A while back, a fellow attorney asked me some questions about whether a Mediated Settlement Agreement (MSA) could be revoked or set aside in a Texas Divorce. I have also debated this question before with other attorneys. Most family law attorneys in Texas know that in most circumstances, revoking or setting aside an MSA is very difficult.
Recently, I had a chance to revisit this topic because a fellow attorney had a case where the opposing party was trying to set aside an MSA. It had been some time since I last looked into the question, so I started looking at whether there was any new case law on the subject.
My friend told me the parties had attended mediation with a mediator to settle their divorce. On that date, a Mediated Settlement Agreement was entered into and signed by all parties, their attorneys, and the mediator.
Later, the wife changed her mind, fired her old attorney, and hired a new one who filed a motion to set aside the MSA. The husband wanted the Mediated Settlement Agreement to stand and filed a motion to enter the final decree based on the MSA.
Wife’s Argument on Why the MSA Should be Set Aside
The wife argued that the MSA should be set aside because:
- The mediator was not an attorney and thus illegally acted as an attorney.
- The MSA required that drafting disputes for the order would be resolved by the mediator through arbitration.
- If the mediator acted as an arbitrator, that would involve the unauthorized practice of law.
Requirements for Mediated Settlement Agreement
For a Mediated Settlement Agreement to be valid and binding, the agreement must:
- provide, in a prominently displayed statement that is in boldfaced type or capital letters or underlined, that the agreement is not subject to revocation;
- be signed by each party to the agreement; and
- be signed by the parties’ attorney, if they are present at the time the agreement is signed (Tex. Fam. Code §6.602(b)). If these requirements are met, the agreement is valid and a party is entitled to judgment on the agreement (Tex. Fam. Code §6.602(c)).
In addition to these requirements, Texas Courts have recognized that for a Mediated Settlement Agreement to be valid, the dispute must have been mediated by a valid mediator (Lee v. Lee, 158 S.W.2d 612, 614 (Tex. App. – Fort Worth, 2005)).
In the case that we are discussing there were:
- A third-party mediator between the two parties to an agreement;
- Both parties and their attorneys sign off on the agreement; and
- A prominently displayed agreement that it was not subject to revocation.
Thus, the requirements of Section 6.602(b) and those in Lee had been met.
Is Mediation the Unauthorized Practice of Law?
The wife also argued that the Mediator acted illegally by engaging in the unauthorized practice of law because they mediated the divorce while not licensed as an attorney in the state of Texas.
The practice of law is defined under Section 81.101 of the Texas Government Code as:
“…the preparation of a pleading or other document incident to an action or special proceeding or the management of the action or proceeding on behalf of a client before a judge in court, as well as a service, rendered out of court, including giving advice or the rendering of any service requiring the use of legal skill or knowledge, such as preparing a will, contract, or another instrument, the legal effect of which under the facts and conclusions involved must be carefully determined.”
While this language may seem broad enough to encompass acting as a mediator within the practice of law, thus requiring an active bar license, the Professional Ethics Committee for the State Bar of Texas recognizes that mediators do not engage in the practice of law simply by mediating disputes between parties.
“Under the Texas Disciplinary Rules of Professional Conduct, mediation does not constitute the practice of law but instead constitutes action as an ‘adjudicatory official’.” -- Texas State Bar Ethics Opinion No. 583, September 2008.
The Texas Rules of Professional Conduct include both arbitrators and mediators within the definition of the adjudicatory official. Additionally, the Texas Rules of Professional Conduct Rule 1.11(b) states: “a lawyer who is an adjudicatory official…” Applying principles of judicial interpretation and statutory construction, this distinction illustrates that a lawyer and an adjudicatory official are not synonymous.
Therefore, Texas law does not require either mediators or arbitrators in Texas to have an active bar license nor does it state that by mediating or arbitrating a case without an active license in Texas, the person doing so is practicing law.
For example, in Ethics Opinion 583, the attorney not only mediated the case but also prepared the final decree and other divorce documents for the parties. Id. The Committee determined that the attorney had engaged in the unauthorized practice of law in that case, not because they had acted as a mediator, but because the attorney provided legal services in addition to serving as the mediator. Id. It is thus implied that had the attorney in that opinion solely served as a mediator, they would not have been engaging in the practice of law at all.
Here, the parties did not dispute that the Mediator was acting as a mediator in this case. Part of the Wife’s contention lies in the possibility of her serving as an arbitrator at some point in the future. However, as the above-cited ethical opinion demonstrates, neither role constitutes the practice of law without more action having been undertaken by the mediator, whose only job was to serve as the third-party mediator.
Ultimately, the judge found that the mediated settlement agreement was valid and signed off on the final decree.
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