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                                         136 N.J.L.J. 1298
                                        April 4, 1994

                                        3 N.J.L. 650
                                        April 4, 1994



Appointed by the New Jersey Supreme Court


Opinion 676 - Advisory Committee on Professional Ethics

Opinion 18 - Committee on Attorney Advertising

Alternative Dispute Resolution (Modifies Opinion 657)

    This opinion arises from the Committee on Attorney Advertising's consideration of a grievance concerning the advertisements of five attorneys who are are engaging in alternative dispute resolution (hereinafter "ADR") as arbitrators or mediators. The grievance alleges that these attorneys are in violation of Opinion 657, 1 N.J.L. 129 (February 17, 1992), 130 N.J.L.J. 656 (February 24, 1992), in that they are practicing law and engaging in ADR-related activities in the same location, jointly advertising or marketing the two, and making no attempt to avoid any other demonstration of a relationship between them.
    After careful consideration of the grievance, the advertisements which appeared in an "Alternative Dispute Resolution Directory" in the New Jersey Law Journal on May 17, 1993, and Opinion 657, the Committee raised the issue of whether alternative dispute resolution is ancillary to or part and parcel of the practice of law. Needless to say, the answer to this question would affect not only the Committee's disposition of the grievance, but also the conduct of an ever-growing segment of the Bar in this State. Consequently, the Committee enlisted the assistance of not only the respondents, but also other attorneys and entities with an interest in this matter. Given the number and nature of the responses to its request for assistance, the Committee concluded that it would be better to treat the grievance as an inquiry and issue an advisory opinion. Since the opinion would require interpretation of Opinion 657 and possibly affect its scope, the Committee also enlisted the assistance of the Advisory Committee on Professional Ethics which joins in its issuance.
    Alternative Dispute Resolution and Complimentary Dispute Resolution have apparently swept the country. Given the congestion and resultant backlogs of the courts, and the expense of the more traditional adversarial process, state and federal courts have embraced ADR and CDR as providing faster and less expensive resolution of disputes.
    In New Jersey, our Supreme Court has amended the Rules Governing the Courts of the State of New Jersey to include R. 1:40 - "Complimentary Dispute Resolution Programs."See footnote 1 1 In adopting this rule, which became effective September 1, 1992, the Court implemented the Report of the Supreme Court Committee on Complimentary Dispute Resolution, 130 N.J.L.J. 578, 1 N.J.L. 170 (1992), expressing the following purpose and goals:
    Complimentary Dispute Resolution Programs are an integral part of the Superior Court and Municipal Courts. They are intended to enhance the quality and performance of the judicial process. Lawyers should become familiar with available CDR programs and inform their clients of them. R. 1:40-1.

Among other things, the rule requires screening of all custody and visitation matters for referral to mediation, R. 1:40-5; allows for mediation of small claims and, in the discretion of the Assignment Judge, landlord-tenant disputes, R. 1:40-6; and calls for mandatory mediation of certain municipal court matters, R. 1:40-7. Of particular relevance to this opinion is R. 1:40-9 which, subject to the approval of the Assignment Judge, permits referral of matters to non-court administered dispute resolution programs (ADR).
    The emergence of ADR has presented attorneys with new and varied ways in which to serve their clients. No longer are attorneys limited to the traditional role of advocate in civil litigation. They may now represent their clients in ADR proceedings, assist their clients in establishing dispute resolution programs and negotiate contracts requiring ADR. Not surprisingly, they are in ever increasing numbers serving as arbitrators or mediators in ADR programs.

    Many lawyers are "natural" arbitrators. Arbitration, which in many cases closely resembles litigation, usually takes place in an adversarial setting, with the parties represented by counsel and the arbitrator(s) rendering a final and binding adjudication. Attorneys, accustomed as they are to appearing before judges, presenting evidence and engaging in oral and written advocacy in an adjudicative forum, come to the arbitrator's task enthusiastically or, as one commentator described it, "like the proverbial duck taking to water." Unquestionably, their educational training and experience make them well-suited if not uniquely qualified to serve as arbitrators.
    Similarly, with training and experience beyond that necessary for and obtained through traditional lawyering, many attorneys are able to provide excellent mediation services. Unlike arbitration, which in many cases is contractually agreed upon before a dispute arises, mediation usually arises after the fact and is a voluntary process. In mediation, the parties in dispute, with or without their attorneys, and without prejudice to their rights to proceed with arbitration or litigation if the matter does not settle, meet with a neutral third party in a good-faith effort to achieve a far more economical, prompt and mutually advantageous resolution of all or part of their dispute. Given their experience weighing the merits of a case and exploring the prospects for settlement, attorneys possess qualifications that lend themselves to service as mediators.
    Attorneys are also conversant with and sensitive to the ethical standards attendant upon service as a mediator or arbitrator. For example, they may not serve as mediator or arbitrator in any case in which they have a conflict of interest. Nor may they participate in ADR as mediator or arbitrator and subsequently represent either of the parties should the mediation not result in a settlement. R. 1:40-4(b). See also Opinion 521, 112 N.J.L.J. 394 (1983) (attorney may not participate in private matrimonial mediation service and subsequently represent either spouse in divorce action).
    Third party neutrals are also under an obligation not to disclose any confidential information obtained during mediation unless they reasonably believe it is necessary to prevent a participant from committing a criminal or illegal act likely to result in death or serious bodily harm. R. 1:40-4(b). See Canon 5D(7), Code of Judicial Conduct (information acquired by a judge in a judicial capacity should not be used or disclosed by the judge in financial dealings or for any other purpose not related to judicial duties). Cf. RPC 1.6(b)(1) (a lawyer shall reveal to the proper authorities confidential information relating to representation of a client as soon as and to the extent the lawyer reasonably believes necessary to prevent the client from committing a criminal, illegal or fraudulent act the lawyer reasonably believes is likely to result in death or substantial bodily harm or substantial injury to the financial interest or property of another).
    Unlike the situation described in Opinion 657, supra, 1 N.J.L. 129, 130 N.J.L.J. 656, respondents and most of the other commentators do not differentiate between their ADR activities and their legal practices. In their advertising, they hold themselves out as lawyers who, in addition to traditional civil and/or criminal trial work, also provide ADR services, including arbitration and mediation, both as counsel and third party neutrals. None can recall a client ever having expressed confusion or surprise over their provision of ADR services as part and parcel of their law practices. To the contrary, many of their clients retained them precisely because of their familiarity with and willingness to engage in alternative dispute resolution when practicable.
    Attorneys engaged in ADR activities consider themselves professionals in dispute resolution. They report that their activities, be they negotiating, advocating in mediation, arbitration, or litigation settings, or, when no conflicts of interest arise, serving as third party neutrals, have been of great benefit to their client community. Their experience in ADR has also provided them with a theoretical as well as practical perspective they might not otherwise have gained and has influenced their "traditional" adversarial practice, just as their litigation practice has informed and strengthened their ADR practice.
    It is therefore apparent that ADR has become part and parcel of the practice of law and constitutes a tool of equal rank with litigation to achieve, in the proper case, prompt and cost effective dispute resolution. When a lawyer discusses the potential of ADR with a client, participates as an advocate in mediation or arbitration, or serves as a third party neutral, he or she is acting as a lawyer and is not engaging in a separate business. In fact, without exception, the commentators' professional liability insurance policies include their activities as arbitrators, mediators and third party neutrals among the covered conduct.
    This is not to say that only lawyers appropriately may provide third party neutral services. There are many trained and experienced lay arbitrators acting under the aegis of the American Arbitration Association and other recognized organizations. In fact, with certain expressed exceptions, no special occupational status or degree is required to be a mediator or receive mediation training in the CDR programs administered by the Court. R. 1:40-10, Guideline 1.1. Clearly, non-lawyers may provide ADR/CDR services as long as they do not hold themselves out as lawyers and do not engage in any activities, such as the rendering of legal advice, that might constitute the unauthorized practice of law.
    However, the fact that non-lawyers may and do serve as third party neutrals does not mean that attorneys engaged in ADR are rendering non-legal services to their clients. Therefore, unlike ancillary business activities such as the medical-legal consulting service described in Opinion 657, supra, 1 N.J.L. 129, 130 N.J.L.J. 656, ADR services may be rendered in the same location as and jointly marketed or advertised with an attorney's legal practice.
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Footnote: 1 1The statutory base for ADR in New Jersey is comprehensive with the New Jersey Alternative Procedure for Dispute Resolution Act, N.J.S.A. 2A:23A-1 et seq., and the New Jersey Arbitration Act, N.J.S.A. 2A:24-1 et seq.

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