Insuring “Full Authority to Settle” at Mediation

WHAT DOES “FULL AUTHORITY TO SETTLE”

MEAN IN THE CONTEXT OF MEDIATION?

It is still not unusual to attend a mediation in which a party, at some point during the mediation, states that they must make one or more telephone calls in order to obtain authority to settle a case.  This occurs despite rules and court orders requiring that someone attending the mediation must have “full authority” to settle.  This begs the questions: what does “full authority” mean and what, if any, might be the penalty for failing to attend mediation with the required individuals?[1]

In 2012, Florida Rule of Civil Procedure 1.720 was amended in an attempt to provide guidance as to who must attend mediation.  1.720(b) states that a party is deemed to appear at a mediation conference if the following persons are physically present:

  1. The party or a party representative having full authority to settle without further consultation;
  2. The party’s counsel of record, if any; and
  3. A representative of the insurance carrier for any insured party who is not such carrier’s outside counsel and who has full authority to settle in an amount up to the amount of the plaintiff’s last demand or policy limits, whichever, is less, without further consultation.

The 2012 amendment added subparagraph (c) which defines a Party Representative Having Full Authority to Settle.  It states:

A “party representative having full authority to settle” shall mean the final decision maker with respect to all issues presented by the case who has the legal capacity to execute a binding settlement agreement on behalf of the party.”

Accordingly, those people who must be physically present at a mediation include a party representative and, if applicable, an insurance representative who can make the final decision to settle a case without consulting someone not attending the mediation.

If a party is concerned that the other party will not bring the appropriate personnel to mediation, what can it do?   In addition to outlining the individuals required to attend a mediation, Rule 1.720 mandates that 10 days prior to appearing at a mediation conference, each party shall file with the court and serve all parties a written notice identifying the person or persons who will be attending the mediation conference and confirming that those persons have the authority required by subdivision (b) of the rule.  If an attorney is required to file a pleading specifically representing to the court that the individuals at mediation will have full settlement authority it may encourage the attorney to be sure that is actually the case.  Thus, if mediation is approaching and no notice has been filed, a party should ask that opposing counsel comply with the rule and file the required notice.

What if a party does not bring the required personnel to mediation?  Rule 1.720 provides the remedy.  Specifically, 1.720(f) states that:

If a party fails to appear at a duly noticed mediation conference without good cause, the court, upon motion, shall impose sanctions, including award of mediation fees, attorneys’ fees and costs, against the party failing to appear.  The failure to file a confirmation of authority required under subdivision (e) above, or failure of the persons actually identified in the confirmation to appear at the mediation conference, shall create a rebuttable presumption of a failure to appear.

Generally, mediations are more successful if the actual decision makers are there in person to work with their counsel, the mediator and the opposing party and its counsel to reach agreement.  Oftentimes, a representative needs to be able to respond to new facts and arguments and to adjust its settlement position in response.  Accordingly, if a party truly desires to reach a resolution, there is little reason for it to send representatives to mediation who do not have full authority to settle the case.  In addition, no attorney wants to unnecessarily risk the mandatory sanctions of Rule 1.720 which often include not only monetary penalties but also a requirement to attend a second mediation.  It, therefore, is highly recommended that prior to mediation attorneys insure that the individuals planning to attend mediation on a client’s behalf have full authority to settle and then make sure that those individuals and not their representatives show up in person on the day of the mediation.

[1] This article addresses claims brought in state court, however, it is noted that the federal courts have similar rules such as the Middle District of Florida’s Local Rule 9.05.  In addition, many Case Management Orders include in person, full authority mediation requirements.

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