I haven't seen the ep for a while but I think you may be right. I can picture the scene and still hear the expression in his voice but I don't remember whether it was a mother and son he was arbitrating between or as you've posited.
The funny coincidental thing about that ep is that one of his college buds played Allen Lloyd, Wolfram & Hart's contractor. It was funny for me to see them both in the same ep.
eta: Shamefully, I don't own it on DVD. I have Firefly on DVD, but not Buffy or Angel yet. I had a housemate who made more $ than me and had full sets. So I had ready access to them when I was living with her. Since then, I haven't been flush enough to get them yet. Though I saw the Buffy mondo box at Costco for $150.