Opinion 2003-8
(August 2003)

The inquirer's firm represents a plaintiff in an uninsured motorist claim, and that claim is to be heard by a traditional panel of three arbitrators. As is usual practice in this area, the plaintiff will select one arbitrator, the defendant will select one arbitrator, and those two arbitrators will select a third "neutral" arbitrator. The inquirer asks whether it would be ethical for plaintiff's counsel to appoint as "plaintiff's arbitrator" an attorney who is "of-counsel" to the inquirer's firm, but is not an employee or a partner thereof. The inquirer notes that the insurance contract takes no position on this question.

The inquirer asks about the ethical conduct of the trial attorney who appoints the arbitrator and not the conduct of the arbitrator himself.

This response presumes (based on common knowledge of the practice) that the arbitrator that inquirer is appointing is intended to be partisan, in favor of plaintiff's case. This is significant because, while no Rule of Professional Conduct directly addresses this inquiry, some guidance is provided by Rule 1.12 (d), which deals with former arbitrators and their subsequent relations with clients. That rule provides as follows:

An arbitrator selected as a partisan of a party in a multi-member arbitration panel is not prohibited from subsequently representing that party (italics added.)

Since neither this rule nor any other rule makes a blanket prohibition against arbitrator - client relationships, the Committee believes it is helpful to look at the concerns that would be raised in such a relationship, for guidance in answering this inquiry. It would appear that Rule 1.12 permits a post-arbitration relationship between an arbitrator and a client because the fact that the arbitration is over before the lawyer- client relationship begins minimizes the likelihood of a lawyer's independent judgment being compromised. Applying this rationale to the present situation, if the appointed arbitrator is "of counsel", but will be screened from any communication about the arbitration and will not receive any compensation out of the recovery from such arbitration, and assuming all necessary disclosures are made and consents received (see below), the Committee believes that satisfactory measures should be in place to promote the continued legal independence of that lawyer when sitting as an arbitrator.

It is important to note that a significant minority of the Committee disagreed with this conclusion and believes that the appointment is so fraught with potential conflicts and divisions of loyalty, that it simply cannot be undertaken in a manner that is consistent with the intent of the Rules. One particular concern is that, once the necessary disclosures are made to the other parties and panel members (see discussion below), the very fact that the arbitrator and plaintiff's counsel have an affiliation may cause the other two arbitrators to take his views of the case less seriously. That is, the other arbitrators may assume that his assessment of, or advocacy for, the plaintiff's case is influenced by the financial benefit his firm stands to gain, even if it is made clear that he, personally, will receive no pecuniary benefit.

Additionally, there is some support, in other jurisdictions, for the notion that this appointment is per se prohibited. Though it is a close call, the Committee majority cannot find a reason for such an outright prohibition under existing Pennsylvania authority.

As mentioned above, it is crucial that the appropriate disclosures be made, not only to the client under Rule 1.7, but also to the remaining members of the arbitration panel under Rule 3.3, and to opposing counsel under Rule 3.4. Furthermore, we believe that these disclosures should be made before the partisan arbitrator participates in the selection of the neutral arbitrator, and that the disclosure should be made to the proposed neutral arbitrator before that person agrees to sit on the panel. Consents obtained from the client under Rule 1.7 must be knowing, intelligent and voluntary.

The Philadelphia Bar Association's Professional Guidance Committee provides, upon request, advice for lawyers facing or anticipating facing ethical dilemmas. Advice is based on the consideration of the facts of the particular inquirer's situation and the Rules of Professional Conduct as promulgated by the Supreme Court of Pennsylvania. The Committee's opinions are advisory only and are based upon the facts set forth. The opinions are not binding upon the Disciplinary Board of the Supreme Court of Pennsylvania or any other Court. They carry only such weight as an appropriate reviewing authority may choose to give it.