Can a North Carolina lawyer who mediated a dispute then draft a business contract for the two unrepresented parties who settled in the mediation?

Plain-English summary

Two business proprietors reach agreement in a mediation conducted by a lawyer-mediator, in a matter not in litigation, and neither party has separate counsel. The question is whether the lawyer-mediator may draft the business contract for both of them. The opinion answers no, treating the proposed drafting as joint representation of the two parties and a non-consentable conflict.

The opinion works through two rules. Rule 1.12(a) would allow a lawyer who served as a mediator to later represent a party in the matter if all parties give informed consent confirmed in writing. But Rule 1.7(a) makes joint representation of both parties to a single agreement a concurrent conflict even with consent, and the opinion concludes the Rule 1.7(b) conditions for proceeding cannot be met here. A disinterested lawyer would not be able to conclude that each party's interests can be fully represented, and one or both parties could benefit from independent advice about whether the deal meets their objectives, advice the lawyer-mediator cannot give while representing both sides.

The opinion identifies the specific risks: joint representation could compromise the integrity of the mediation, because advising one client candidly might mean telling that client the mediated deal was a "bad deal"; and if the contract proves one-sided or becomes the subject of later litigation, the parties would need new lawyers and the lawyer-mediator's role could be scrutinized. The opinion adds that the lawyer-mediator is also governed by the Supreme Court's Standards of Professional Conduct for Mediators, which may independently bar representing a party. It does permit the lawyer-mediator to help the parties prepare a written summary of their mutually acceptable understanding, as long as the mediator does not represent that the summary is a legally enforceable document.

In practice

Under the North Carolina rules as they stood at the time of the opinion, conduct in which a lawyer-mediator drafts a single business contract for both pro se parties is prohibited. Per the opinion, the obstacle is Rule 1.7: joint representation of the two parties to one agreement is a concurrent conflict, and on these facts it is one to which the parties cannot validly consent, because a disinterested lawyer could not conclude that each party's interests would be adequately protected.

Per the opinion, the lawyer-mediator may still assist the parties in preparing a written summary that reflects their mutually acceptable understanding of the issues resolved, provided the mediator does not represent to the parties that the summary is a legally enforceable document. The opinion also notes the lawyer-mediator remains subject to the Supreme Court's Standards of Professional Conduct for Mediators.

Common questions

Q: Can a lawyer-mediator draft the contract for both parties after a successful mediation?

A: No. The opinion concludes that drafting a business contract jointly for the two pro se parties is a non-consentable concurrent conflict of interest, so the lawyer-mediator should not draft it.

Q: Doesn't Rule 1.12 let a mediator represent a party with everyone's consent?

A: Rule 1.12(a) allows a former mediator to represent a party in the matter if all parties give informed consent confirmed in writing, but the opinion concludes that here Rule 1.7 independently bars the representation because joint representation of both parties cannot satisfy the conditions of Rule 1.7(b).

Q: Why can't the parties just consent to the conflict?

A: The opinion reasons that a disinterested lawyer could not advise both parties to consent, because each party might benefit from independent advice on whether the deal serves their objectives, and the lawyer cannot provide that while representing both sides; advising one client candidly could mean telling that client the mediated agreement was a bad deal.

Q: Is there anything the lawyer-mediator can prepare for the parties?

A: Yes. The opinion states the lawyer-mediator may help prepare a written summary of the parties' mutually acceptable understanding of the issues resolved, so long as the mediator does not represent that the summary is a legally enforceable document.

Background and rules framework

The opinion applies North Carolina Rule 1.12 (former judge, arbitrator, mediator, or other third-party neutral, the analogue of Model Rule 1.12) and Rule 1.7 (concurrent conflicts of interest, the analogue of Model Rule 1.7). Rule 1.12(a) permits a former neutral to represent a party with the informed written consent of all parties; Rule 1.7(a) defines a concurrent conflict, and Rule 1.7(b) sets the conditions under which a lawyer may proceed despite one. The opinion relies on Comments [15] and [29] to Rule 1.7 on when multiple representation is improper.

The opinion also references the North Carolina Supreme Court's Standards of Professional Conduct for Mediators as a separate source of constraint on the lawyer-mediator.

Citations and references

Rules of Professional Conduct:

• MR 1.12 / NC Rule 1.12(a) (former third-party neutral; representation with consent of all parties)
• MR 1.7 / NC Rule 1.7 (concurrent conflict of interest; conditions for proceeding)

Other authorities:

• North Carolina Supreme Court, Standards of Professional Conduct for Mediators.

See also

• DC Ethics Op. 276: Mediator Conflict Checks
• DC Ethics Op. 217: Joint Representation and Intermediary
• FL Bar Ethics Op. 94-6: Law Firm Mediation Department

Source

• Landing page: https://www.ncbar.gov/for-lawyers/ethics-and-governing-rules/ethics-opinions/opinions/2012-formal-ethics-opinion-2/

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Inquiry:

May a mediator, who is also a lawyer, draft a business contract for two business proprietors at the conclusion of a successful mediation concerning a matter that is not currently the subject of litigation when neither party is represented by individual counsel?

Opinion:

No. It is a non-consentable conflict of interest.

Rule 1.12(a) allows a lawyer to represent a party in connection with a matter in which the lawyer participated personally and substantially as a mediator if all parties to the proceeding give informed consent, confirmed in writing. However, under Rule 1.7(a), joint representation of two parties to an agreement presents a concurrent conflict of interest even if the lawyer-mediator has their consent.

Although Rule 1.7(b) provides for circumstances under which a lawyer may represent joint clients, an analysis of the risks associated with the proposed joint representation leads to the conclusion that such representation is not appropriate. Therefore, the lawyer-mediator should not draft the business contract.

When contemplating joint representation, a lawyer must consider whether the interests of the parties will be adequately protected if they are permitted to give their informed consent to the representation, and whether an independent lawyer would advise the parties to consent to the conflict of interest. Representation is prohibited if the lawyer cannot reasonably conclude that he will be able to provide competent and diligent representation to all clients. See Rule 1.7, cmt. [15]. As stated in comment [29] to Rule 1.7, the representation of multiple clients “is improper when it is unlikely that impartiality can be maintained.”

The complex issues that must be addressed when crafting a comprehensive business contract may result in adverse interests. Even if the parties agree on the broad outlines of a business contract at the conclusion of the mediation, a disinterested lawyer will not be able to conclude that the interests of each party can be completely represented. With respect to the terms on which there appear to be agreement, one or both parties may benefit from a disinterested lawyer’s advice as to whether the agreement meets with the party’s legitimate objectives, and what other procedural alternatives may be available to achieve more favorable terms. In the instant inquiry, neither party is represented by individual counsel.

Joint representation could lead to questions about the integrity of the mediation process. The lawyer’s duty to provide each client with necessary and appropriate advice might require informing one party that they made a “bad deal” during the mediation process. It is untenable for a lawyer to counsel a client that an agreement the lawyer-mediator has assisted him to reach in mediation may not be in that client’s best interests. If the ultimate agreement turns out to be one-sided and unfavorable to one party, the lawyer-mediator’s role could be closely scrutinized.

Finally there is the risk that the proposed joint representation will fail or that the business contract will be the subject of future litigation between the two parties. In either event, the parties will have to retain new lawyers for the subsequent litigation.

For the reasons cited above, the lawyer-mediator in the facts presented may not jointly represent both parties by drafting their new business contract.

Regardless of the above analysis, the lawyer-mediator will be governed by the Supreme Court’s Standards of Professional Conduct for Mediators, which may also prohibit the lawyer’s representation of one or more of the parties following the mediation.

This opinion does not prohibit a lawyer-mediator from assisting the parties in preparing a written summary reflecting the parties’ mutually acceptable understanding of the issues resolved in the mediation, as long as the lawyer-mediator does not represent to the pro se parties that the summary is being prepared as a legally enforceable document.