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Law Pro
Law Pro, Attorney
Category: Business Law
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Experience:  20 years experience in business law - sole proprietor, partnership, and corporations
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My partners and I are having a mediation session to resolve

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My partners and I are having a mediation session to resolve disputes over tax issues.
My partner wants to bring a tax attorney that he knows.
Can the information exchanged during the mediation session be used against me later?
Is he supposed to maintain confidentiality?
Welcome! I'm an attorney and will be assisting you with your question.

Mediation is a process in which a neutral, called a mediator, assists the parties in exploring issues in the case. The mediator facilitates discussion between counsel and parties, and guides the parties toward finding their own solutions to the dispute. In traditional mediation the mediator does not make a decision, a court reporter is not present, and there are no rules of evidence which control the process, with the exception of a rule concerning confidentiality.

 

 

Mediation is confidential. Everything which is discussed during the mediation, and any documents prepared especially for the mediation cannot be used by any party outside of the mediation process, or in any portion of the litigation or trial. The purpose of confidentiality is to provide a setting in which the parties and attorneys can discuss the facts and issues openly, without fear that what has been said may be used against them outside of the mediation.

 

 

The rational behind such is - that the ability to speak openly leads to solutions and settlement.

 



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Customer: replied 3 years ago.

I am not concerned with the confidentiality of the mediators. My question was if the tax attorney that my partner is bringing will be used against me?


 


My partner has been alleging that I sided with the CPA to prepare the taxes., which contained significant errors. Subsequently we amended the tax returns. It was amended by the tax attorney who is coming to the mediation session. Would the tax attorney try to use the information against me if my partner tries to bring any lawsuit later?


 

No. As stated, anything and everything presented and discussed is confidential and cannot be used at a later date by anyone.

The tax attorney would have to make their proofs at trial with evidence otherwise obtained. Nothing you state or present as documentation of anything can be used at trial.


However, obviously the attorney is going to gather information and evaluate both the documentation and all the parties involved.

So they will have an opinion as to the probability of success if the matter went to trial.

But they would have to gather their information for use at trial by other discovery means and couldn't reference anything from the mediation.

By gathering information - they would have to use discovery methods of depositions, requests for production of documents, requests for admissions, and interrogatories.

Customer: replied 3 years ago.

Is there any foolproof confidential agreement that I can have the tax attorney sign?

No. The tax attorney will be in attendance - that he's listening and hearing and looking.

Certainly he can't use anything - but he's learned from the mediation event.

Too, parties are allowed to have their technical experts at the mediation.



Customer: replied 3 years ago.

Can the tax attorney ask me questions?


Are there any exceptions for when the info at the mediation session can be used later in a court?

No. There isn't a right to direct examination of witnesses or even cross-examination of witnesses.

You make your argument and they make their argument - your expert or attorney or accountant makes your argument.

Then the mediator usually discusses the matter with one party at a time - the other party leaves. Then it's vice-versa.

The mediator tries to get both parties to resolve the matter.

IMHO - I don't like mediation. I think it's a waste of time, effort, and monies. I like arbitration but not mediation.


I think that many times the mediators have an opinion and it might not be favorable to my position.

So, don't think you have to settle the matter at mediation. I rarely do.

Customer: replied 3 years ago.

Do the mediators meet with the parties separately first?


Are you saying that the tax attorney (that my partner who has dispute wants to bring) will never question anyone? Is he mostly a passive observer?


What actually happens during mediation?


 


We are trying to resolve a couple of main issues - one surrounding taxes for our LLC and the other being refusing to open the business.


 


Our mediation session is set for 3 hours.


 


 

Do the mediators meet with the parties separately first?

 

No, usually the parties make their presentation to the mediator. Then the mediator meets with each party separately and points out the "bad" of their case. The mediator tries to get settlement number from the party.

 

Then the mediator meets with the other party and points out the "bad" of their case to them. And then tries to get a settlement number from them.


Are you saying that the tax attorney (that my partner who has dispute wants to bring) will never question anyone? Is he mostly a passive observer?


Correct - there is no questioning of witness - just a presentation.

Mediation is not a trial - it's a presentation to the mediator - who then tries to resolve the matter amicably somewhere in the middle.

What actually happens during mediation?



It's as I stated.



Good luck!!

 


We are trying to resolve a couple of main issues - one surrounding taxes for our LLC and the other being refusing to open the business.


 


Our mediation session is set for 3 hours.


 

Customer: replied 3 years ago.

Does the mediator come up with solutions that are acceptable to both the parties?


In case the disputes fail to get resolved, will the mediators propose alternate options?


For eg, in our scenario if both the parties don't want to work together, can they come up with a solution - say one party can be passive investors in the project.

Does the mediator come up with solutions that are acceptable to both the parties?

 

They try to make suggestions to both parties. Then it's up to the parties if they want to accept such.



Neither party has to settle at mediation - mediation is not binding it's strictly volutary.

Sometimes although there isn't a settlement at mediation - the mediator can continue over the next few days to arrive at a negotiated settlement.



In case the disputes fail to get resolved, will the mediators propose alternate options?

 

Yes, that is their function - to propose alternatives and possible settlements.

 


For eg, in our scenario if both the parties don't want to work together, can they come up with a solution - say one party can be passive investors in the project.


I don't know what your situation is at all so I can't comment.

Good luck in your mediation I will be going off line for the evening.


I think I answered your original question as the confidentiality of mediation.

Customer: replied 3 years ago.

Thanks, XXXXX XXXXX question - what's the difference between arbitration and mediation?

The biggest differences are arbitration is binding - not mediation.

 

Arbitration usually is an informal court process where witnesses and testimony are presented - not mediation.

 

Arbitration usually the evidence has to be authenticated - not in mediation.


Mediation is a confidential legal process that uses a neutral third party to act as a facilitator to the agreement, but not a decision-maker. It is used to avoid settling a dispute in court. The mediation process is informal and does not follow the rigid rules of evidence or procedure used in litigation. The parties to the dispute are in control. Ultimately, success depends upon the parties’ ability to reach an agreement. The mediator stimulates discussion between the disputing parties to help the negotiation process and move the dispute toward a resolution. Mediation is a non-binding process. It does not restrict the ability to pursue the dispute further unless the parties reach an agreement and choose to be bound by the agreement’s terms.

 

 

Arbitration is also a confidential legal process used to avoid settling a dispute in court. However, the neutral third party is appointed to review the case and make a final decision in favor of one of the parties. The arbitrator renders a decision that is generally binding and cannot be appealed. The process is more formal than mediation, although it is still usually less formal than litigation.

 

 

Arbitration offers many of the same benefits as mediation. Both allow disputing parties to settle their conflicts outside of the traditional court system. Mediation and arbitration are also similar in that they both:

  • Can resolve disputes quickly and usually less expensively that litigation.
  • Are confidential proceedings in which the resolution doesn’t become a matter of public record.
  • Use a neutral third party (arbitrator or mediator) to oversee the proceedings.
  • May result in legally enforceable resolutions.
  • Require voluntary participation from the disputing parties (unless a mediation or arbitration contract has been previously signed).

 

One of the most important differences between mediation and arbitration is that an arbitrator makes a final decision on a case, while a mediator does not. During the arbitration proceeding, an arbitrator listens to and considers all relevant information, then decides which party should win. Essentially, the arbitrator acts as the judge and jury. In contrast, a mediator doesn’t impose a final resolution on the disputing parties. The mediator acts as a middleman who facilitates discussions for possible settlements or resolutions and encourages the disputing parties to arrive at their own decision.

When an arbitrator makes a final decision (an Award), it is legally binding. Appeals are accepted only under special circumstances.
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