Editor's Note:
State Bar Ethics Opinions cite the applicable California Rules of Professional Conduct in effect at the time of the writing of the opinion. Please refer to the California Rules of Professional Conduct Cross Reference Chart for a table indicating the corresponding current operative rule. There, you can also link to the text of the current rule.
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May an attorney who is currently representing a client on other legal matters serve as the arbitrator designated by that client in a contractual tripartite (hereinafter "partisan") arbitration?
An attorney who represents the client in other legal matters may accept that client's designation in a contractual partisan arbitration. However, because the attorney who acts in such a dual role is still bound by the professional standards of an attorney, the attorney should take care to discuss with the client any potential problems which may result from acting in both roles prior to accepting such a designation.
Rules 4-101 and 5-102 of the Rules of Professional Conduct of the State Bar of California.
Business and Professions Code sections 6067, 6068, subdivision (e).
A law firm has represented client since 1970 on matters other than that now in tripartite arbitration.1 The client requests that a senior partner in the firm participate as client's designated arbitrator in contractual partisan arbitration. (See Code Civ. Proc., 1282, 1282.2.) May the attorney ethically accept the designation of party-designated arbitrator?
The law of California provides for several arbitration models, including judicial arbitration (see Code Civ. Proc., 1141.10 et seq.), contractual arbitration (Code Civ. Proc., 1280 et seq.) and mandatory fee arbitration (Bus. & Prof. Code, 6200 et seq.).
There is no rule of professional conduct or legislative enactment which expressly prohibits an attorney from acting as an arbitrator. Indeed, some arbitration models provide for attorney arbitrators. (See Code Civ. Proc., 1141.18 and Bus. & Prof. Code, 6200, subd. (c).)
The existence of an attorney-client relationship creates in the attorney many duties which must be performed on behalf of the client. Of primary importance are the duties of: 1) undivided fidelity and loyalty (Bus. & Prof. Code, 6067 and rules 4-101 and 5-102 of the Rules of Professional Conduct of the State Bar of California); 2) competent representation (rule 6-101 of the Rules of Professional Conduct of the State Bar of California and Bus. & Prof. Code, 6067); and 3) protection of client confidence and secrets (Bus. & Prof. Code 6068, subd. (e)).
In whatever other capacity the attorney may be acting on behalf of the client, the role of an attorney demands adherence to all the rules governing attorney conduct. (See Libarian v. State Bar (1944) 25 Cal.2d 314 [153 P.2d 739] and State Bar of California Formal Opinion No. 1982-69.) Therefore, an attorney acting as an arbitrator on behalf of a client must comply with his/her obligations as an attorney even while assuming the role of an arbitrator.
To avoid jeopardizing the results of the arbitration, an attorney who accepts the designation as a partisan arbitrator should insure that the pre-existing attorney-client relationship is disclosed to all parties at the outset of the proceedings.
In Graham v. Scissor-Tail, Inc. (1981) 28 Cal.3d 807, 824, the court relied upon specific provisions of the California Arbitration Act which, in the court's opinion, allow for "complete contractual autonomy in the choice of an arbitrator.'' (See also, Code Civ. Proc., 1281.6, 1282.) The Graham court also approved the result reached in Arrieta v. Paine, Webber, Jackson & Curtis, Inc. (1976) 59 Cal.3d 222 [and other cases cited in Graham, supra, at pages 822-823] holding that "potential unfairness from the non-neutral nature of an arbitrator is not a ground for vacation of the arbitration award."
In fact, California courts have consistently applied the rule that the existence of an attorney-client relationship between a "partisan" arbitrator and a disputant is not, of itself, a basis for disqualification of the arbitrator-designate unless the arbitration agreement otherwise provides.
"Nothing in the Arbitration Act prohibits parties to a contract of arbitration from selecting an arbitrator who, by reason of relationship to a party or similar factor, can be expected to adopt something other than a neutral stance in determining disputes." (Dinong v. Superior Court (1981) 120 Cal.App. 3d 300, 303 [174 Cal. Rptr. 590].)
Accordingly, if the arbitration contract creates in the disputants an unqualified right to nominate an arbitrator, a past or continuing attorney-client relationship between an arbitrator-designate and a party will not be grounds for disqualification. (See Hines v. Anchor Motor Freight (1976) 424 U.S. 544, 571; Johnston v. Security Ins. Co. (1970) 6 Cal.App.3d 839 [86 Cal.Rptr. 133]; Obispo Bay Properties, Inc. v. Pacific Gas & Electric Co. (1972) 28 Cal.App.3d 556 [104 Cal.Rptr. 733]; Good v. Kaiser Foundation Hospital (1984) 152 Cal.App.3d 819; Tipton v. Systron Donner Corp. (1979) 99 Cal.App.3d 501, 505 [160 Cal. Rptr. 303]; and Code Civ. Proc., 1282, 1286.2.) In Graham, the court expressly stated its unwillingness to prohibit the selection of an "interested" arbitrator by application of a per se rule. The court reasoned as follows:
"... we do not intend to limit the power of contracting parties to designate arbitrators who, with the knowledge of the parties, may have an interest in the dispute or who sustain some relationship to a party which would otherwise disqualify the arbitrator from serving."
Thus, the role of a party designated arbitrator in partisan tripartite arbitration is vastly different from that of a judge, whose constitutional mandate is one of fairness and impartiality.
There appears to be no inherent inconsistency between the role of attorney and the role of party designated arbitrator. Rule 5-102(B) of the Rules of Professional Conduct, which proscribes the representation of conflicting interests without the written consent of all parties concerned, is inapplicable to this situation. The attorney's role requires, and the arbitrator's role permits, advocacy of the client's interests.
However, counsel contemplating assuming both roles should keep in mind that, while so acting, the attorney is still bound by professional standards. Prior to accepting the role of arbitrator, the attorney should discuss with the client the potential difficulties which may arise by virtue of his or her dual role, in order to avoid misunderstandings or problems once the role of arbitrator has been accepted. For example, it may be necessary for the attorney to be an adverse witness in a collateral proceeding challenging the arbitration award.3
An attorney who represents the client in other legal matters may accept that client's designation as arbitrator in a contractual partisan arbitration. However, because the attorney who acts in such a dual role is still bound by the professional standards of an attorney, the attorney should take care to discuss with the client any potential problems which may result from acting in both roles prior to accepting such a designation.
This opinion is issued by the Standing Committee on Professional Responsibility and Conduct of The State Bar of California. It is advisory only. It is not binding upon the courts, The State Bar of California, its Board of Governors, any persons or tribunals charged with regulatory responsibilities, or any member of the State Bar.
1 The Committee does not opine on situations in which the law firm represented the client in the specific matter prior to arbitration or presently is counsel for the client in the arbitration.
2 Typically, partisan tripartite arbitration poses two party-designated arbitrators tempered by a "neutral" umpire.
3 See rule 4-101 of the Rules of Professional Conduct.
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