3 N.J.L. 2459
December 19, 1994
138 N.J.L.J. 1558
December 12, 1994
Out-of-State Attorney Representing
Party Before Panel of the American
Arbitration Association in New Jersey
The Committee on the Unauthorized Practice of Law has received an inquiry whether an out-of-state attorney may appear before a panel of the American Arbitration Association (hereinafter "AAA") in New Jersey to present evidence and argue questions of substantive law on behalf of a client with a claim against a former employer for breach of an employment contract. It is the Committee's opinion that an out-of-state attorney may represent a party in an arbitration proceeding conducted under the auspices of the AAA in New Jersey.
Rule 22 of the AAA Commercial Arbitration Rules provides that "[a]ny party may be represented by counsel or other authorized representative." Although Rule 22 appears to impart broad discretion to a party regarding the party's choice of representation in a commercial arbitration, the New Jersey legislature has not addressed this issue, in either the New Jersey Alternative Procedure for Dispute Resolution Act, N.J.S.A. 2A:23A- 1, et seq., or the New Jersey Arbitration Act, N.J.S.A. 2A:24-1, et seq. Moreover, there is no New Jersey case law determining whether representation of a party by an out-of-state attorney in an arbitration proceeding constitutes the unauthorized practice of law.See footnote 1 1
However, New York courts have determined that an out-of-state attorney's representation of a party in a commercial arbitration proceeding does not constitute the unauthorized practice of law. In Williamson v. John D. Quinn Constr. Corp., 537 F. Supp. 613 (S.D.N.Y. 1982), a New Jersey law firm sought compensation for legal services rendered in an arbitration proceeding in New York. The defendant claimed that the plaintiff law firm was foreclosed from recovery, as the attorney who performed the bulk of the services in the arbitration proceeding was not admitted to practice in New York. The district court began its analysis by recognizing the differences between arbitration and judicial proceedings, specifically noting that an arbitration proceeding is of "an informal nature." Id. at 616. The court explained that "[a]n arbitration tribunal is not a court of record; its rules of evidence and procedures differ from those of courts of record; its fact finding process is not equivalent to judicial fact finding; it has no provision for the admission pro hac vice of local or out-of- state attorneys." Id.
The court also found "no case precisely on point ... under New York or New Jersey law." Id. Therefore, in reaching its conclusion that an out-of-state attorney's representation of a party in a commercial arbitration proceeding does not constitute the unauthorized practice of law, the court relied upon a 1975 report by the Committee on Professional Ethics of the Association of the Bar of the City of New York. Although the report focused on labor arbitration, the court adopted the committee's ultimate conclusion that "representation of a party in an arbitration proceeding by a non-lawyer or a lawyer from another jurisdiction is not the unauthorized practice of law." Id. (citing Committee Report, Labor Arbitration and the Unauthorized Practice of Law, The Record of the Association of the Bar of the City of New York, Vol. 30, No. 5/6 (1975)). See also Siegel v. Bridas Sociedad Anonima Petrolera Industrial Y Commercial, 1991 WL 167979 (S.D.N.Y.).
The Virginia Committee on Legal Ethics and the Unauthorized Practice of Law also determined, although without providing its reasoning, that "[i]t is not the unauthorized practice of law for a non-Virginia-licensed attorney to present evidence and argue matters of law before an arbitration panel of the American Arbitration Association in Virginia...." Va. UPL Op. No. 92 (May 2, 1986).
In August 1991, the Committee on Professional Ethics of the Association of the Bar of the City of New York, revisited this issue, which it had originally addressed in its 1975 report. The committee concluded that "as a matter of New York law and professional ethics, parties to international or interstate arbitration proceedings conducted in New York may be represented in such arbitration proceedings by persons of their own choosing, including lawyers not admitted to practice in New York." Committee Report, "Recommendation and Report on the Right of Non-New York Lawyers to Represent Parties in International and Interstate Arbitrations Conducted in New York," The Record of the Association of the Bar of the City of New York, Vol. 49, No. 1 (1991). The Committee found that "this position is consistent with that of the American Bar Association." Id. The Committee also determined that "[t]he most prominent organizations in the field of arbitration expressly recognize the parties' right to be represented by whomever they choose." Id. See generally Penna, "Issues Regarding Representation," N.Y.L.J. (September 1, 1994) ("As for the question of who may represent a party in arbitration, existing precedent and commentary indicates that arbitration is not considered the unauthorized practice of law.").
Accordingly, this Committee finds that an out-of-state attorney's representation of a party in an arbitration proceeding conducted under the auspices of the AAA in New Jersey does not constitute the unauthorized practice of law.