Can a lawyer who is the sole shareholder of a company act as both its advocate and a necessary witness in a private arbitration?

Plain-English summary

A lawyer was the sole shareholder of an Ohio limited liability company formed for a one-time real estate purchase. The company faced binding arbitration arising from that purchase, and the lawyer wanted to represent it while also testifying as a necessary witness. The Board addressed whether the advocate-witness rule barred this.

The Board first concluded that Prof.Cond.R. 3.7(a), the advocate-witness rule, applies to private binding arbitrations even though the rule's text refers to serving as "an advocate at a trial." The Board relied on the comments, which use the broader term "tribunal," and on Prof.Cond.R. 1.0(o), which defines "tribunal" to include an arbitrator in a binding arbitration proceeding. The concern the rule addresses, the prejudice and confusion created when a lawyer both advocates and testifies, is present in arbitration as much as in a trial. The Board therefore held a lawyer ordinarily may not serve as both advocate and necessary witness in an arbitration, though whether to permit it rests in the arbitrator's sole discretion.

The Board then carved out the sole-shareholder situation. Ohio courts have held the advocate-witness rule does not apply to a lawyer representing himself or herself. Because the requesting lawyer was the sole shareholder of a closely held corporation, the Board found him essentially self-represented: the usual concerns, particularly conflicts between client and lawyer, and prejudice to the opposing party, were not present. The Board concluded the situation is more analogous to appearing pro se and the lawyer may proceed as both advocate and witness, subject to his other ethical obligations.

The opinion closes by flagging two other duties for a lawyer proceeding pro se: Prof.Cond.R. 3.4(e) restricts stating a personal opinion on the justness of a cause, a witness's credibility, or a party's culpability (though the lawyer may argue conclusions based on the lawyer's analysis of the evidence), and Prof.Cond.R. 4.2 still bars contacting an opposing party known to be represented, even when the lawyer is a party.

In practice

Under this opinion, the advocate-witness rule reaches private binding arbitrations, so a lawyer who is likely to be a necessary witness generally cannot also serve as advocate before the arbitrator. Per the opinion, the exception is a lawyer who is the sole shareholder of a closely held corporation, whom the Board treats like a self-represented party; that lawyer may act as both advocate and witness, subject to the arbitrator's discretion and to Prof.Cond.R. 3.4(e) and 4.2. The opinion notes that whether to permit a lawyer who will be a necessary witness to represent a party in arbitration is within the arbitrator's sole discretion.

Common questions

Q: Does the advocate-witness rule apply in arbitration, not just at trial?

A: The opinion concludes yes. Although Prof.Cond.R. 3.7(a) refers to serving as an advocate "at a trial," the Board read it together with the comments and the definition of "tribunal" in Prof.Cond.R. 1.0(o), which includes an arbitrator in a binding arbitration, and held the rule applies to private arbitrations.

Q: Can a lawyer who owns the company represent it and also testify in the arbitration?

A: Per the opinion, a lawyer who is the sole shareholder of a closely held corporation is treated like a pro se party and may serve as both advocate and witness, because the usual conflict and prejudice concerns are absent, subject to the arbitrator's discretion.

Q: Who decides whether the lawyer can do both roles?

A: The opinion states the decision whether to permit a lawyer to represent a party in an arbitration when the lawyer will also be a necessary witness is within the sole discretion of the arbitrator.

Background and rules framework

The opinion interprets Ohio Prof.Cond.R. 3.7 (lawyer as witness; Model Rule 3.7), reading it alongside the definition of "tribunal" in Prof.Cond.R. 1.0(o). It also applies Prof.Cond.R. 3.4(e) (fairness to opposing party and counsel; Model Rule 3.4) and Prof.Cond.R. 4.2 (communication with represented persons; Model Rule 4.2) to a lawyer proceeding pro se.

Citations and references

Rules of Professional Conduct:

• Ohio Prof.Cond.R. 3.7(a) and cmts. [1], [3] (Model Rule 3.7)
• Ohio Prof.Cond.R. 1.0(o) (definition of "tribunal")
• Ohio Prof.Cond.R. 3.4(e) and cmt. [3A] (Model Rule 3.4)
• Ohio Prof.Cond.R. 4.2 (Model Rule 4.2)

Cases:

• City of Akron v. Carter, 190 Ohio App.3d 420, 2010-Ohio-5462 (9th Dist.), standard for when a lawyer is a "necessary witness"
• In re Disciplinary Proceeding Against Pfefer, 182 Wash. 2d 716, 344 P.3d 1200 (2015), advocate-witness rule applies to all tribunals
• Krueger v. Willowood Care Ctr. of Brunswick, Inc., 2019-Ohio-3976 (9th Dist.); Horen v. Bd. of Edn., 174 Ohio App.3d 317, 2007-Ohio-6883 (6th Dist.), rule does not bar self-representation
• Disciplinary Counsel v. Bruce, 158 Ohio St.3d 382, 2020-Ohio-85, Prof.Cond.R. 4.2 applies to self-represented lawyers
• National Child Care, Inc. v. Dickinson, 446 N.W.2d 810 (Iowa 1989), sole-shareholder representation

Other opinions cited:

• N.Y. St. Bar Op. 1045 (2015); N.Y. St. Bar Op. 642 (1993); Mich. Adv. Op. RI-264 (1996); Pa. Eth. Op. 92-150: application of the advocate-witness rule

See also

• Ohio BPC Op. 2020-005: Law Director as Advocate When an Office Lawyer Is a Witness
• Ohio BPC Op. 2003-005: Law Director as Advocate When a Colleague Testifies
• Ohio BPC Op. 1990-015: Lawyer as Labor Arbitrator Subject to the Code

Source

• Landing page: https://ohioadvop.org/advisory-opinion-index/
• Original PDF: https://www.ohioadvop.org/wp-content/uploads/2021/04/Adv.-Op.-2021-03-Final.pdf

Original opinion text

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

OPINION 2021-03
Issued April 9, 2021

    Lawyer -Shareholder Representing a Closely Held Corporation in a
                               Private Arbitration

SYLLABUS: A lawyer may not serve as both an advocate for a client and a necessary
witness in a private arbitration. A lawyer may represent a closely held corporation of
which the lawyer is the sole shareholder and testify as a necessary witness in a private
arbitration, subject to the discretion of the arbitrator.

This nonbinding advisory opinion is issued by the Ohio Board of Professional Conduct
in response to a prospective or hypothetical question regarding the application of
ethics rules applicable to Ohio judges and lawyers. The Ohio Board of Professional
Conduct is solely responsible for the content of this advisory opinion, and the advice
contained in this opinion does not reflect and should not be construed as reflecting the
opinion of the Supreme Court of Ohio. Questions regarding this advisory opinion
should be directed to the staff of the Ohio Board of Professional Conduct.
65 SOUTH FRONT STREET, 5TH FLOOR, COLUMBUS, OH 43215-3431
Telephone: 614.387.9370 Fax: 614.387.9379
www.bpc.ohio.gov

PATRICIA A. WISE RICHARD A. DOVE
CHAIR DIRECTOR
HON. D. CHRIS COOK D. ALLAN ASBURY
VICE- CHAIR SENIOR COUNSEL
KRISTI R. MCANAUL
COUNSEL

                                  OPINION 2021-03
                                  Issued April 9, 2021

  Lawyer -Shareholder Representing a Closely Held Corporation in a Private
                                      Arbitration

SYLLABUS: A lawyer may not serve as both an advocate for a client and a necessary
witness in a private arbitration. A lawyer may represent a closely held corporation of
which the lawyer is the sole shareholder and testify as a necessary witness in a private
arbitration, subject to the discretion of the arbitrator.

QUESTION PRESENTED:

   Whether a lawyer may represent a closely held corporation, of which he or she is

the sole shareholder, in a private binding arbitration when he or she will likely testify as
a necessary witness.

APPLICABLE RULES: Prof.Cond.R. 3.4, 3.7, 4.2

OPINION: The requesting lawyer is the sole shareholder of an Ohio limited liability
company with no employees. The limited liability company was formed for the sole
purpose of a one-time purchase of real estate and has ceased all business activities. The
limited liability company has been threatened with binding arbitration stemming from
the real estate purchase. The lawyer wishes to represent the limited liability company
during the impending arbitration and will likely testify as a necessary witness.

   Prof.Cond.R. 3.7(a), commonly known as the “advocate-witness” rule, prohibits a

lawyer from serving as “an advocate at a trial in which the lawyer is likely to be a
necessary witness.” A lawyer is a necessary witness after a trial court “determine[s] that
Op. 2021-03 2

the proposed testimony is material and relevant to the issues being litigated and that the
evidence is unobtainable elsewhere." City of Akron v. Carter, 190 Ohio App.3d 420, 2010-
Ohio-5462 (9th Dist.) The “advocate-witness” rule applies whether the lawyer would be
called as a witness by the lawyer's client or the client's adversary, and whether or not the
lawyer's testimony would be favorable to the client. N.Y. St. Bar Op. 1045 (Jan. 8, 2015).
Prof.Cond.R. 3.7 contains three enumerated exceptions, none of which is applicable to the
analysis in this opinion.

     On its face, Prof.Cond.R. 3.7(a) does not apply to a lawyer’s representation of a

client in an arbitration or administrative hearing as the rule references a prohibition
against serving as an “advocate at a trial.” In contrast to traditional litigation, proceedings
before arbitrators are commonly referred to as hearings, not trials, are informal, and state
court rules of evidence are not always observed. However, the comments to Prof. Cond.
R. 3.7 suggest a broader application of the rule by using the term “tribunal.” “Tribunal”
is defined in Prof. Cond. R. 1.0(o) as “a court, an arbitrator in a binding arbitration
proceeding, or a legislative body, administrative agency, or other body acting in an
adjudicative capacity.” The comments reinforce that the purpose of the rule is to protect a
tribunal from prejudice and confusion. Prof.Cond.R. 3.7(a), cmt.[1],[3]. The comment is
not restricted to only matters involving litigation before a court. See In re Disciplinary
Proceeding Against Pfefer, 182 Wash. 2d 716, 344 P.3d 1200 (2015) (holding advocate-
witness rule applies to all tribunals, including disciplinary hearings, despite the language
in the rule referencing the word “trial.”)

     The same ethical considerations for the advocate-witness in a trial apply equally

in a binding arbitration before an arbitrator. The concern addressed by the advocate-
witness rule is not so much where the conduct occurs, but rather the problem that is
created when a lawyer advocates for a particular party before any forum and also testifies
in that forum as to relevant and material facts. An arbitration proceeding, whether
characterized as a hearing or trial, adjudicates the merits of the claims to the same extent
that they are resolved before a judicial officer.1 Similar issues that can arise with an
advocate-witness at trial also can be present in the context of an arbitration. For example,

1
Binding arbitrations in Ohio are authorized and governed by state law and subject to the jurisdiction of courts of law.
R.C. 2711.01 et.seq.
Op. 2021-03 3

the dual roles of an advocate-witness may prejudice the opposing party’s rights in an
arbitration and it may not always be clear whether a statement by an advocate-witness
should be taken as proof or as an analysis of the proof. Prof.Cond.R. 3.7, cmt.[1].

   The Board concludes that Prof.Cond.R. 3.7(a) applies to the conduct of a lawyer

representing a client in a private arbitration. Michigan Adv. Op. RI-264 (1996). See N.Y.
St. Bar 642 (1993) (lawyer may not serve as both lawyer for a union and as a witness in an
arbitration concerning a collective bargaining agreement the lawyer negotiated.)
Consequently, a lawyer has an ethical obligation under the Rules of Professional Conduct
to not serve as both advocate and witness in an arbitration. However, the decision
whether to permit a lawyer to represent a party in an arbitration when the lawyer will
also serve as a necessary witness is within the sole discretion of the arbitrator.

Advocate -Witness Appearing Pro Se

   While not an enumerated exception to Prof.Cond.R. 3.7(a), the strict application of

the “advocate-witness” rule in the context of an arbitration is ameliorated when a lawyer
is appearing pro se before a tribunal. Ohio courts have opined that the advocate-witness
rule, as codified by rules of professional conduct, does not apply to a lawyer representing
himself or herself in a court of law. Krueger v. Willowood Care Ctr. of Brunswick, Inc., 2019-
Ohio-3976 (9th Dist.), Horen v. Bd. of Edn., 174 Ohio App.3d 317, 2007-Ohio-6883 (6th Dist.)
(trial court erred as matter of law by disqualifying lawyer from serving as her own
counsel.)

   The requesting lawyer is technically representing a separate legal entity in the

arbitration. However, because he is the sole shareholder of a closely held corporation, he
is essentially representing himself. The traditional concerns with “advocate-witness”
representation of private clients or entities with multiple members, particularly issues
raised by conflicts of interest between client and lawyer, do not exist under the facts
presented. In addition, prejudice to the opposing party is less likely when the lawyer is
the sole shareholder of the closely held corporation and the matter is being adjudicated
in a binding arbitration. The Board concludes that the situation under the facts presented
is more analogous to a lawyer appearing pro se before a tribunal and that the requesting
lawyer may ethically proceed as both advocate and witness in a private arbitration,
subject to his other ethical obligations. Pa. Eth. Op. 92-150. See also National Child Care,
Op. 2021-03 4

Inc. v. Dickinson, 446 N.W.2d 810 (Iowa 1989) (lawyer improperly disqualified under
“advocate-witness” rule when representing corporation as its sole shareholder.)

Other Ethical Considerations

   Lawyers proceeding pro se in a private arbitration must be cognizant of other

ethical considerations. In the context of a proceeding, Prof.Cond.R. 3.4(e) restricts a
lawyer from “stat[ing] a personal opinion as to the justness of a cause, the credibility of a
witness, [or] the culpability of a civil litigant.” Prof.Cond.R. 3.4(e). The lawyer’s dual role
as advocate-witness in an arbitration increases the possibility that the trier of fact may be
persuaded by the testimony of a lawyer on the matters referenced in the rule and that the
opposing party could be prejudiced by such testimony. However, the lawyer may argue,
“based on the lawyer’s analysis of the evidence, for any position or conclusion with respect
to matters referenced” in the rule. Prof.Cond.R. 3.4, cmt. [3A]. In addition. Prof.Cond.R.
4.2 prohibits a lawyer from “communicat[ing] about the subject of the representation with
a person the lawyer knows to be represented by another lawyer in the matter.
Prof.Cond.R. 4.2 applies to lawyers representing themselves. Disciplinary Counsel v. Bruce,
158 Ohio St.3d 382, 2020-Ohio-85. Lawyers may not directly contact an opposing party
known to be represented by a lawyer, even when the lawyer is a party to a matter. Id.