Case Law Review: Lawyer Found Negligent Following Mediated Settlement Raichura v. Jones, 2020 CarswellAlta 356 (QB)

This case is a warning for lawyers and dispute resolution professionals as to the risks of allowing a party to enter a settlement through mediation without full disclosure, advice as to the party’s legal rights, and proper preparation for the mediation.

The parties agreed to mediation/arbitration. The case settled in mediation. Subsequently the wife sued her lawyer for failing to properly prepare her for the mediation, failing to explain her legal entitlements, and allowing her to settle in mediation rather than proceeding to arbitration. The court found the lawyer negligent and ordered damages based on what the wife would have received had the case proceeded to arbitration.

The decision is under appeal. 

While this decision may be a one-off due to its unique facts, it does raise a number of concerns for family law lawyers and FDR professionals.

We know that family law clients settle their cases for many reasons, some of which are totally unrelated to their legal rights and obligations (cost and unpredictability of litigation/ arbitration, desire to see an end to the conflict, etc.). Parties who agree to participate in mediation must be assumed to be prepared to make compromises of their legal rights in order to achieve other objectives. In Ontario (Raichura is an Alberta case), parties entering mediation will likely (or in the case of med-arb, must) have executed a written agreement describing the process and confirming that the parties have received independent legal advice explaining the process. Clearly, a lawyer must advise his/her client as to their entitlement to disclosure, their legal rights and obligations as best can be assessed based on the known facts of the case, and the alternatives to a negotiated settlement. However, the likely result of proceeding with litigation or arbitration often cannot be predicted and the cost (emotional, financial, and otherwise) of failure to settle is often an overwhelming factor in the negotiation.

In family law, like sports, it is easy to be a Monday morning quarterback and to second-guess the decisions that were made by the parties in the heat of the mediation. Should a lawyer be criticized (and held liable for damages) because a client suffers from buyer’s remorse the day after the case settles? These are some of the troubling questions that this decision generates, which hopefully the Court of Appeal will address.