Disclosure Could Become Mandatory

In response to a growing scandal, the state of California is considering mandatory disclosure of past relationships by mediators and arbitrators. The scandal involves a Los Angeles attorney named Tom Girardi who worked for years with “private judges” in administering mass tort cases while diverting funds to himself. An LA Times investigation suggests millions of dollars were misappropriated. The private judges were mostly retired judges working for JAMS. Because these cases are private and confidential, there is, as one commentator noted,  “little accountability for how decisions are made, how funds are distributed, and how much plaintiffs’ attorneys receive in fees.”

So a California legislator is raising the possibility of requiring that mediators and arbitrators disclose past relationships.

Mediation and arbitration are largely unregulated. That may change, as abuses are uncovered.

In Michigan, the State Bar’s ADR Section has proposed new, more detailed, Standards of Conduct regarding mediator disclosures. The more mediators and arbitrators voluntarily disclose about their relationships with others in the case, the less likely that legislation will be necessary.