Mandatory Mediation Clauses in Retainer Agreements
Wed, Mar 19th, 2025 | by Miles Mediation and Arbitration | Article | Social Share
We often settle legal malpractice claims before they result in a publicly filed lawsuit. Many of our clients, who are lawyers, want to avoid a public lawsuit, but once a suit is filed, they want to be vindicated by a dismissal or a defense verdict. Therefore, the chance of settlement is often much greater before the lawsuit is filed. One way to encourage clients to discuss the settlement before filing a suit is to include a mandatory mediation clause in your retainer agreement. Some clients will ignore the mediation clause and file suit without initiating mediation. A motion to dismiss or stay the suit until the client complies with the mediation clause could be filed, but the potential reputational damage of a public lawsuit will already have occurred. However, many clients will be interested in avoiding the risk and expense of litigation and will comply with a mandatory mediation clause.
When including a mandatory mediation clause in an agreement with a client, the lawyer must comply with Missouri Supreme Court Rule 4-1.8(h)(1) and not include any language that would limit the lawyer’s liability to the client. The terms of the mediation clause, and the retainer agreement as a whole, must be fair to the client; and the mediation clause should be conspicuous, possibly in bold or all capital letters to make sure the client reads it before agreeing to it. Write the clause without legalese so the lay client can understand it. The lawyer should explain to the client the reason for the mediation clause and how the mediation will work. Most lay people, with no prior litigation experience, do not know what a mediation is and how it differs from arbitration. Encourage the client to ask questions and suggest they seek independent legal advice before signing the agreement if they choose to do so.
It may be helpful to explain to the client the benefits of mediation. For example, explain that mediation fosters discussion and allows both parties to have a better understanding of the dispute. Mediation is substantially less expensive than litigation, and a mediation gives the client an opportunity to talk to an independent person about their concerns.
Fee disputes are particularly suited for mediation because they are often the result of a misunderstanding, and the cost of litigation may be prohibitive depending on the amount in dispute. The Missouri Bar has a fee dispute resolution program that allows for fee disputes to be resolved through facilitation, mediation or binding arbitration. For more information, go to: https://missourilawyershelp.org/dispute-resolution-programs/fee-dispute-resolution-program/.
Mediating a legal malpractice claim pre-suit has many advantages for the lawyer. In addition to the chance to avoid the potential reputational damage of a lawsuit, a mediation gives the lawyer and their insurer an opportunity to understand the basis of the potential claim so they can decide if it can be resolved without litigation. Also, sometimes clients want to sue their lawyer because they are emotional about the bad result they obtained from the lawyer’s services. Mediation provides for a cooling off period. A good mediator may be able to help the client understand the difficulties in proving a legal malpractice claim. Most legal malpractice cases are not easy to win because the client has to prove the case-within-the-case. In other words, they have to prove that, had the lawyer done something differently, the client would have had a better result. As so many things can happen in litigation that affect the result, proving causation in a legal malpractice case is hard to do without relying on speculation.
The mediator can also highlight the expense involved in bringing a legal malpractice claim. In most cases, the client will need to hire one or more experts, which can be expensive. The client usually will not be able to recover legal fees spent to pursue the legal malpractice case. When the client has time to think about all the factors and the cost, they may not be as interested in filing a lawsuit.
Here are some terms to include in a mediation clause:
- A timeline for mediation (e.g., 30 to 90 days after the dispute is identified).
- The types of disputes that will be subject to mediation (e.g., all disputes related to the legal services provided).
- Specify how the mediation costs will be paid. To encourage the client to comply with the mediation clause and to settle, you may want to state in the agreement that the lawyer will pay the full cost of mediation if the dispute settles at mediation.
- Set forth a process for choosing the mediator and specify where the mediation will be conducted. This could include agreeing on a mediation organization to manage the mediation (e.g., Miles Mediation & Arbitration, American Arbitration Association, JAMS, The Missouri Bar Dispute Resolution Program).
** Originally published in Missouri Lawyers Media and reprinted with permission.
About Steven Schwartz
Steven H. Schwartz
is a highly experienced litigator and mediator with a legal career spanning nearly four decades. Since 1985, he has focused on complex litigation and economic loss claims, representing clients in a wide range of disputes, including business-related disputes, professional liability claims, employment law, intellectual property disputes, and insurance coverage matters.