing that arbitration will promptly follow mediation may encourage the parities to make realistic demands and engage in good-faith negotiation. Also, the prospect of a binding decision may narrow the gap between offers and counteroffers.

Med-Arb may expedite a voluntary resolution with a full or partial settlement. Even absent settlement, issues are often narrowed. Parties may abandon marginal claims, voluntarily exclude non-issues, or stipulate to undisputed facts, thereby streamlining the arbitration phase of the process.

Using the same neutral reduces duplicative effort. Selecting and educating two separate ADR professionals requires additional time and expense. Although mediation does not involve formal presentation of evidence, the sole neutral gains substantial knowledge about the dispute during mediation. This familiarity is likely to improve efficiency during arbitration.  The rapport, trust, and confidence in the neutral developed during mediation may enhance party comfort in the arbitration phase.

Med-Arb is inherently flexible. Parties may specify a timeframe for mediation, limit the type and amount of discovery, or streamline arbitration procedures. They may agree to limit the number of witnesses, submit joint exhibits, or proceed on documents only. Because the mediator-arbitrator already understands the case, presentation time may be reduced.

Parties may also choose the form of arbitration award: standard, reasoned, or detailed with findings of fact and conclusions of law. A standard award is typically the most cost-effective. Settlement terms may be incorporated into a consent award, strengthening enforceability beyond that of a mediated agreement alone.

Risks of Med-Arb

Despite its advantages, Med-Arb poses certain risks. Critics identify concerns regarding confidentiality, impartiality, due process, diminished candor, and potential undue influence.[2]

Confidentiality is foundational to mediation. Mediation communications—oral, written, or nonverbal—are generally inadmissible in subsequent proceedings, subject to limited exceptions, such as threats of harm or party agreement to disclosure.[3] However, in Med-Arb, the same neutral hears confidential communications during mediation then later serves as arbitrator, therefore, non-disclosure of mediation communications to the ultimate decision-maker is not possible.

The Michigan Court Rule 2.412 (D)(1) and AAA Commercial Rule M-10 acknowledge that the parties may agree to waive the confidentiality privilege.  Therefore, the Med-Arb agreement can expressly retain or waive mediation confidentiality.  

Rule 408 of the Federal and Michigan Rules of Evidence similarly exclude offers of settlement from evidence in subsequent proceedings. The rationale is to encourage candid settlement discussions. In Med-Arb, however, exclusion is complicated because the neutral has firsthand knowledge of settlement offers.

Proponents point out that judges and juries are routinely instructed to disregard inadmissible evidence and judges often preside over trials following unsuccessful pre-trial settlement conferences. [4] Nevertheless, critics maintain that the mediator-arbitrator’s dual exposure raises unique concerns.

Due process issues also arise. Arbitration rules generally prohibit ex parte communications,[5] while mediation routinely involves caucuses. During caucus, a mediator may learn adverse information never disclosed to the opposing party. If the same neutral later serves as arbitrator, there is concern that such undisclosed information may consciously or subconsciously influence the award. The opposing party may have no opportunity to rebut the damaging information through presentation of contrary evidence or cross-examination, raising significant due process concerns.

Another criticism of Med-Arb is the neutral’s dual role may compromise impartiality and independence in arbitration because the neutral may be swayed by the offers exchanged during mediation.  A mediator who actively engages in evaluating claims or suggesting settlement ranges may appear to have prejudged the case.[6] This risk may be heightened in evaluative mediation, where the mediator offers opinions on the merits of the case and probable outcome. If the dispute proceeds to arbitration, parties may question whether the neutral can remain fully impartial.

Some commentators suggest that Med-Arb may chill candor. Parties might hesitate to propose innovative solutions or engage in frank discussions if the same neutral will later render a binding decision. The mediator-arbitrator may similarly avoid rigorous reality-testing to preserve perceived neutrality. The mediation participants may be reluctant to use caucus at all, potentially diminishing the effectiveness of mediation.[7]

Concerns about undue influence have also been raised. Because the mediator-arbitrator ultimately holds decision-making authority, parties may feel pressured to settle.[8] However, the risk of coercion often depends more on the individual neutral’s approach than on the structure of Med-Arb itself.

Essential Safeguards

Careful design and informed consent are critical to mitigating Med-Arb risks. Full disclosure of benefits and potential drawbacks should occur before the process begins. Written informed consent from parties and counsel is essential. A comprehensive Med-Arb Agreement should address confidentiality, the benefits, and risks of proceeding with the hybrid ADR process.

Selecting a well-trained, experienced neutral adept in both mediation and arbitration is paramount. One of the most significant risks occurs when an arbitration award appears to be based on confidential mediation communications. Such reliance may create grounds for setting aside an award based on bias or due process violations.

Procedural safeguards can further reduce risk. Conducting mediation exclusively in joint session, rather than caucus, avoids unilateral exposure to undisclosed information. Alternatively, the neutral may seek party consent before disclosing confidential information shared in caucus if essential to fairness. Employing a facilitative, rather than an evaluative, approach may further reduce perceptions of real or perceived bias and prejudgment.

An “opt-out” provision is one of the most straightforward and effective protections. The Med-Arb Agreement may permit any party—or the neutral—to request withdrawal prior to the arbitration phase if impartiality concerns arise during mediation. This preserves party self-determination and enhances confidence in the process.

At the inception of mediation, the neutral should confirm that parties understand the hybrid structure and provide an opportunity to ask questions. Ongoing transparency strengthens legitimacy of the Med-Arb process.

Concerns about offers influencing arbitration may be addressed through modified high-low arbitration. For example, the highest and lowest mediation offers could define the permissible award range. Alternatively, parties may agree to a high-low range disclosed to the arbitrator only after the award is rendered. A confidential, pre-set range may help to ensure the neutral renders an arbitration award based solely on the evidence. If the award falls outside the agreed range, it is adjusted to the closest high or low amount.  This approach narrows risk while preserving evidentiary integrity.

Certain ADR professionals may be particularly suited to the dual role. Those experienced in mediation and arbitration and comfortable maintaining clear role boundaries may be better positioned to manage the transition. They may be more interested in solving disputes in a creative way and willing to use their skills to facilitate efficient and effective resolutions for parties who knowingly and voluntarily decide to engage in Med-Arb with a single neutral.  Ultimately, parties may conclude that the efficiencies and advantages of Med-Arb outweigh the risks, particularly when safeguards are thoughtfully implemented.

Conclusion

Med-Arb is a distinct option along the ADR continuum. When used in appropriate cases and conducted by a qualified neutral skilled in both mediation and arbitration, it can provide an efficient and flexible path to resolution. Parties electing to pursue this route should receive full disclosure of the benefits and risks of this approach and advised of the essential safeguards. With informed consent and careful procedural design, Med-Arb can effectively balance collaboration and finality while minimizing potential risks.

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[1]Sussman, Edna, Developing an Effective Med-Arb/Arb-Med Process, 2 New York Dispute Resolution Lawyer 71, 73 (Spring 2009); see also, Weisman, Martin and Stark, Sheldon, Is Med/Arb the Process for You? Mich. Bar J. (June 2015)(Med-Arb requires distinct skills, techniques, knowledge, and temperament in each

phase of the process). PREMi professionals are experienced in providing Med-Arb services.

[2] Pappas, Brian, Med-Arb and the Legalization of Alternative Dispute Resolution, 20 Harvard Negotiation Law Review 157 (Spring 2015).

[3] Michigan Court Rule 2.412 (B)(2) (C) (D); Michigan Mediator Standards of Conduct V;  AAA Commercial Rules and Mediation Procedures, Rule M-10; ; Section 4(a) of the Uniform Mediation Act (not been adopted in Michigan).

[4] Blankley, Kristen, Keeping a Secret from Yourself? Confidentiality when the Same Neutral Serves both as Mediator and as Arbitrator in the Same Case (2011) available at: https://digitalcommons.unl.edu/lawfacpub/122

[5] AAA Commercial Rule 20.

[6] Welsh, Nancy, Switching Hats in Med-Arb: The Ethical Choices Required to Protect Process Integrity in Mediation Ethics: A Practitioner’s Guide 213 (Omer Shapira eds., 2021). Available at: https://scholarship.law.tamu.edu/facscholar/1482; Rule III of the Mediator Standards of Conduct (mediator must avoid an actual or the appearance of a conflict of interest, defined as, “conduct or a relationship that could reasonably be viewed as creating an impression of potential bias or as raising a question about the impartiality or self-interest of the mediator.”)

[7] See supra note 2.

[8] See supra note 6.

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Laura A. Athens is an attorney, mediator, facilitator and arbitrator with over 30 years of litigation and alternative dispute resolution (ADR) experience. Ms. Athens currently devotes her practice exclusively to ADR in a variety of matters, including education, higher education, university faculty grievance, consumer, employment, vocational rehabilitation, guardianship, and disability rights cases. Ms. Athens serves as an arbitrator in automotive warranty cases and previously served as a Hearing Officer in special education and vocational rehabilitation due process hearings.