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Ethics Opinion

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RI-271

June 19, 1996

SYLLABUS

    A lawyer under consideration for selection as an arbitrator on a three-member arbitration panel is ethically required only to conduct such inquiry and make disclosures with regard to the matter and participants as are necessary to ascertain whether ethical constraints are in place as a result of the lawyer's professional activities, and, if so, to deal with them in accordance with ethics rules.

    References: MRPC 1.7(b), 2.2; RI-188.

TEXT

The Committee has been asked to address what disclosures are ethically required when a lawyer is under consideration for selection as an arbitrator. The arbitration panel will have three members, all lawyers, two of whom are selected by the parties and the third by the two party nominees. The questions posed are what disclosures must a lawyer make when being considered as a possible arbitrator, e.g., professional, business, family or even social contacts with parties, principals of parties, counsel, witnesses, and the like, and when must required disclosures be made.

Alternate dispute resolution ["ADR"] systems and techniques are evolving and gaining popular acceptance rapidly, with lawyers, courts and the organized bar not always at the forefront. One aspect of this phenomenon is that the profession has begun only recently to devote attention to the differences, as well as the similarities, between the lawyer's traditional role as partisan advocate of a client's interest and that of a decision maker or facilitator for all of the parties in an ADR setting. Much of what has developed piecemeal, through ethics opinions in other state and city bar associations, is either contradictory or severely limited to specific factual settings. Bodies such as the American Arbitration Association or the National Association of Securities Deals, which themselves operate formal organized ADR systems, typically have published their own codes of ethics or rules for arbitrators, to which a lawyer (or anyone) selected to serve becomes subject by agreement. Where no such specific rules exist, the prospect that panels may be composed of both lawyers and nonlawyers gives rise to a concern for uniformity in duties that cannot be totally addressed by ethical constraints applicable only to lawyers. Indeed, it may eventually be concluded that service as an arbitrator or mediator is not necessarily lawyering at all. It is thus with considerable caution that the Committee ventures opinions concerning the ethical duties of lawyers who serve as ADR providers. RI-188.

An examination of the Michigan Rules of Professional Conduct themselves will reveal that a lawyer's duties are directed to clients or, to a lesser extent, tribunals, other lawyers, or the public at large. But the lawyer who serves as an arbitrator has no clients among the participants. By contrast, MRPC 2.2 which applies when a lawyer serves as an intermediary between two or more clients (a temptingly close but false analogy), actually puts the lawyer into an almost reciprocal role, i.e., the lawyer serves all the clients' interests, is not the decision-maker, may not keep information of one client from the another of the clients, and may be discharged at will by any of the participants. See Comment to MRPC 2.2, which confirms that it does not apply when non-clients are parties.

Arbitration proceedings, on the other hand, often contemplate that arbitrators will not share confidences and will render decisions that are disadvantageous to one side or the other, so that fidelity to bedrock ethical duties such as loyalty to a client's cause is neither expected nor required. It will not do to define the arbitrator's duties by reference to rules bearing upon the lawyer-client relationship or a lawyer's role as advocate of a partisan interest.

The Michigan Rules of Professional Conduct do not dictate an arbitrator's duties, whether the arbitrator is a lawyer or not. As long as a lawyer being considered for selection as a member of an arbitration panel can undertake the activity while remaining in compliance with ethical constraints, the lawyer's conduct while serving as an arbitrator is governed by rules other than the Michigan Rules of Professional Conduct. Ethics rules apply to lawyers' conduct as lawyers; they do not regulate a lawyer's outside activities except where they are incidental to or likely will affect the fulfillment of the lawyer's professional duties.

This does not entirely dispose of the question, however, which asks what disclosures must a lawyer make when being considered for selection as a member of an arbitration panel. If the thrust of the question is what disclosures must be made to the arbitration participants, none are required by the Michigan Rules of Professional Conduct.

But a lawyer contemplating service as an arbitrator has a workload of lawyer projects to deal with in addition to the arbitration, and those duties carry obligations that are imposed by the Michigan Rules of Professional Conduct. A lawyer must not do anything outside the practice of law that will cause an ethics violation or problem professionally. A lawyer may not undertake those outside activities if doing so will result in a breach of professional duties. MRPC 1.7(b), for example, applies without regard to whether the source of a conflict situation is professionally related or not. The source of a proscribed conflict need not be a professional duty owed to another client. It may be nonprofessional and may be the lawyer's own interests or nonprofessional duties owed to third parties, such as parties to an arbitration proceeding in which the lawyer is an arbitrator. It is the effect upon the discharge of professional duties that the rule addresses, not the source of any distracting or disabling conflict.

Therefore, a lawyer being considered for selection as an arbitrator may accept the appointment if doing so will not place the lawyer in default of an existing ethical obligation under the Rules. Depending upon the particular circumstances, this will require the lawyer to make preliminary inquiry as to the identities of the participants and the nature of the matter, to assess the potential impact of such service upon the lawyer's professional relationships and engagements, and to proceed accordingly. In some situations, this may require disclosure to, and consent of, a client. Such duties arise out of the lawyer's work other than as an arbitrator. The arbitration participants must look to other sources than Michigan Rules of Professional Conduct for rules applicable to the lawyer/arbitrator's duties to them.

 
     

 

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