Can a New Jersey attorney run a commercial divorce-mediation center under a trade name and have the center collect and keep the mediation fees?

Plain-English summary

Opinion 711 responds to an inquiry about a commercial "Center for Divorce Mediation, P.C.," run by a New Jersey attorney from an out-of-state office under a trade name. Affiliated attorneys, accountants, and therapists keep their own practices and provide the Center with open appointment times; client coordinators match clients with the professionals, an attorney guides each case through a non-adversarial divorce, and the clients are told to take the resulting draft settlement to separate litigation attorneys for review.

The Committee concludes the affiliated attorneys are practicing law. They accept clients in a form of limited representation under RPC 1.2(c) for the sole purpose of serving as a third-party neutral under RPC 2.4, so all of their conduct is governed by the Rules of Professional Conduct. The Center's website repeatedly describes furnishing legal advice, so the Center is offering the services of attorneys to provide legal advice. The amounts the client pays for the lawyer's mediation services are legal fees, and because the Center fixes and collects them, RPC 5.4(a) bars that sharing of legal fees with a non-lawyer.

The Committee sets conditions for a proper limited-scope mediation. The attorney must fully disclose that the attorney cannot and will not act as the client's individual lawyer or provide advice adverse to the other party, and that engaging separate counsel may be in the client's best interest. The safeguards of ACPE Opinion 699 (collaborative law) apply: the lawyer may proceed only if the lawyer has no reason to believe the process will likely fail and the lawyer discloses the risks and alternatives, obtaining both clients' informed consent under RPC 1.2(c) and consistent with RPC 1.7(a). The opinion finds none of these safeguards present here.

The Committee adds two further conclusions: requiring affiliated attorneys to refer clients for therapy and accounting only to Center-approved professionals violates the duty of independent professional judgment in referrals under RPC 5.4(c) (citing Opinion 694); the "Center for Divorce Mediation, P.C." trade name, used by a lawyer and involving other lawyers, is not permissible under RPC 7.5; and any partnership with non-attorneys in an enterprise that is practicing law would violate RPC 5.4(b).

In practice

The opinion holds that, under the New Jersey rules as they stood at the time, an attorney-operated commercial divorce-mediation center structured as described is not permissible. Per the opinion, attorneys serving as mediators through the center are engaged in limited-scope practice (RPC 1.2(c), 2.4); the mediation charges are legal fees, so the center's collecting and fixing them is impermissible fee-sharing with a non-lawyer (RPC 5.4(a)); steering required referrals to center-approved professionals violates the independent-judgment duty (RPC 5.4(c)); the trade name is impermissible (RPC 7.5); and any partnership with non-lawyers practicing law violates RPC 5.4(b). The opinion conditions any proper limited mediation representation on the Opinion 699 disclosures and the clients' informed consent under RPC 1.2(c) and 1.7(a). Because this opinion predates the most recent five years, verify the current Rules of Professional Conduct before relying on the specific requirements it describes.

Common questions

Q: Is an attorney who only mediates a divorce still "practicing law"?

A: Yes. The opinion concludes the attorney is providing limited-scope representation under RPC 1.2(c) as a third-party neutral under RPC 2.4, so all of the Rules of Professional Conduct apply.

Q: Can a mediation center collect the lawyer's mediation fees?

A: No, as structured. The opinion concludes the charges for the lawyer's mediation services are legal fees, and a non-lawyer center fixing and collecting them is improper fee-sharing under RPC 5.4(a).

Q: What must an attorney-mediator disclose to the parties?

A: Per the opinion, the attorney must disclose that the attorney cannot and will not act as either party's individual lawyer or give advice adverse to the other party, that separate counsel may be in the client's best interest, and the Opinion 699 risks and alternatives, obtaining informed consent under RPC 1.2(c) and 1.7(a).

Q: Can the center require referrals only to its approved accountants and therapists?

A: No. The opinion concludes that requiring referrals only to center-approved professionals violates the lawyer's duty of independent professional judgment in making referrals under RPC 5.4(c).

Q: Is "Center for Divorce Mediation, P.C." a permissible name?

A: No. The opinion concludes that the trade name, used by a lawyer and involving other affiliated lawyers, is not permissible under RPC 7.5.

Background and rules framework

The opinion applies RPC 1.2(c) (limited scope of representation) and RPC 2.4 (lawyer serving as a third-party neutral), the New Jersey analogs to Model Rules 1.2 and 2.4, together with RPC 5.4(a)-(c) (no fee-sharing with non-lawyers, no non-lawyer partnerships practicing law, and independent professional judgment in referrals), RPC 1.7(a) (conflicts), and RPC 7.5 (firm names and trade names). It incorporates the collaborative-law safeguards of ACPE Opinion 699 and the referral-judgment principle of ACPE Opinion 694.

Citations and references

Rules of Professional Conduct:

• MR 1.2 / NJ RPC 1.2(c) (limited scope of representation)
• MR 2.4 / NJ RPC 2.4 (lawyer serving as a third-party neutral)
• MR 5.4 / NJ RPC 5.4(a), (b), (c) (fee-sharing, non-lawyer partnerships, independent judgment in referrals)
• MR 1.7 / NJ RPC 1.7(a) (concurrent conflicts of interest)
• MR 7.5 / NJ RPC 7.5 (firm names and trade names)

Other opinions cited:

• ACPE Opinion 699, 182 N.J.L.J. 1055 (Dec. 12, 2005): collaborative-law disclosures and safeguards
• ACPE Opinion 694, 174 N.J.L.J. 460 (Nov. 3, 2003): independent judgment in referrals to other professionals

See also

• NJ ACPE Op. 699: Collaborative Law
• ME Ethics Op. 71: Law Firm Offering Divorce Mediation Services
• IL Ethics Op. 92-05: Lawyer in a Divorce-Mediation Business with a Nonlawyer
• ME Ethics Op. 149: Lawyer and Nonlawyer in a Mediation Partnership

Source

• Full text (Justia mirror): https://law.justia.com/cases/new-jersey/advisory-committee-on-professional-ethics/2008/acp711-1.html
• Issuing authority: New Jersey Supreme Court Advisory Committee on Professional Ethics, via the NJ Courts Supreme Court Committees page

Original opinion text

Reproduced from a full-text mirror of the official opinion for research purposes. Spaces dropped by the mirror's text extraction have been restored; the linked official source controls.

189 N.J.L.J. 253

July 16, 2007

16 N.J.L. 1401

July 23, 2007

Advisory Committee on Professional Ethics

Appointed by the Supreme Court of New Jersey

OPINION 711

Advisory Committee on Professional Ethics

Divorce Mediation Centers Operated By New Jersey Attorneys

An inquirer questions whether a commercial center for divorce mediation (hereafter Center ) run by a New Jersey attorney from an out-of-state office under a trade name, ___ Center for Divorce Mediation, P.C., is operating consistent with the New Jersey Rules of Professional Conduct.

The attorney responsible for the Center describes its operations as follows:

An attorney, who is responsible for guiding our clients through a non-adversarial divorce process, handles each case. As in the litigated divorce process, clients are referred to accountants and therapists to deal with ancillary, non-legal issues. The only difference is that our referral list of professionals includes only those who agree to act as neutral mediators.

All of the attorneys, accountants and therapists affiliated with the Center have their own individual practices. They provide the Center with a calendar of open appointments. Based on the attorney's recommendation, our client coordinators will match clients with the professionals whose services are needed and whose schedules are compatible. The meetings are held in the same office so that clients do not have the inconvenience of finding several different locations.

When a tentative agreement is reached on all outstanding issues, the attorney provides the clients with a draft of a settlement agreement, pro se divorce proceedings and a copy of all supporting documentation. The clients are directed to take these documents to separate litigation attorneys for review.

The Committee reaches the following conclusions:

The attorneys affiliated with and taking mediation cases on referral from the Center are practicing law. In effect, they are accepting clients in a form of limited representation, consistent with RPC 1.2(c), for the sole purpose of serving as a third-party neutral, as contemplated in RPC 2.4.

2. All conduct of attorneys practicing law is governed by the Rules of Professional Conduct. The Center's website is replete with references to the furnishing of legal advice (e.g., [Center] attorneys help you make the decisions and navigate the necessary legal procedures ; your attorney-mediator helps you understand your legal rights and obligations ; your rights under law are explained and you are encouraged to make an agreement that follows the law ). As such, the Center is plainly offering the services of attorneys to provide legal advice.

The amounts paid by the client for a lawyer's mediation services are legal fees. They are fixed by and paid to the Center. RPC 5.4(a) prevents sharing of legal fees with a non-lawyer (here the Center), and this situation is not within the exceptions listed in the Rule.

It is possible that a mediated settlement may not be in a client's best interest: imbalance of power, a controlling relationship, lack of sophistication or other factors may make a nominally voluntary agreement severely disadvantageous to one party.

For an attorney to limit representation to neutral mediation services in a way that is proper under RPC 1.2(c), the attorney must fully disclose that the attorney cannot and will not at any time act as the client's individual lawyer, nor provide legal advice or representation adverse to the other party to the dispute, and that it may be in the client's best interest to engage a separate attorney who represents only that client. Furthermore, all of the safeguards contained in ACPE Opinion 699, 182 N.J.L.J. 1055 (December 12, 2005), 14 N.J.L. 2474 (December 12, 2005), are applicable to this disclosure. As noted in Opinion 699, a lawyer may participate in the collaborative law process only if: (i) based on her knowledge and experience, after being fully informed about the existing relationship between the parties, the lawyer has no reason to believe that there is any significant possibility that the process will fail; and (ii) the lawyer discloses to the clients the potential risks and consequences of the failure of the collaborative law process, including a description of the alternative procedures available with all of their attendant risks and consequences, thereafter receiving informed consent of both clients. None of these safeguards are apparent here. For such mediation representation to be deemed reasonable under RPC 1.2(c) and consistent with the requirements of RPC 1.7(a), the clients must give informed consent after such disclosure is made.

The Center's requirement that an affiliated attorney make other referrals, for therapy and accounting services, only to professionals approved by the Center, violates the duty of independent judgment concerning referrals to other professionals solely in furtherance of the client's best interests, free from any economic or other incentives that might impinge on the lawyer's judgment. See RPC 5.4(c); ACPE Opinion 694, 174 N.J.L.J. 460 (November 3, 2003), 12 N.J.L. 2134 (November 3, 2003).

_____ Center for Divorce Mediation, P.C., run by a lawyer and involving other affiliated lawyers, is not a permissible trade name under RPC 7.5.

It is unclear whether the Center involves a partnership with any non-attorneys. Since it is practicing law, any such partnership would be a violation of RPC 5.4(b). The Center appears to be a for-profit enterprise, not the kind of not-for-profit entity for education of the public about the benefits of mediation that was examined and conditionally permitted in Opinion 699.