Mediation is Not the Unauthorized Practice of Law
Although the debate continues over whether certain aspects of mediation can constitute the practice of law, the recent adoption by the American Bar Association House of Delegates of revisions to the Model Rules of Professional Conduct, which included a special ethical rule on the role of a lawyer as neutral, brings the issue to a close, at least in my view. The basis of this new rule, and a resolution adopted by the ABA Section of Dispute Resolution, is that the practice of law must involve an attorney-client relationship or its equivalent. Because the parties in mediation to not have such a relationship with their mediator and do not rely upon the mediator to protect their interests, the mediator’s discussion of legal issues, and feedback about possible outcomes of the dispute, does not constitute the practice of law.
Those who have argued that mediation is the practice of law tend to single out “evaluative” mediators. So-called evaluative mediators assist the parties in assessing the strengths and weaknesses of their case, helping the parties to reach an acceptable resolution by a better understanding of their BATNA (Best Alternative to a Negotiated Agreement) more clearly—the probable results of the litigation and its attendant costs, delays, disruption, anxiety and so on. Because lawyers traditionally assist clients in this very same way, this view takes the position that a mediator’s evaluation of a party’s case and assessment of litigation outcomes constitute the practice of law.
As an aside, it must be emphasized that those who condemn evaluative mediation have a view of what occurs in the evaluative phase of a mediation that is certainly different than my practice and experience. Perhaps some mediators tell the parties what their case is worth and what the outcome will be. I would submit, however, that most successful evaluative mediators do not do this. First of all, mediation is certainly not black or white, and any successful mediator must bring a variety of skills to the process, including both facilitative and evaluative. And the evaluative portion of the process is ordinarily subtle, and much more sophisticated, than simply saying who is right and who is wrong.
Good evaluative mediators enable the parties to carefully analyze their positions, to understand the legal aspects of their problem fully, to consider how their dispute will play out before a judge or jury, and to look into the future to understand all possible outcomes of the dispute, including appeals. It is the feedback, analysis and impressions of the neutral that provide the parties new information about their problem that is so critical in causing them to examine the problem from another perspective, thereby enabling them to see the other side’s point more clearly, and thus moving toward a more common understanding of a fair settlement. Although some have criticized this approach to mediation, from my experience as a mediator of disputes in litigation, I am convinced that the parties and their attorneys are looking for precisely this type of feedback.
The view that so-called evaluative mediation is the practice of law has been expressed by the North Carolina Bar Association, and most strongly by the State Bar of Virginia in its Guidelines on Mediation and the Unauthorized Practice of Law (the “Guidelines”). Published in 1999, the Guidelines prohibit mediators from giving “legal advice.” According to the Guidelines:
[A]t a minimum, a mediator provides legal advice whenever, in the meditation context, he or she applies legal principles . . . that (1) in effect predicts a specific resolution of a legal issue or (2) directs, counsels, urges, or recommends a course of action by a disputant or disputants as a means of resolving a legal issue.
Although, in my opinion, the position advanced in Virginia is clearly incorrect, nevertheless it is a thoughtful one that warrants discussion. That is the purpose of this article.
The Guidelines are based on the rationale that an important aspect of a lawyer’s role in assisting a client is ability to apply law to specific facts and predict how a court might rule on a particular issue. This is certainly true. I submit, however, that in order for one to be engaged in the practice of law, one must have a “client” or, at a minimum, someone placing their trust, confidence and reliance on the provider of “legal” services to provide advice and assistance solely on their behalf. And, because the parties in mediation are not the “client” of the mediator, the type of evaluative function addressed by the Guidelines does not constitute the practice of law.
Those who advocate that evaluative aspects of mediation constitute the practice of law do not consider, in my opinion, the issue of reliance and the reasonable expectations of the parties in mediation. All of the various definitions of the practice of law have at their core the principle that the “client” or consumer of the purported legal services views the lawyer or other provider of legal services as their representative, placing their trust and confidence in, and reliance upon, that person to protect their personal interests. This is quite clear from the cases defining the practice of law and those holding that certain conduct constitutes the unauthorized practice of law. A review of these cases is the beginning point of our discussion.
The Practice of Law Defined
Surprisingly, courts have struggled with developing a clear definition of the “practice of law.” The difficulty in providing one comprehensive definition of the practice of law was articulated by the Arizona Supreme Court when it stated that “it is impossible to lay down an exhaustive definition of the ‘practice of law’ by attempting to enumerate every conceivable act performed by lawyers in the normal course of their work.” State Bar of Arizona v. Arizona Land Title & Trust Co. (“Arizona Land Title”). Typical activities that have been held by courts to constitute the practice of law include: representing another in court; holding oneself out as a lawyer; preparing, filing or signing documents in legal proceedings; threatening to file suit on behalf of clients; negotiating settlement of legal claims or plea agreements on behalf of a client; giving legal advice; taking depositions; recording deeds; and interviewing clients.
More specifically, courts have developed a number of “tests” to determine whether an activity constitutes the practice of law. One such test is to examine whether “professional judgment” is being used. This test considers whether the activity in question requires specialized legal training or skills not ordinarily possessed by the average person. In Oregon State Bar v. Smith, the court held that the practice of law involved the utilization of “professional judgment” in applying legal principles in the giving of assistance or advice to address an individual’s needs. Professional judgment also has been defined as the lawyer’s “educated ability to relate the general body and philosophy of law to a specific legal problem of a client.” Committee on Prof. Ethics & Conduct of Iowa State Bar Ass’n v. Baker.
Another test employed to determine if an activity falls within the practice of law is the “client reliance test,” which examines whether or not the client believes they are receiving legal services. Courts such as the Arizona Supreme Court have found that “[r]eliance by the client on advice or services rendered . . . is more pertinent in determining whether certain conduct is the purported or actual practice of law.” Arizona Land Title.
This test is illustrated by the Supreme Court of Florida’s decision in Florida Bar v. Brumbaugh. In that case, the respondent ran a secretarial service that prepared legal forms for individuals in various legal proceedings. Although she did not hold herself out as an attorney to the individuals for whom she provided this service, the preparation of the various forms itself was deemed the unauthorized practice of law. The rationale for this decision was that because the respondent advised individuals regarding which form to use, and because the individuals utilizing her services relied on her to select the appropriate forms needed in their legal proceedings, the activities were found to constitute the unauthorized practice of law.
The court reasoned that the “tendency of persons seeking legal assistance to place their trust in the individual purporting to have expertise in the area necessitates this Court’s regulation of such attorney-client relationships, so as to require that persons giving such advice have at least a minimal amount of legal training and experience.”
The importance of reliance in determining whether conduct constitutes the unauthorized practice of law is illustrated clearly in this case. The court explained:
Although Marilyn Brumbaugh never held herself out as an attorney, it is clear that her clients placed some reliance upon her to properly prepare the necessary legal forms for their dissolution proceedings.(emphasis added).
Similar to the client-reliance test is the attorney-client relationship test. This test assesses the activity being performed by evaluating whether the relationship in question is the equivalent of the attorney-client relationship. Under this test, the practice of law is implicated if a personal relationship is formed that is tantamount to that of attorney and client. State Bar of Mich. v. Cramer.
Another important factor courts consider in determining whether activity is the practice of law is if the activity affects important legal rights. Thus, preparing instruments and contracts by which legal rights are secured are also indicators of whether an activity is the practice of law. State Bar of N.M. v. Guardian Abstract & Title Co., Inc. For example, in Palmer v. Unauthorized Practice Comm. of the State Bar of Tex., the court found that the sale of will forms by untrained laymen fell within a statutory prohibition barring unlicensed individuals from practicing law particularly because “confidential communications regarding family relations are often necessary.”
Common to all of these tests is the underlying premise that the consumer or “client” has placed their trust and confidence in the provider of the “legal” service and is relying upon the provider of the legal service to protect their individual interests. In other words, there exists a relationship of trust and confidence between the two parties such that a reasonable person would believe that the provider of services was, in effect, functioning as that person’s attorney.
For example, in bar disciplinary matters, the Arizona Supreme Court has held that:
[W]here a person holds an objectively reasonable belief that a lawyer is acting as his attorney, relies on that belief and relationship, and the lawyer does not refute that belief, we will treat the relationship as one between attorney and client . . . .
In re Pappas. The Arizona Court of Appeals approached the question in a very different context but viewing the creation of the attorney-client relationship from the same perspective. For example, the court held that the existence of the attorney-client privilege “hinges upon a client’s belief that he is consulting a lawyer in that capacity and upon his manifested intention to seek professional legal advice.” G & S Inv. v. Belman. Do parties in mediation reasonably believe that the neutral mediator is providing each of them personal, legal advice. I submit the answer is no.
Evaluative Mediation is not the Practice of Law
There are a number of court rules and ethics opinions addressing specifically the question of whether a mediator or arbitrator is engaged in the practice of law. The vast majority of these opinions and rules confirm my opinion that parties in mediation do not rely upon the mediator to protect their individual interests. And, because parties know and understand that the mediator is neutral, it is not reasonable for parties believe that the mediator is functioning as the attorney for the party.
This premise is illustrated by the decision of the 10th Circuit Court of Appeals in Dietrich Corp. v. King Resources Co. Although the case is in a very different context, the reasoning of the court strongly supports the view I am asserting here. In that case, a law professor was employed by two law firms as a consultant on legal accounting issues. The law professor was not admitted to practice law in the jurisdiction, and a dispute later arose about his status when a fee application was submitted. Upon challenge that the professor engaged in the unauthorized practice of law, the court held that, although the professor provided services in the field of his legal expertise, his actions did not constitute the unauthorized practice of law because the “licensed attorneys alone remain[ed] responsible to clients.” The court observed that the parties’ own attorneys acted as a “filter” between the unlicensed person—the consultant—and lay client. So too, in mediation, do the parties’ own attorney act as “filter” between the mediator and their client.
More specifically, the view that I proffer has been expressly adopted by the District of Columbia Court of Appeals in promulgating its rule on the unauthorized practice of law within the District of Columbia. The practice of law is defined as the “provision of professional legal advice or services where there is a client relationship of trust or reliance.” Specifically addressing alternative dispute resolution, the Comments to the Rule state:
The Rule is not intended to cover the provision of mediation or alternative dispute resolution (“ADR”) services. This intent is expressed in the first sentence of the definition of the “practice of law” which requires the presence of two essential factors, the provision of legal advice or services and a client relationship of trust or reliance. ADR services are not given in circumstances where there is a client relationship of trust or reliance; and it is common practice for providers of ADR services explicitly to advise participants that they are not providing the services of legal counsel.
The conclusion found in the District of Columbia rule has been adopted in the majority of bar ethics opinions and court rules I have examined. See, e.g., Connecticut Bar Ass’n, Comm. on Prof. Ethics, Informal Opin. No. 97-12 (June 4, 1997) (“At all times in the process, the lawyer acts as mediator between the parties, not as an advocate for either one.”); Indiana Ethics Opinion No. 5 (1992) (“Thus, because the Supreme Court permits non-attorneys to act as mediators and because the nature of . . . mediation is substantially different from the practice of law, mediation service is not the practice of law.”); Rule 901(d), Rules of the Supreme Court of Kansas (“An attorney acting as a mediator is not the legal representative of the parties and there is no attorney-client relationship between the parties and the attorney-mediator.”); Kentucky Bar Ass’n Ethics Opinion 377 (1995) (“Mediation is not the practice of law . . . “); Maine Bar Rule 3.4(h)(2) (“The role of mediator does not create a lawyer-client relationship with any of the parties and does not constitute representation of any of them.”); State Bar of Michigan, Standing Committee on Professional and Judicial Ethics, Opinion No. RI-256 (April 8, 1996) (“By definition, a neutral arbitrator or mediator has no client with respect to the matter being arbitrated or mediated.”); Opinion No. 241 of the Mississippi Bar (Nov. 20, 1997(“At the present time mediation . . . services are not considered the practice of law per se.”): New York State Bar Ass’n, Comm. on Professional Ethics, Opinion 736 (Jan. 3, 2001) (“As we have recognized in the past, a lawyer who serves as a mediator to assist in the resolution of a possible dispute does not ‘represent’ either party as a client for purposes of the conflict-of-interest rules and other rules governing the lawyer-client relationship.”); Pennsylvania Bar Ass’n Comm. On Legal Ethics and Professional Responsibility, Informal Op. No. 96-167 (Dec. 30, 1996) ( mediation is not considered to be a “legal” service when provided by a nonlawyer): Utah State Bar Ethics Advisory Opinion Committee, Formal Op. 97-03 (April 25, 1997) (“ADR services are not considered by the Utah Legislature to be legal services or the practice of law.”); Washington State Bar Ass’n, Comm. to Define the Practice of Law, Final Report (July 1999), adopted by Washington State Bar Association Board of Governors, September 1999 (“[P]ersons acting in [the] capacity of [mediator, arbitrator, conciliator or facilitator] are not engaged in the practice of law.” ); South Carolina Bar Ethics Advisory Comm., Ethics Advisory Opinion No. 97-03 (March1997) (“ A lawyer serving in the role of an intermediary is not engaged in the practice of law while acting as the intermediary. Moreover, the ethical obligations of an arbitrator may be more nearly analogous to those of a judge, than of a member of the Bar.”); contra Iowa Supreme Court Board of Professional Ethics and Conduct, Opinion No. 96-30 (June 5, 1997) (“Alternate dispute resolution done by others than laywers has not been held to be the practice of law. . . . But when done by a lawyer it becomes the practice of law.”); New Jersey. Sup. Ct. Advisory Comm. Professional Ethics, Op. No. 676 (April 4, 1994) (holding that when a lawyer serves as a third party neutral, he or she “is acting as a lawyer”).
The recent revisions to the American Bar Association Model Rules of Professional Conduct (the “Model Rules”), adopted by the ABA House of Delegates on February 5, 2002, provides further support for the view that serving as a mediator or arbitrator does not constitute the practice of law. For the first time, the Model Rules acknowledge that a lawyer may serve a role different than in a representational capacity. Rule 2.4 provides that a lawyer may serve 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 the dispute or other matter that has arisen between them.” The Comments define a “third-party neutral” as a person such as a “mediator, arbitrator, conciliator or evaluator who assists the parties . . . in the resolution of a dispute or in the arrangement of a transaction.” Implicitly recognizing that this neutral role does not constitute the practice of law by creating an attorney-client relationship, Rule 2.4 states that the neutral “shall inform unrepresented parties that the lawyer is not representing them.”
The Rule places no such duty upon the neutral when the parties are represented. Presumably, the drafters believed that when parties are represented by their own counsel, there could be no confusion over the neutral’s role, and the parties could not reasonably believe that the neutral was serving as their attorney. The Comments to the Rule note that when the parties are unrepresented, however, it is conceivable that there could be confusion over the lawyer’s role, and thus the Comments instruct the lawyer, where appropriate, to inform the unrepresented parties of the “important differences between the lawyer’s role as a third-party neutral and a lawyer’s role as a client representative, including the inapplicability of the attorney-client privilege.” Indeed, tt should be obvious that a lawyer’s obligations to a client are fundamentally incompatible with the lawyer’s role as a neutral. In fact, as the Guidelines correctly recognize, if a lawyer established an attorney-client relationship with both parties in a mediation, the lawyer would be representing two parties in the same dispute, a clear violation of ER 1.7.
In another recent development, the ABA Section of Dispute Resolution adopted a resolution also declaring that the practice of mediation is not the practice of law. The resolution provides, in part:
Mediation is not the practice of law. Mediation is a process in which an impartial individual assists the parties in reaching a voluntary settlement. Such assistance does not constitute the practice of law. The parties to the mediation are not represented by the mediator.
Mediator’s discussion of legal issues. In disputes where the parties’ legal rights or obligations are at issue, the mediator’s discussions with the parties may involve legal issues. Such discussions do not create an attorney-client relationship, and do not constitute legal advice, whether or not the mediator is an attorney.
The rationale underlying the resolution is found in the Comments, which note that:
Essential to most of the common definitions of the practice of law is the existence of an attorney-client relationship. Because mediators do not establish an attorney-client relationship, they are not engaged in the practice of law when they provide mediation services.
Furthermore, the Comments focus on the critical point that parties in mediation do not expect the mediator to provide them specific legal advice for the protection of their personal, individual interests:
It is important that mediators who are competent to engage in discussion about the strengths and weaknesses of a party’s case be free to do so without running afoul of UPL statutes. Indeed, many parties, and their counsel, hire mediators precisely to obtain feedback about their case. Even though mediators who engage in these discussions do sometimes aid the parties by discussing possible outcomes of the dispute if a settlement is not reached and providing evaluative feedback about the parties’ positions, this conduct is not the practice of law because the parties have no reasonable basis for believing that the mediator will provide advice solely on behalf of any individual party. This is the important distinction between the mediator’s role and the role of an attorney. Parties expect their attorney to represent solely their interests and to provide advice and counsel only for them. On the other hand, a mediator is a neutral, with no duty of loyalty to the individual parties.
Perhaps the clearest example of this point is when a judge serves in a settlement capacity. The stereotypical view of a settlement judge is one who is engaged in a highly evaluative process. Is the judge conducting an evaluative settlement conference engaged in the practice of law? I don’t think so. Why not? Because on one in the room reasonably believes that the judge—a neutral—is acting on behalf of their individual, personal interests.
In conclusion, that when an individual provides mediation services, that individual is not engaged in the practice of law. The practice of law involves the creation of an attorney-client relationship to a similar relationship in which a party reasonably places their trust and confidence in another for assistance in meeting their legal needs. Mediators, evaluative or otherwise, do not provide such assistance.
Compare B. Meyerson, Lawyers who Mediate are not Practicing Law, 14 Alternatives to High Cost Litig. 74 (1996); C. Menkel-Meadow, Is Mediation the Practice of Law? 14 Alternatives to High Cost Litig. 57 (1996); see generally G. Glass and K. Jackson, The Unauthorized Practice of Law: The Internet, Alternative Dispute Resolution and Multidisciplinary Practices, 14 Geo. J. Legal Ethics 1195 (2001); M.Laflin, Preserving the Integrity of Mediation Through the Adoption of Ethical Rules for Lawyer-Mediators, 14 ND J. L. Ethics & Pub Pol’y 479 (2000); G. Sato, Comment, The Mediator-Lawyer: Implications for the Practice of Law and One Argument for Professional Responsibility Guidance—A Proposal for Some Ethical Considerations, 34 UCLA L. Rev. 507 (1986); D. Hoffman & N. Affolder, Mediation and UPL: Do mediators have a well-founded fear of prosecution?, Disp. Res. Mag. 20 (Winter 2000); A. Morrison, Is Divorce Mediation the Practice of Law? A Matter of Perspective, 75 Cal. L. Rev. 1093 (1987).
I don’t take credit for being the first to advance this view. See, e.g., S. Purnell, Comment, The Attorney as Mediator—Inherent Conflict of Interest? 32 U.C.L.A. Law Rev. 986 (1985); J. Cooley, Shifting Paradigms: The Unauthorized Practice of Law or the Authorized Practice of DR, ___ Disp. Res. J. ___, (2000).
E.g., K. Kovach & L. Love, “Evaluate Mediation is an Oxymoron, 14 Alt. High. Cost Litig. 31 (March 1996); L. Love, The Top Ten Reasons Why Mediators Should Not Evaluate, 24 Fla. St. U. Law Rev. 937 (1997).