Lawyer Mediator Must Conduct Conflicts Check
Rule 1.7 of the District of Columbia Rules of Professional Conduct requires that a lawyer acting as a mediator conduct a conflict check as to the immediate parties to the mediation in order to ensure that the lawyer’s exercise of professional judgment on behalf of her clients is not adversely affected by service as a mediator. Our Rules do not require, however, that a lawyer/mediator conduct a conflict-of-interest investigation of officers, directors, or stockholders of affiliated corporate entities when serving as mediator in a case involving corporate parties. Rule 8.4, which forbids misrepresentation, further requires that a lawyer holding herself out as a neutral in a mediation must disclose to the parties the results of the required conflict check, if the lawyer or her firm represents one of the parties before her or a client adverse to one of the parties to the mediation.
Applicable Rules
- Rule 2.2 (Intermediary)
- Rule 1.7 (Conflict of Interest)
- Rule 8.4 (Misconduct)
Inquiry
The Inquirer, a law firm, has been asked by the District of Columbia Superior
Court to make its lawyers available to mediate cases under the court’s
Alternative Dispute Resolution (“ADR”) program. Lawyers participating
in the ADR mediation program provide their professional services to the
Superior Court for a nominal fee, paid by the court, to assist the court
with its congested docket. Lawyers in the inquiring firm wish to participate
in this program.
As stated by the Inquirer, the attorneys participating
in this program do not provide legal services or representation to either
side in the dispute. They are assigned by the court rather than chosen
by the parties. An attorney assigned to a case is supposed to act “as
a neutral third party” to assist “parties in a dispute to
communicate their positions on issues and to explore possible solutions
or settlements. The mediator does not give an evaluation or opinion of
the case, but rather prompts the parties to assess their relative interests
and positions and to evaluate their own cases by the exchange of information,
ideas and alternatives for settlement.” 1996 Program Summary on
Alternative Dispute Resolution, Superior Court of the District of Columbia,
at 5. In this task, they do not receive confidential information from
the parties in the context of a lawyer-client relationship. They may,
however, receive confidential information from the parties in the context
of the mediation, and they agree to keep that information confidential.
The Inquirer states that its firm has found it
“extremely burdensome” to conduct a conflict-of-interest check
for the parties in the mediation and also as to the officers, directors,
and stockholders of corporate parties, and for the affiliated entities,
spouses, and partners of non-corporate entities. In lieu of such a procedure,
which the Inquirer apparently conducts in connection with the firm’s
engagements for its clients, the Inquirer seeks to conduct a less extensive
conflict-of-interest search that would determine only if the firm is currently
representing any party to the mediation or any client whose interests
are adverse to one of the parties to the mediation. The lawyer would advise
the parties to the mediation that no effort has been made to determine
if the firm is representing any officer, director, or stockholder of a
corporate party, any affiliated entity, or any spouse or partner of a
party. The Inquirer asks whether the firm’s attorney’s obligations
under the Rules are met by this less extensive conflict-of-interest check.
Discussion
Our Rules address primarily the duties of a lawyer representing clients,
and not the duties of a lawyer acting as a mediator or arbitrator between
non-clients.1
Our Rules require, however, that a lawyer avoid client conflicts arising
from “the lawyer’s responsibilities to . . . a third party.
. . .” Rule 1.7(b)(4); and see Rule 1.3. Because service as a mediator
in a case involving a client or a client’s adversary could easily
compromise a lawyer’s ability to represent existing clients, we
believe that some form of conflict check is required prior to service
as a mediator.2
The potential for conflict in such a situation
is evident. For example, in order to serve effectively, mediators normally
become privy to confidential information about the positions of the parties
to the litigation. Should the mediator acquire confidential information
through the mediation that would be helpful or harmful to her firm’s
existing clients, she (as well as other members of her firm) might be
obliged to use such information in order to satisfy her ethical duty of
zealous representation. See generally Rule 1.3; and see Rule 1.10: Rule
1.6 (protecting from disclosure only client confidences).
Yet the lawyer/mediator would be barred from
using that information by virtue of her promise of confidentiality to
the parties to the mediation. The standard Statement of Understanding
applicable to the civil mediation program in the Superior Court, executed
prior to mediation by the parties and the mediator, provides that “[t]he
parties, individuals and attorneys whose signatures appear below [including
the mediator] agree that all proceedings . . . including any statement
made or document prepared . . . are privileged and shall not be disclosed
in any subsequent proceeding or document. . . .”3
Given the substantial potential for adverse impact
upon the interests of existing firm clients, we believe that a lawyer
is required by Rule 1.7 to conduct a conflicts check to ascertain whether
she or her law firm represents any party to the mediation or any party
whose interests are adverse to the parties to the mediation.
We do not believe that a conflicts check of corporate
constituents is normally required of lawyer/mediators under our Rules,
however. Rule 1.13 provides generally that a lawyer representing an organization
represents the organization and not the directors, officers, shareholders,
or employees of that organization. Where this is true, the possibility
of obtaining confidential information through service as a mediator and
yet being unable to use that information on behalf of one’s clients
affects only the client organization, and not its non-client constituents.
In such situations, no broader conflict check is required.
Our Rules, however, recognize situations in which
some particular structure of the client or the reasonable expectations
of the constituents of the client alters the normal organizational representation
principle set forth in Rule 1.13. See Comments [13], [14] and [15] to
Rule 1.7. In such cases, because the lawyer represents a broader range
of interests and of clients, a broader conflict check would be ethically
required to avoid compromising the interests of the lawyer’s clients.4
If the conflict check required by our Rule 1.7 discloses that the mediator
or her firm represents or is adverse to any of the parties to the mediation
(whether those parties are the organizations directly involved or their
officers, directors, and stockholders in appropriate situations), that
information must be disclosed to the affected client(s) unless the mediator
withdraws of her own accord, and client consent is sought to the activity
that raises a conflict under Rule 1.7(b)(4).
Additionally, Rule 8.4(c), which precludes a
lawyer from engaging “in conduct involving dishonesty, fraud, deceit
or misrepresentation,” prevents a lawyer from misrepresenting her
status as a neutral if she knows in fact that she is not neutral due to
representation of a client which is a party or adverse to a party, involved
in the proceeding, or knows of some other circumstance (such as a personal
relationship with a party to the arbitration) which could affect her neutrality.
To avoid misrepresentation of neutral status, this Rule requires disclosure
of the results of the conflict check to the parties to the mediation.5
We do not believe, however, that Rule 8.4(c) requires every lawyer acting
as a mediator to investigate information about law firm clients of which
she is not actually aware that arguably could call into question her “neutrality.”6
Thus we conclude that, absent unusual circumstances,
a lawyer/mediator satisfies her ethical duties by conducting a conflicts
check as to the immediate parties to the mediation and by disclosing the
results to the parties.
Inquiry No. 93-2-5
Adopted: November 19, 1997
- Rule 2.2 (Intermediary) specifically addresses the role of a lawyer acting as mediator, but it applies only to situations in which a lawyer attempts to mediate between two or more of the lawyer’s clients with actual or potentially conflicting interests. Lawyers participating in the ADR program do not represent as clients the parties who appear before them and therefore do not intermediate between clients.
- We note that our Rules prohibit conflicts of interest but do not by their express terms require a law firm to have a conflicts checking system. In a firm of any size, some system for avoiding conflicts would seem mandatory under Rules 1.7 and 1.10. Cf. DR 5-105(E) of the Lawyer’s Code of Professional Responsibility of the New York State Bar Association (requiring lawyers to have a conflicts checking system in place). We assume for purposes of discussion that the firm in question is of sufficient size to require a conflict check system.
- When acting as an arbitrator or a mediator, confidentiality also may be required by applicable codes of ethics, such as the American Arbitration Association/American Bar Association Code of Ethics for Arbitration in Commercial Disputes and the Commercial Mediation Rules of the American Arbitration Association. Such codes impose more extensive ethical requirements, as discussed in subsequent portions of this opinion.
- For mediators serving in other contexts and for arbitrators, a broad conflict check might be required by other ethical rules governing mediators and arbitrators. The Commercial Mediation Rules of the American Arbitration Association provide, for example, that no person shall serve as a mediator in any dispute in which that person has any financial or personal interest in the result of the mediation, except by the written consent of all parties, Commercial Mediation Rule 5, and that prior to accepting appointment as a mediator, the prospective mediator shall disclose any circumstances likely to create a presumption of bias. Id. A similar requirement is imposed upon arbitrators under the Code of Ethics for Arbitrators in Commercial Disputes promulgated by a Joint Committee of the American Arbitration Association and the American Bar Association. Canon II of that Code requires that “[a]n arbitrator should disclose any interest or relationship likely to affect impartiality or which might create an appearance of partiality or bias,” and further specifies that disclosure should extend to “relationships involving members of their families or their current employers, partners or business associates.” While lawyers acting as mediators and arbitrators should consult and observe all governing ethical codes, we decline to find embedded in our Rules of Professional Conduct any blanket ethical obligations to comply with such codes.
- Situations may arise in which the lawyer’s confidentiality obligations to her firm’s clients may preclude disclosure of relevant results of a conflicts check to the parties to a mediation. The firm’s representation may in and of itself be confidential or the nature of the representation may be confidential. In such a case, the lawyer/mediator would have no choice but to resolve the problem by withdrawing as mediator without further comment.
- We note that in commercial arbitration, where the arbitrator generally acts as a private judge with substantial authority to bind to parties, the extent of mandatory investigation and disclosure has been litigated frequently. Even so, no clear line exists between relationships likely to affect an arbitrator’s neutrality and trivial or irrelevant relationships. See generally Commonwealth Coatings Corp. v. Continental Casualty Co., 393 U.S. 145, 151-52 (1968) (distinguishing between relationships likely to affect arbitrator’s judgment from relationships that are merely “trivial); and see A.A.A./A.B.A. Code of Ethics Canon II (noting that the “provisions of the Code are intended to be applied realistically so that the burden of detailed disclosure does not become so great that it is impractical for persons in the business world to be arbitrators, thereby depriving the parties of the services of those who might be best informed and qualified to decide particular types of cases.”) See also Al-Harbi v. Citibank, N.A., 85 F.3d 680 (D.C. Cir. 1996); Overseas Private Investment Corp. v. Anaconda Co., 418 F. Supp. 107, 112 (D.D.C. 1976); but see Schmitz v. Zilveti, 20 F.3d 1043 (9th Cir. 1994) (vacating arbitration award where arbitrator’s law firm has extensively represented parent company of entity involved in arbitration and arbitrator had run conflict check only on the subsidiary entity, in case arising under NASD rules specifically requiring investigation of possible conflicts of interest). We do not decide whether and to what extent these principles apply to mediation, a non-binding procedure that is substantially different from arbitration. We merely conclude that the lawyer’s duty under Rule 8.4 to avoid misrepresentation does not require that every mediator in every case investigate and disclose every conceivable relationship that a party might claim affects her neutrality.
