On June 17, 2025, the First Department issued a decision in Prospect Capital Corp. v. Morgan Lewis & Bockius LLP, 2025 NY Slip Op. 03659, holding that a confidential mediation statement was not subject to discovery on relevance grounds, explaining:
In this legal malpractice action, plaintiff Prospect Capital Corporation (Prospect) alleges that defendants’ negligence in negotiating a debt subordination agreement on its behalf with nonparty Silicon Valley Bank (SVB) deprived it of a cause of action under a turnover provision and that defendants’ subsequent incorrect advice concerning Prospect’s rights created further harm. Prospect previously sued SVB in federal court and settled the action after participating in a confidential mediation proceeding before a magistrate judge. Defendants sought discovery of the settlement agreement and all statements submitted by Prospect to the magistrate judge who mediated the SVB Action, including all exhibits thereto. Prospect has produced the settlement agreement as well as all documents related to the federal action, other than its mediation statement.
While discovery under CPLR 3101(a) is broad, the court improvidently determined that defendants established a basis for compelling Prospect to produce the confidential mediation statement. How Prospect planned to prove causation and damages on its separate claim in the underlying SVB action is not material and relevant to the issues here, which involve whether defendants’ alleged malpractice leading to the loss of a cause of action under the turnover provision of the subordination agreement caused Prospect damages. Defendants’ hope that the mediation statement contains admissions by Prospect that may directly undermine its causation argument in this case, is too speculative a basis to compel discovery.
Nor have defendants shown that the mediation statement is relevant to their setoff defense as there appears to be no dispute that Prospect provided the settlement agreement, which reveals the existence of a settlement of the underlying action and the settlement amount. To the extent defendants contend that Prospect, against its own interests, resolved the underlying action for a lower settlement amount, this argument is speculative and does not justify compelling production of the confidential mediation statement.
(Internal quotations and citations omitted).