Reported by Prof. Carrie Menkel-Meadow
Commission on Ethics and Standards in ADR
The Commission on Ethics and Standards in ADR (sponsored by Georgetown University andCPR Institute for Dispute Resolution) has drafted this proposed Rule for adoption into the Model Rules of Professional Conduct. We offer here a framework or architecture for consideration by the appropriate bodies of the American Bar Association and any state agency or legislature charged with drafting lawyers ethics rules. The current draft is in progress and the Conflicts Drafting Subcommittee welcomes all comments, submitted to Professor Carrie Menkel-Meadow at Georgetown University Law Center, 600 New Jersey Ave. N.W., Washington DC 20001 (or [email protected]) or Elizabeth Plapinger, Vice President, CPR Institute for Dispute Resolution, 366 Madison Avenue, New York, New York 10017 ([email protected]).
The proposed Rule which follows addresses the ethical responsibilities of lawyers serving as third party neutrals, in a variety of Alternative Dispute Resolution (ADR) fora (arbitration, mediation, early neutral evaluation, etc.) and as an initial jurisdictional matter does not address the ethical requirements for non-lawyers performing these duties or the ethical duties of lawyers acting in Alternative Dispute Resolution proceedings as representatives or advocates.
Proposed New Model Rule of Professional Conduct
Rule 4.5 for The Lawyer Neutral
This section applies to the lawyer who acts as a neutral third-party, such as mediator, arbitrator, conciliator or evaluator, to assist represented or unrepresented parties resolve disputes or arrange transactions among each other. When lawyers act in neutral, non-representative capacities, they have different duties and obligations in the areas addressed by this Rule than those of lawyers acting in a representative capacity.
This section is intended to be applied to the duties and responsibilities of lawyers who act as third party neutrals in the following processes:
Arbitration B- Is a procedure in which each party presents its position and evidence before a single neutral third party or a panel, who is empowered to render a resolution of the matter between the parties. Arbitrators may be chosen jointly by all parties, by contractual arrangements, under court or other rules, and in some cases, may be chosen specifically by each side. Arbitrators chosen separately by each party to a dispute may be considered "partisan" arbitrators or "neutral" arbitrators, depending on the rules governing the arbitration. If the parties agree in advance, or applicable law provides, the award is binding and is enforceable in the same manner as any contractual obligation or under the applicable statute (such as the Federal Arbitration Act or state equivalents). Agreements by the parties or applicable law may provide rules for whether the award must be in writing and what recourse the parties may have when the arbitration is not binding.
Neutral Evaluation- Is a procedure in which a third-party neutral provides an assessment of the positions of the parties. In a neutral evaluation process, lawyers and/or parties present summaries of the facts, evidence and legal principles applicable to their cases to a single neutral or a panel of neutral evaluators who then provide(s) an assessment of the strengths, weaknesses and potential value of the case to all sides. By agreement of the parties or by applicable law, such evaluations are usually non-binding and offered to facilitate settlement. By agreement of the parties or by applicable law or practice, if the matter does not reach a settlement, the neutral evaluator may also provide other services such as case planning guidance, other settlement assistance and discovery scheduling. By agreement of the parties or applicable law, the neutral evaluator(s) may issue fact-finding, discovery and other reports or recommendations.
Mediation- Is a procedure in which a third party neutral facilitates communications and negotiations among the parties to effect resolution of the matter by agreement of the parties. Although often considered a facilitative process (see below) in which a third party neutral facilitates communication and party negotiation, in some forms of mediation, the third party neutral may engage in evaluative tasks, such as providing legal information, helping parties and their counsel assess likely outcomes and inquiring into the legal and factual strengths and weaknesses of the problems presented. By agreement of the parties or applicable law, mediators may sometimes be called on to act as evaluators, or special discovery masters or perform other third party neutral roles.
Mediation- Is a procedure in which a neutral third party facilitates communication and negotiations among the parties to seek resolution of issues between the parties. Mediation is non-binding and does not, unless otherwise agreed to by the parties, authorize the third party neutral to evaluate (see above), decide or otherwise offer a judgment on the issues between the parties. If the mediation concludes in an agreement, that agreement, if it meets otherwise applicable law concerning the enforceability of contracts, is as enforceable as a contractual agreement. Where authorized by applicable law, mediation agreements, achieved during pending litigation, may be entered as court judgments.
IV. Hybrid Processes
Minitrial- Is a procedure in which parties and their counsel present their matter, which may include evidence, legal arguments, documents and other summaries of their case, before a neutral third party and representatives of all parties, for the purpose of defining issues, pursuing settlement negotiations or otherwise sharing information. A neutral third party, usually at the parties' request, may issue an advisory opinion, which is non-binding, unless the parties agree otherwise.
Med-arb- Is a procedure in which the parties initially seek mediation of their dispute before a third party neutral, but if they reach impasse, may convert the proceeeding into an arbitration in which the third party neutral renders an award. This process may also occur in reverse in which during a contested arbitration proceeding, the parties may agree to seek facilitation of a settlement (mediation) from the third party neutral. In some cases, these third party neutral functions may be divided between two separate individuals or panels of individuals.
Other- Parties by agreement, or pursuant to court rules and regulations, may create and utilize other dispute resolution processes before third party neutral(s) in order to facilitate settlement, manage or plan discovery and other case issues, seek fact-finding or conciliation services, improve communication, simplify or settle parts of cases or for other reasons. Such processes may be decisional (adjudicative) or facilitative or a hybrid of the two, and they may be binding or non-binding as party agreements or court rules or statutes provide.
Lawyers who provide neutral services as described above shall be subject to the duties, and obligations as specified below:
Rule 4.5. 1 Diligence and Competence
(1) A lawyer serving as a third party neutral should act diligently, efficiently and promptly, subject to the standard of care owed the parties as required by applicable law or contract.
(2) A lawyer should decline to serve in those matters in which the lawyer is not competent to serve.
Comment (To be added).
Rule 4.5. 2 Confidentiality
(1) A lawyer serving as a third party neutral shall maintain the confidentiality of all information acquired in the course of serving as a third party neutral, unless the third party neutral is required or permitted by law or agreement of all the parties to disclose or use any otherwise confidential information.
(A) As between the parties, the third party neutral shall maintain confidentiality for all information disclosed to the third party neutral in confidence by a party, unless the party agrees or specifies otherwise.
(B) A third party neutral should discuss confidentiality rules and requirements with the parties at the beginning of any proceeding and obtain party consent with respect to any ex parte communication or practice.
(C) A lawyer who has served as a third party neutral shall not thereafter use information acquired in the ADR proceeding to the disadvantage of any party to the ADR proceeding, except when the information has become publicly known or the parties have agreed otherwise or except when necessary to defend the neutral from a charge of misconduct.
(2) A third party neutral may use or disclose confidential information obtained during a proceeding when and to the extent the third party believes necessary to prevent:
(A) death or serious bodily injury from occurring; or
(B) substantial financial loss from occurring in the matter at hand as the result of a crime or fraud that a party has committed or intends to commit.
(3) Before using or disclosing information pursuant to section (2), if not otherwise required to be disclosed, the third party neutral must, if feasible, make a good faith effort to persuade the party's counsel or the party if the party is unrepresented either not to act, or to warn those who might be harmed by the party's action.
Comment (to be added).
Rule 4.5. 3 Impartiality
A lawyer who serves as a third party neutral should be impartial with respect to the issues and the parties in the matter.
(1) A lawyer who serves as a third party neutral should:
(A) Disclose to the parties all circumstances, reasonably known to the lawyer, why the lawyer might not be perceived to be impartial. These circumstances include (i) any financial or personal interest in the outcome, (ii) any existing or past financial, business, professional, family or social relationship with any of the parties, including, but not limited to any prior representation of any of the parties, their counsel and witnesses, (iii) any other source of bias or prejudice concerning a person or institution which is likely to affect impartiality or which might reasonably create an appearance of partiality or bias, and (iv) any other disclosures required of the lawyer by law or contract.
(B) Conduct a reasonable inquiry and effort to determine if any interests or biases described in section (A) exist, and maintain a continuing obligation to disclose any such interests or potential biases which may arise during the proceedings,
(C) Decline to participate as a third party neutral unless all parties choose to retain the neutral, following all such disclosures, unless contract or applicable law require participation. If, however, the lawyer believes that the matters disclosed would inhibit the lawyer's impartiality, the lawyer should decline to proceed;
(D) All disclosures of interests extend to those of the lawyer, members of his or her family, his or her current employer, partners or business associates.
(E) After accepting appointment and while serving as a neutral, a lawyer shall not enter into any financial, business, professional, family or social relationship or acquire any financial or personal interest which is likely to affect impartiality or which might reasonably create the appearance of partiality or bias, without disclosure and consent of all parties.
(2) Conduct all proceedings in an impartial and evenhanded manner, treating all parties with fairness and respect, and act at all times without bias or prejudice. If at any time the lawyer is unable to conduct the process in an impartial manner, the lawyer shall withdraw, unless prohibited from doing so by applicable law.
(A) A lawyer serving in a third party neutral capacity should not allow other matters to interfere with the lawyer's impartiality.
(B) A lawyer serving in a third party neutral capacity should conduct all proceedings in a manner that promotes the integrity and impartiality of the ADR process.
(C) When serving in an adjudicative capacity, the lawyer shall decide all matters fairly, with impartiality, exercising independent judgment and without any improper outside influence.
Comment (to be added).
Rule 4.5. 4 Conflicts of Interest
(1) Disqualification of Individual Third Party Neutrals
(A) Without disclosure and consent by all the parties, a lawyer who is serving as a third party neutral shall not, during the course of an ADR proceeding, seek to establish any financial, business, representational, or personal relationship with or acquire an interest in, any party, entity or counsel who is involved in the matter in which the lawyer is participating as a neutral.
(B) Without disclosure and consent by all parties, a lawyer who is currently serving or has served as a third party neutral shall not undertake additional neutral service involving any party, entity or counsel involved in prior or concurrent ADR.
(C) Without disclosure and consent by all the parties, a lawyer who has served as a third party neutral shall not subsequently represent any party to the ADR proceeding (in which the third party neutral served as neutral) in the same or a substantially related matter.
(D) Where the circumstances might reasonably create the appearance that the neutral had been influenced in the ADR process by the anticipation or expectation of a subsequent relationship or interest, a lawyer who has served as a third party neutral shall not subsequently represent a party to the ADR proceeding for a period of one year or other reasonable period of time under the circumstances.
(2) Imputation of Conflicts to Affiliated Lawyers and Removing Imputation
(A) If a lawyer is disqualified by section (1), no lawyer who is affiliated with that lawyer may knowingly undertake or continue representation in any substantially related or unrelated matter unless the personally prohibited lawyer is adequately screened from any participation in the matter, is apportioned no fee from the matter and timely and adequate notice of the screening has been provided to all affected parties and tribunals, provided that no material confidential information about any of the parties to the ADR proceeding has been communicated by the personally prohibited lawyer to the affiliated lawyer or that lawyer's firm.
(B) (Alternative) Unless all affected parties consent after disclosure, in any matter where a lawyer would be disqualified under section 1, the restrictions imposed therein also restrict all other lawyers who are affiliated with that lawyer under Rule 1. 10.
(3) A lawyer selected as a partisan arbitrator of a party in a multi-member arbitration panel is not prohibited from subsequently representing that party, nor are any affiliated lawyers.
(4) If a lawyer serves as a neutral at the request of a court, public agency or other group for a de minimis period and pro bono publico, the firm with which the lawyer is associated is not subject to imputation under 4.5.4(2).
Comment (to be added).
Rule 4.5. 5 Fees
(1) Before or within a reasonable time after being retained as a third party neutral, a lawyer should communicate to the parties, in writing, the basis or rate and allocation of the fee for service, unless the third party neutral is serving in a no-fee or pro bono capacity.
(2) A third party neutral who withdraws from a case should return any unearned fee to the parties.
(3) A third party neutral who charges a fee contingent on the settlement or other specific resolution of the matter should explain to the parties that such an arrangement gives the third party neutral a direct financial interest in settlement that may conflict with the parties' possible interest in terminating the proceedings without reaching settlement. The third party neutral should consider whether such a fee arrangement creates an appearance or actuality of partiality, inconsistent with the requirements of Rule 4.5.3.
Comment (to be added).
Rule 4.5. 6. Fairness and Integrity of the Process
(1) The lawyer serving as third party neutral should make reasonable efforts to determine that the ADR proceedings utilized are explained to the parties and their counsel, and that the parties knowingly consent to the process being used (unless applicable law or contract requires use of a particular process).
(2) The third party neutral should not engage in any process or procedure not consented to by the parties (unless required by applicable law or contract).
(3) The third party neutral should use all reasonable efforts to conduct the process with fairness for all parties. The third party neutral should be especially diligent that parties who are not represented have adequate opportunities to be heard and involved in any ADR proceedings.
(4) The third party neutral should make reasonable efforts to prevent misconduct that would invalidate any settlement. The third party neutral should also make reasonable efforts to determine that the parties have reached agreement of their own volition and knowingly consent to any settlement.
Comment (to be added).