Lawyer as third-party neutral (Rule 2.4)

PROPOSED RULES OF PROFESSIONAL CONDUCT

The Board of Trustees of the State Bar of California has approved, and submitted to the California Supreme Court, a complete set of new and amended proposed Rules of Professional Conduct, which will become effective if and when approved by the court.

Included in the proposed rules is Rule 2.4, “Lawyer as Third-Party Neutral.” Proposed new Rule 2.4 defines a third-party neutral as an individual who assists two or more persons, who are not clients of the individual, to resolve a dispute between them. Third-party neutrals commonly act as arbitrators or mediators. While non-lawyers can act as third-party neutrals, arbitrators and mediators are often lawyers. Proposed Rule 2.4 only applies to lawyers acting as third-party neutrals.

Proposed Rule 2.4 obligates a lawyer serving as a third-party neutral to inform unrepresented parties that the lawyer is not representing them. Whenever such a third-party neutral knows or reasonably should know that a party does not understand the lawyer’s role in the matter, proposed Rule 2.4 further obligates the lawyer to explain the difference between his or her role as a third-party neutral and a lawyer’s role as one who represents a client.

There is no current California Rule of Professional Conduct that corresponds to proposed new Rule 2.4. However, our current Rule 1-710, a version of which has been submitted to the California Supreme Court as proposed Rule 2.4.1, concerns lawyers serving as temporary judges, referees and court-appointed arbitrators.

Proposed Rule 2.4 is based on the American Bar Association’s Model Rule 2.4. In fact, the wording of the proposed rule is identical (although the comments to the proposed rule differ from those in the Model Rule). Thirty-three other U.S. jurisdictions have adopted Model Rule 2.4 verbatim, and 13 jurisdictions have adopted a rule substantially similar to Model Rule 2.4. Only five jurisdictions (including California) have not adopted a rule derived from Model Rule 2.4.

The California State Bar, in submitting proposed Rule 2.4, noted the importance of adopting a new disciplinary standard that imposes duties on lawyers when acting in a “quasi-judicial” capacity to enhance public protection in an area of lawyer conduct that has expanded in the past three decades. Proposed new Rule 2.4 would protect the public by requiring disclosures that help to assure that a lawyer’s role as a third-party neutral is properly understood when it is intended to be distinct from the typical and common understood function of a lawyer as a client’s advocate.

The California Supreme Court has already addressed the inherent power to impose attorney discipline for conduct occurring in the performance of judicial functions. See, for example, In re Scott, 52 Cal. 3d 968 (1991) (“Under our inherent power we may discipline an attorney for conduct either in or out of his profession which shows him to be unfit to practice” [internal quotes and citations removed]). Proposed new Rule 2.4 would make clear in the Rules of Professional Conduct that lawyers can be disciplined when acting in the capacity as a third-party neutral.

The proposed comments to Rule 2.4 recognize that a lawyer who serves as a third-party neutral may subsequently be asked to serve as a lawyer representing a client in the same matter. In order to do so, such a lawyer and the lawyer’s law firm would need to navigate conflict of interest and other procedural rules, including proposed Rule 1.12 (applicable to former judges, arbitrators, mediators and other third-party neutrals).

The proposed comments also make clear that a lawyer serving as a third-party neutral may be subject to court rules or other law that apply either to third-party neutrals generally or to lawyers serving as third-party neutrals. The comments promote compliance with such other related regulatory standards by including references to both the Judicial Council Standards for Mediators in Court Connected Mediation Programs and the Judicial Council Ethics Standards for Neutral Arbitrators in Contractual Arbitration. Interested parties may also want to consult Rules 10.780 to 10.783 and Rules 3.850 to 3.872 of the California Rules of Court.

Rule 2.4 Lawyer as Third-Party Neutral

(a) A lawyer serves as a third-party neutral when the lawyer assists two or more persons* who are not clients of the lawyer to reach a resolution of a dispute, or other matter, that has arisen between them. Service as a third-party neutral may include service as an arbitrator, a mediator or in such other capacity as will enable the lawyer to assist the parties to resolve the matter.

(b) A lawyer serving as a third-party neutral shall inform unrepresented parties that the lawyer is not representing them. When the lawyer knows* or reasonably should know* that a party does not understand the lawyer’s role in the matter, the lawyer shall explain the difference between the lawyer’s role as a third-party neutral and a lawyer’s role as one who represents a client.

Comment

[1] In serving as a third-party neutral, the lawyer may be subject to court rules or other law that apply either to third-party neutrals generally or to lawyers serving as third-party neutrals. Lawyer neutrals may also be subject to various codes of ethics, such as the Judicial Council Standards for Mediators in Court Connected Mediation Programs or the Judicial Council Ethics Standards for Neutral Arbitrators in Contractual Arbitration.

[2] A lawyer who serves as a third-party neutral subsequently may be asked to serve as a lawyer representing a client in the same matter. The conflicts of interest that arise for both the individual lawyer and the lawyer’s law firm* are addressed in rule 1.12.

[3] This rule is not intended to apply to temporary judges, referees or court-appointed arbitrators. (See rule 2.4.1.)