Can a lawyer serve as a party-appointed arbitrator when one of that lawyer's law partners represents a party to the arbitration?

Plain-English summary

A contract for the sale of a business between Client A and Client B contained an arbitration clause under which each party would select an arbitrator and those two would select a third. When a dispute arose, Attorney X demanded arbitration for Client A and selected Attorney O, who had no association with Attorney X's firm. Attorney Y, for Client B, selected Attorney P, a partner in Attorney Y's own law firm. The inquiry asked whether Attorney P could serve as an arbitrator.

The opinion concluded that he could not. To avoid even the appearance of impropriety, a lawyer should never undertake to serve as an arbitrator in a case in which his or her partner represents one of the parties to the arbitration, citing Canon IX.

Currency note

This opinion was issued in 1993, before the North Carolina State Bar's adoption of the 2003 revisions to the Rules of Professional Conduct, and it rests on the "appearance of impropriety" standard of the former Canon IX, a standard the later rules did not carry forward in that form. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Can a lawyer act as arbitrator when a partner represents one of the parties?

A: No. The opinion held that a lawyer should never serve as an arbitrator in a case in which his or her partner represents one of the parties, to avoid even the appearance of impropriety.

Q: Does it matter that the arbitrator was party-appointed under the contract's selection clause?

A: The opinion treated the partner relationship as disqualifying regardless of the party-appointment mechanism; Attorney P, a partner in the selecting attorney's firm, could not serve.

Background and rules framework

The opinion applied Canon IX of the former Canons of Ethics, which directed lawyers to avoid even the appearance of impropriety. The analysis turns on the partner relationship between the proposed arbitrator and counsel for one of the parties.

Citations and references

Other authority:

• Canon IX (former Canons of Ethics; avoiding the appearance of impropriety)

See also

• NC Ethics Op. RPC 144: conflict in joint representation
• NC Ethics Op. RPC 137: estate representation and adversity to a former client

Source

• Landing page: https://www.ncbar.gov/for-lawyers/ethics-and-governing-rules/ethics-opinions/opinions/rpc-138/

Original opinion text

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

Editor's Note: This opinion was originally published as RPC 138 (Revised).

Inquiry:

Client A entered into a contract for the sale of his business with Client B. The contract of sale contained an arbitration clause wherein it provided that should a dispute arise between A and B regarding any matter to be performed by A and B under the contract, that A should elect an arbitrator and B should elect an arbitrator and the two arbitrators should elect a third. Subsequent to the transfer and sale of the business, a genuine dispute arose between A and B, and Attorney X (on behalf of Client A) demanded arbitration and selected as an arbitrator Attorney O, who is not a member of Attorney X's law firm nor associated with him in any manner. In response to the demand for arbitration, Attorney Y (for Client B) served notice on Attorney X that they selected Attorney P as their arbitrator. Attorney P is a partner in Attorney Y's law firm.

May Attorney P serve as an arbitrator?

Opinion:

No. In order to avoid even the appearance of impropriety, a lawyer should never undertake to serve as an arbitrator in a case in which his or her partner represents one of the parties to the arbitration. Canon IX.