Non-Lawyer representation in arbitration?

Although the right to legal representation in arbitration is well-settled, the use of non-lawyers to represent disputants in the arbitral process is not.

In Florida, non-lawyers representing parties in securities arbitrations are deemed to be engaged in the unauthorized practice of law. See Florida Bar Advisory Opinion on Non-lawyer Representation in Securities Arbitration, 696 So.2d 1178, 22 Fla.L.Weekly S388 (date). Securities arbitration may present a special case. The Florida court specifically noting that the opinion did not address the “propriety of non-lawyer representation in any other form of arbitration.” Id. Apparently, the drafters of the revised Uniform Arbitration Act thought so also. The drafters considered adding “or any other person” after “attorney” in the section providing for representation in arbitration; however, they expressed particular concern over the possibility that “incompetent and unscrupulous individuals, especially in securities arbitration,” would hold themselves out in arbitration. ULA ARB §16, Comment 2 (2000) (emphasis added). Nevertheless, the drafters purposely avoided prohibiting non-lawyer representation by noting that §16 “is not intended to preclude, where authorized by law, representation in an arbitration proceeding by individuals who are not licensed to practice law.” Id.
State law governs the unauthorized practice of law. Because the “practice of law” is defined very broadly in Georgia, representation in arbitration could easily fall into the definition. See OCGA §15-19-50; see also discussion §15:6 infra. Nevertheless, neither federal nor state arbitration law empowers a court to intervene in an arbitration when a non-lawyer is representing a party, nor is non-lawyer representation is a ground to vacate an award. In addition, there is no authority to support discipline for lawyers serving as arbitrators or representatives of other parties in such arbitrations. Arguably, the “freedom to contract” rationale that underlies so much of the pro-arbitration trend in case law, particularly at the federal level, supports the parties’ choice of representation. After all, they need not select lawyers as arbitrators. In some instances, federal law may actually preempt state limitations on representation. See, e.g., 36 USCA §220529(b)(4) (allowing parties in certain sports arbitrations to be represented by an attorney “or by any other authorized representative”(emphasis added)).
Finally, judicial deference to arbitration custom would favor non-lawyer representation in many traditional arbitration settings in which legal issues are secondary, e.g., factual and technical disputes in construction or commodities association trading, or where arbitration is part of a religious or cultural identity, e.g., Bet Din arbitration in Jewish communities. EM/DY
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11th Cir. lacks jurisdiction to hear lower court's refusal to enjoin arbitration

In ConArt, Inc. v. Hellmuth, Slip Copy 2007 WL 2994001 (11th Cir. Oct. 16, 2007), the 11th Circuit found it was without jurisdiction to hear an appeal of an Alabama federal district court’s order refusing to enjoin arbitration. Under the FAA, an appeal may not be taken from an interlocutory order refusing to enjoin arbitration. 9 U.S.C. 16(b)(4). The Court rejected petitioner’s argument that 28 U.S.C. s 1292(a)(1), which authorizes interlocutory appeals generally of orders "refusing ... injunctions," trumps the FAA. Such an argument has “too much throw weight” according to the Court. Furthermore, the lower court had retained jurisdiction over the issues and, therefore, its order was not a final order subject to review. Pointing out that the order refusing to enjoin arbitration could be reviewed after final judgment on the award was entered following the conclusion of arbitration, the 11th Circuit accepted the possibility that the parties may have to adjudicate twice if the issues are subsequently found to be non-arbitrable. SH Read more!

Should Georgia Adopt the Uniform Mediation Act?

A recent decision from the New York appellate division in Hauzinger v. Hauzinger illustrates the complex issues and implications involved in the adoption or non-adoption of the Uniform Mediation Act (UMA). In Hauzinger, the appellate division refused to enforce a confidentiality agreement that the parties entered into as part of the mediation process. The court also refused to grant a motion, made by the mediator, to quash the subpoena which required the mediator to appear for a deposition and for his records in connection with the mediation. The court noted that the UMA had yet to be adopted by the New York legislature and declined to use the case before them as an opportunity to do so.
The confidentiality of mediation proceedings is considered important to attain the level of candor that some feel is essential for the efficacy of the process. Different ways to achieve protection include privilege, evidentiary exclusion rules, and non-disclosure agreements. The drafters of the UMA adopted a privilege approach to confidentiality that can be invoked to protect mediation communications. While there are some exceptions, supporters believe the UMA will foster more candor and respect for the mediation process. Critics, however, find the privilege approach lacking and believe a broader confidentiality provision should have been utilized. Also controversial is the use of ethical disclosure requirements similar to those involved in arbitration with loss of confidentiality as the penalty for violation.

Georgia has not passed the UMA. Instead, the confidentiality of court-connected mediation is governed by the Georgia Supreme Court Dispute Resolution Rules. Under the rules there is a broader confidentiality provision for court-connected mediation with a few exceptions in the case of threats or abuse. Were Georgia to consider supplementing current laws with the UMA it would be important to take stock of exactly what protections are currently afforded, locate the gaps, and use the UMA to create broader protection. One huge gap involves private mediations which are protected only by the evidentiary exclusion rules that protect the content of settlement discussions. Something to think about. SH
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Recent Ga. App. decision misses the mark

Consider this scenario, one party says there is an arbitration agreement, and the other party says there isn’t. Wouldn’t it be prudent to resolve this question of arbitrability before the time and expense of the arbitration? In hindsight, the parties in Panhandle Fire Protection v. Batson Cook Co., Slip Copy, 2007 WL 3203072 (Ga. App. Nov. 1, 2007), probably wish they had. This case raises several interesting questions.

Batson Cook (BCC), a corporation headquartered in Georgia, subcontracted a Florida company, Panhandle (PFP), to install sprinklers in an Alabama project. BCC believed the operative version of the subcontract was governed by Georgia law and contained an arbitration clause providing for arbitration under AAA rules in Georgia. In contrast, PFP believed that the operative version of the subcontract provided that all disputes be handled in a Florida court. After the relationship soured and BCC filed a demand for arbitration with the AAA, PFP notified BCC and the AAA that it wasn’t bound to arbitrate. It is important to note here that apparently BCC did not seek to compel arbitration nor did PFP file a petition in any court to stay the arbitration. The arbitrator was appointed and ruled PFP was bound to arbitrate in Georgia. The hearing was held and an award issued in favor of BCC. PFP did not participate in any way other than to give notice that it believed it wasn’t bound to arbitrate. The Troup County Superior Court confirmed the award and awarded attorneys’ fees under OCGA 9-15-14. The Georgia Court of Appeals vacated the trial court’s order and remanded with instructions for the lower court to determine whether or not there was an enforceable arbitration agreement before it could act on the confirmation of the award.

Whoa! Isn’t this a bit like trying to put the horse back in the barn, the cat back in the bag, etc. Shouldn’t it be incumbent on one of the parties to have tried to resolve the question of arbitrability before getting this far down the pipeline? On one hand, I’d argue that BCC satisfied any responsibility it had by obtaining an arbitral ruling that PFP was bound to arbitrate. After all, under BCC’s version of the situation, AAA Rules applied and R-7 empowers an arbitrator to “rule on his or her own jurisdiction including any objections with respect to the existence…of the arbitration agreement.” Although both federal and state arbitration law (the later of which the Court said would apply) allow a party to seek an order compelling arbitration, BCC should not be required to do so to have a valid arbitration. Nevertheless, on appeal, R-7 isn’t mentioned. Are we to assume that R-7 is always trumped by the “clear and unmistakable” standard of First Options? That is to say, if the parties contest whether or not they entered into an arbitration agreement, then is it impossible to have clear and unmistakable agreement to submit this particular gateway issue to the arbitrator?

On the other hand, I’d argue that PFP had a responsibility to seek an order to stay the arbitration, clearly available to it under OCGA § 9-9-6(b). Moreover, the GAC expressly provides that a party served with a demand cannot argue to vacate the award on the basis that there isn’t a valid arbitral agreement. OCGA § 9-9-13(c)(2). By not seeking a stay, PFP waived its right subsequently seek to vacate the award on the grounds that a valid arbitration agreement doesn’t exist. When we drafted the GAC, we created this bar to encourage early resolution of the gateway issue of arbitrability and to discourage challenges to arbitrability after one or both parties had incurred the costs of the process. Moreover, the law should insure that parties not have to adjudicate the same thing twice, once in the arbitral forum and again in the courts.

If after its independent examination, the Troup County court concludes that there isn’t a valid arbitration agreement, then BCC will have to retry the matter in a Florida court after having gone through the considerable expense of already adjudicating the matter and arguing the appeal and subsequent lower court hearing on remand. Ouch! If the Troup County court finds the arbitral agreement to be valid, it can simply confirm the award, in which case, the costs to BCC will be “only” the appellate proceedings and the lower court hearing, neither of which is insubstantial. If I were BCC, I’d seek attorneys’ fees again on the basis of PFP’s failure to seek a stay of arbitration. But that’s just my opinion.

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Reviving the blog and other news-- ODR gets temporary reprieve

I apologize for the paucity in posts since late Spring. It takes more discipline or change of habit than anticipated. Nevertheless, I'm trying to pick up the pace with the help of my student assistants, Elizabeth Marum and Shannon Hodder. Elizabeth is graduating in December, and Shannon will be taking over. I could also use help from the readers of this blog. If you have an issue, news, comment, etc. regarding ADR in Georgia, please sent it to me, and I'll post it.

Here's some big news: The Georgia Office of Dispute Resolution received a grant from the Georgia Legal Foundation to cover the current year's massive budget shortfall caused by some odd decision making in the General Assembly. GODR's Director, Shinji Morokuma, will have his work cut out for him during the next session to get ODR's budget reinstated. If you have friends in high places, please contact Shinji to coordinate efforts. Read more!

ADR Job available in Dekalb Co.

DEKALB COUNTY C0URTS ADR TRUST FUND

Dispute Resolution Center Director

Applications accepted: October 5-26, 2007

This is a merit exempt position funded by the ADR Trust Fund.

Under the general direction of the ADR Trust Fund Board , the Director will administer and manage all aspects of the DeKalb County Dispute Resolution program. The Director is expected to function under a high degree of accountability in ensuring the accuracy and follow through of the program requirements. Maintains overall responsibility for the program's administrative and operational functions, and program adherence to and compliance with established Federal, State and local standards and guidelines governing alternative dispute resolution. Manages assigned staff including establishing workloads, evaluating performance, resolving staff conflicts and administering employee discipline. Evaluates, recommends and implements policies and procedures for the operation of the dispute resolution center. Recruits, trains and coordinates a network of mediators, arbitrators and case evaluators to provide services. Develops forms, brochures and reports for the dissemination of ADR program information.

[The aforementioned duties are normal for this position. These are not to be construed as exclusive or all-inclusive. Other duties may be required and assigned.]

Minimum Requirements: Bachelor's degree in Public Administration, Criminal Justice, Social or Human Services, Court Management or a related field, five years of work experience in a court system or legal field, knowledge and experience with the Georgia state ADR rules and guidelines; three or more years of supervisory experience preferred. An equivalent combination of education and experience may be considered in determining eligibility for this position.

Work Schedule: Employee may be required to work regularly on various shifts as deemed necessary by the ADR Trust Fund Board.

Annual Salary Range: $55,000 - $75,000 (commensurate with education and experience)

Benefits: 10 paid holidays; 15 days vacation; 13 days sick leave; medical group insurance options; pension plan; deferred compensation plan.

Physical Ability: Successful completion of a job related physical examination by a County Examining Physician is required. DeKalb County does not discriminate on the basis of disability.

Submit application and resume detailing experience and skills related to this position to the Superior Court Administrator's Office, Room 405, DeKalb County Courthouse, Decatur, Georgia 30030, or to cwmccumb@co.dekalb.ga.us by close of business October 26, 2007. Applications are available online at http://www.co.dekalb.ga.us/ or at the DeKalb County Human Resources Department.

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Georgia ODR Budget Eviscerated

For those of you who might not follow the Georgia Office of Dispute Resolution, the final state budget passed by the General Assembly cut $250,000 off ODR's budget -- a 60 percent reduction, leaving a total of $144,643 to sustain the office from July 1, 2007, to June 30, 2008. The cut was a random redirection of funds in which the state judiciary took a big hit overall. Earlier in the process, ODR's budget was completely eliminated. A last minute effort by ADR proponents to educate legislators about the important role ODR plays in our legal system was to no avail. Shinji Morokuma, who recently took over the directorship of ODR, remains calm as always in the face of this setback to the Supreme Court's ADR initiative. He is exploring options which he'll present to the Commission on Dispute Resolution at its May 22nd meeting in Athens. Read more!

Collaborative Lawyers hit ethics roadblock in Colorado

The most recent ABA e-report contains an article on the advisory non-binding decision of the Colorado Bar's ethics committee that an important element of collaborative lawyering is per se unethical. In "collaborative lawyering," the lawyers and parties commit to using cooperative instead of adversarial means of resolving their dispute. Confined mostly still to divorce and family disputes, collaborative lawyering takes advantage of the possible cost of additional lawyers to motivate settlement. The lawyers and the parties agree that the lawyers will withdraw if a party decides to litigate. This is spelled out at the onset of the process in a contract known as the “four-way agreement.” However, the ethics committee said the four-way agreement creates an insurmountable conflict of interest among lawyers and clients. The agreement violates Colorado's Professional Rule of Conduct 1.7(b), barring a lawyer from representing a client if the representation is “materially limited by the lawyer’s responsibilities to ... a third person.” Ethics Opinion 115, Ethical Considerations in the Collaborative and Coopera­tive Law Contexts (Feb. 24). Nor can the client consent to the conflict because the conflict impairs the lawyer’s independent judgment about the need for litigation. In contrast, footnote 11 of the opinion opins that a two-way agreement between the parties is ok because the lawyers are not entering into an agreement with each other and the opposing parties; however, such agreements would not commit the lawyers to withdrawal and thereby arguably gut the process.

Although other states have raised eyebrows at the four-way agreement, only Colorado has gone so far as to determine it unethical. It will be interesting to see if this raises any eyebrows in Georgia which has a small but thriving collaborative lawyering practice. Moreover, the Na­tional Conference of Com­mis­sioners on Uniform State Laws has formed a drafting committee for collaborative law which will tackle this problem in drafting model statutory language. Read more!