Florence M. Peterson Re: The American Arbitration Association and Multijurisdictional Practice of Law - Center for Professional Responsibility

June 15, 2001


American Bar Association
Commission on Mutlijurisdictional Practice
Wayne J. Positan, Chair
541 North Fairbanks Court, 14 th Floor
Chicago, Illinois 60611-3314

Re: The American Arbitration Association and Multijurisdictional Practice of Law

Dear Mr. Positan:

This letter is submitted in response to your correspondence of April 13, 2001, to William K. Slate II. The American Arbitration Association (AAA) very much appreciates this opportunity to present its views to the Commission.

As the Commission knows, the growth of ADR has been rapid and wide-spread; both court-annexed and contractually mandated arbitrations and mediations have become essential elements of dispute resolution. It is in the public interest, as well as in the interest of the legal community, that these-party determined procedures do not become burdened by restrictive regulation.

The AAA , as an administrative organization, is not involved in the practice of law. However, the AAA does maintain panels of independent neutrals, many of whom are lawyers, and assists parties and their counsel in selecting their arbitrator or mediator and place of hearing. It therefore has an interest in monitoring laws and regulations that might impact neutrals and advocates, and to consider the effects of laws on arbitration and ADR alternatives.

Service as an arbitrator is not the practice of law. No statute or case requires that an arbitrator be a lawyer. Many arbitrators on the AAA panel, who have served with distinction for years, are not lawyers. Those neutrals who also happen to be lawyers are not practicing law when they sit as arbitrators. For its seventy five year history, the AAA has been able to list , and the parties have had the option to select, those neutrals that best meet the needs of the case, without regard to the locale of the hearing. This practice must be allowed to continue.

Arbitrators and mediators are not free to behave as they please. They are bound by standards of behavior and ethics through rules and codes specifically addressed to issues that arise in alternative dispute resolution. Furthermore, arbitrators know that courts may be scrutinizing their behavior, since most motions to vacate an award are based on alleged bias or conflict of interest on the part of the neutral. We suggest that this judicial oversight is another effective restraint on inappropriate practices.

Regarding the attorneys who serve as advocates in arbitration and mediation, it is essential that some accommodation be made for representation of a party by out-of-state, in-house or foreign counsel in an ADR proceeding. Many venues are chosen by parties precisely because neither is located there. The law to be applied to a dispute is often the law of another jurisdiction from the one where the proceeding is taking place. Counsel local to the place of the hearing may have no knowledge of the substantive law applicable to the case and add unnecessary scheduling complications and expense to the process. Experience has shown that the principal effect of requiring representation in arbitration proceedings by members of the local bar drives arbitrations to more friendly forums.

In addition, as the United States builds its international commercial presence and ADR capabilities, foreign parties and their non-U.S. counsel are increasingly involved in mediations and arbitrations here. In representing such clients, no public interest of the forum state is implicated, and no knowledge of local procedural laws is required.

We would be more than happy to answer any questions or appear before the Commission, as it may request.

Very truly yours,


Florence M. Peterson
General Counsel

cc: W.K. Slate, II