Ethics and the attorney as mediator or third party neutral

FICC Quarterly, Summer 2001 by Lanzone, Anthony M

I.

INTRODUCTION

The use of mediation and other alternative dispute resolution (ADR) methods has increased dramatically over the years. Lawyers, judges and the parties involved in a dispute should all be aware of the advantages and disadvantages of the different methods available. This article provides a commentary on mediation, including the efforts to revise the Uniform Mediation Act, the ethical issues affecting third party neutrals, whether the use of ADR methods constitutes the practice of law, and the role of the attorney as a third party neutral.

II.

THE MEDIATION PROCESS

Mediation is a non-binding, confidential dispute resolution process before one or more third party neutrals. Individuals and entities generally participate in mediation on a voluntary basis in order to resolve their dispute through nonbinding negotiations with the assistance of a third party neutral. Experienced lawyers and non-lawyers are privately retained to serve as mediators and neutrals. Some organizations also maintain a roster of people trained in dispute resolution. All of these individuals are experienced in using methods of conciliation to aid parties in settlement or other mutually acceptable resolution of a dispute.

Alternate dispute resolution methods are used to resolve a variety of disputes. Examples include disputes between employer and employee, insurer and insured, health provider and patient, manufacturer and customer, professional and client, insurer and reinsurer. Contract issues and disagreements with government agencies are also properly subject to ADR methods.

Many court systems sanction both voluntary and compulsory mediation programs that use the services of a lawyer as the third party neutral. In commercial disputes many non-lawyers, by virtue of their education, training, and life or work experiences, are selected to serve as neutrals. Many courts favor the use of ADR methods to reduce court congestion and to assist parties in reaching a faster and usually more economical resolution to their dispute. However, objections have been lodged against non-lawyer neutrals who participate as mediators in court-related dispute resolution proceedings. This issue was the subject of study by the American Bar Association's Section of Dispute Resolution in 1999. That study resulted in the following resolution:

The section of dispute resolution has noted that many court connected ADR programs and other dispute resolution programs have restricted participation to neutrals who are lawyers. The section believes that the eligibility criteria for dispute resolution programs should permit all individuals who have the appropriate training and qualifications to serve as neutrals, regardless of whether they are lawyers.'

Ill.

UNAUTHORIZED PRACTICE OF LAW

In the case of Birbrower Montalbano Condon & Frank v. Superior Court,2 the California Supreme Court addressed the issue of unauthorized law practice by unlicensed lawyers during ADR proceedings. Birbrower Montalbano, a New York law firm, was retained to represent a California client during California arbitration proceedings. The firm was unlicensed in California. The court determined that the firm could not recover payment of its fees for services performed in California because its conduct constituted the unlawful practice of law. The Birbrower decision, however, stands in sharp contrast to the decision in Williamson v. John D. Quinn Construction Corp.3 In Williamson, the New York federal court held that a New Jersey law firm, though unlicensed in New York, could collect fees for its legal representation of a client during a New York arbitration.

The conflict between these legal decisions emphasizes the care that attorneys must take while engaged in conduct that might be considered "legal" in nature. Meeting with a client or witnesses, providing advice over the phone, or even sending a fax that contains legal advice when the attorney is not licensed in the jurisdiction could be problematic. Unless the particular jurisdiction has decided the issue, it is difficult to predict the rules of engagement in ADR cases. The use of a non-lawyer neutral in mediation could be challenged on grounds that the neutral has engaged in the unauthorized practice of law. If that occurs, the results are not clear. Under the circumstances, it would be prudent for both the non-lawyer mediator, as well as the lawyer mediator, to avoid any activity that might be construed as legal in nature so as to precipitate sanctions.

Conflicting case law on these issues often occurs because there are differing views as to whether arbitration constitutes a "legal proceeding." If it is not, participation as an arbitrator or party representative should occasion no issue about the unlicensed practice of law. However, problem situations may arise as a result of conduct that is tantamount to the practice of law, such as preparing a document intended to be binding on the parties and filed in court. In light of the holding in Birbrower, the parties can only speculate about international implications. It is questionable, for example, how the California courts might interpret a similar situation involving international arbitration under the InterAmerican Convention on International Commercial Arbitration. If one party elected to be represented by a non-lawyer and the other party retained an unlicensed out-of-state attorney, would the treaty provisions "trump' the California state licensing rules governing the practice of law?