If a lawyer signs a mediation agreement promising to pay the client's share of the mediator's fee, is the lawyer ethically bound to pay it?

Plain-English summary

A lawyer who regularly represents clients in mediations and arbitrations signed a mediation agreement stating that the parties and their attorneys agree that the attorney representing each party will bear responsibility for and pay that party's respective share of the mediator's bill. The inquiry asked whether, having agreed to be responsible for payment of the mediator fees, the lawyer is ethically responsible for paying them.

The committee concluded yes. Compensation of mediators is normally an obligation of litigants, not their lawyers (SC Court-Annexed ADR Rule 9; S.C. District Court Local Civil Rule 16.11), and the applicable ADR rules setting out counsel's obligations do not include ensuring payment of mediator fees (SC Court-Annexed ADR Rule 6; Local Civil Rule 16.08), so the default rule is that counsel does not serve as guarantor of the client's debt to a mediator. Here, however, the lawyer chose to sign an agreement promising to pay the mediator. Absent some legal justification, refusing to fulfill that promise would be dishonest and thus violate Rule 8.4(d) (conduct involving dishonesty). Moreover, because the contractual promise was made in the course of representing a client and in connection with a pending matter, failing to honor it would be prejudicial to the administration of justice under Rule 8.4(e). The committee added that Rule 8.4(e) is not implicated every time an attorney fails to perform a contract, but is implicated here because the contract was made in connection with representing a client in a pending matter and non-performance could adversely affect the availability and cost of mediation generally, to the detriment of other litigants.

In practice

The opinion holds that, under South Carolina Rule 8.4(d) and 8.4(e), a lawyer who signs a mediation agreement promising to pay the client's share of the mediator's fee is ethically bound to pay it, even though the ADR rules' default is that counsel is not a guarantor of the client's mediator debt. The opinion treats refusal without legal justification as dishonest under Rule 8.4(d), and as prejudicial to the administration of justice under Rule 8.4(e) because the promise was made representing a client in a pending matter and non-performance could harm the availability and cost of mediation for other litigants. The opinion notes Rule 8.4(e) is not triggered by every contract breach.

Common questions

Q: Is a lawyer normally responsible for paying the mediator's fee?

A: No. The committee said compensation of mediators is normally the litigants' obligation, not counsel's, and the ADR rules do not make ensuring payment a duty of counsel, so the default is that counsel is not a guarantor.

Q: What changes when the lawyer signs an agreement to pay the mediator?

A: The lawyer becomes bound. The committee said a lawyer who chose to sign such a promise must honor it; refusing without legal justification would be dishonest under Rule 8.4(d).

Q: Why would non-payment be "prejudicial to the administration of justice"?

A: Because of the context and effect. The committee said the promise was made representing a client in a pending matter and non-performance could adversely affect the availability and cost of mediation generally, to the detriment of other litigants.

Q: Does every breach of a lawyer's contract violate Rule 8.4(e)?

A: No. The committee said Rule 8.4(e) is not implicated every time an attorney fails to perform under a contract; it was implicated here because of the litigation context and the potential systemic effect.

Background and rules framework

The opinion interprets South Carolina Rule 8.4(d) (conduct involving dishonesty) and Rule 8.4(e) (conduct prejudicial to the administration of justice), which correspond to the Model Rule 8.4 misconduct provisions, against the backdrop of the ADR rules (SC Court-Annexed ADR Rules 6 and 9; Local Civil Rules 16.08 and 16.11) that make mediator compensation a party obligation. The analysis turns on the lawyer's voluntary contractual promise overriding the default rule and the litigation context that brings Rule 8.4 into play.

Citations and references

Rules of Professional Conduct:

• MR 8.4 / SC Rule 8.4(d) (dishonesty), 8.4(e) (conduct prejudicial to the administration of justice)

Court rules:

• SC Court-Annexed ADR Rules 6 and 9 (counsel's ADR obligations; mediator compensation)
• S.C. District Court Local Civil Rules 16.08 and 16.11 (mediation obligations; mediator compensation)

See also

• SC Bar Ethics Op. 13-02: Paying an Appointed Investigator
• SC Bar Ethics Op. 13-04: Nonprofit-Funded Trust Money

Source

• Landing page: https://www.scbar.org/for-lawyers/quicklinks/legal-resources/ethics-advisory-opinions/ethics-advisory-opinion-14-03/
• Original PDF: https://www.scbar.org/media/3xtdler0/14-03.pdf

Original opinion text

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

UPON THE REQUEST OF A MEMBER OF THE SOUTH CAROLINA BAR, THE ETHICS ADVISORY COMMITTEE HAS RENDERED THIS OPINION ON THE ETHICAL PROPRIETY OF THE INQUIRER’S CONTEMPLATED CONDUCT. THIS COMMITTEE HAS NO DISCIPLINARY AUTHORITY. LAWYER DISCIPLINE IS ADMINISTERED SOLELY BY THE SOUTH CAROLINA SUPREME COURT THROUGH ITS COMMISSION ON LAWYER CONDUCT.

Ethics Advisory Opinion 14-03

SC Rules of Professional Conduct: 8.4

SC Court-Annexed ADR Rule: 9

S.C. Dist. Ct. Local Civil Rule: 16.11

Facts:

Lawyer regularly represents clients in mediations and arbitrations. Recently, Lawyer executed a Mediation Agreement that states as follows: “The parties and their attorneys agree that the attorney(s) representing each party will bear the responsibility for and pay that party’s respective share of the mediator’s bill for services rendered.”

Question Presented:

Having agreed to be responsible for payment of the mediator fees, is Lawyer ethically responsible for payment of such fees?

Summary:

Yes. Lawyer chose to guarantee payment of mediator fees. Refusing to honor this obligation would likely violate Rules 8.4(d) (dishonesty) and (e) (conduct prejudicial to the administration of justice).

Opinion:

Compensation of mediators is normally an obligation of litigants and not their lawyers. SC Court-Annexed ADR Rule 9; S.C. Dist. Ct. Local Civil Rule 16.11. Applicable ADR rules set forth the obligations of counsel in connection with mediation, and ensuring payment of mediator fees is not among them. SC Court-Annexed ADR Rule 6; S.C. Dist. Ct. Local Civil Rule 16.08. Thus, the default rule is that counsel does not serve as a guarantor of her client’s debt to a mediator.

Here, however, Lawyer has chosen to sign an agreement promising to pay the mediator. Absent some legal justification, refusing to fulfill this promise would be dishonest, and thus in violation of Rule 8.4(d), which prohibits “conduct involving dishonesty.” Moreover, because the contractual promise was made in the course of representing a client and in connection with a pending matter, failing to honor it would be “prejudicial to the administration of justice,” in violation of Rule 8.4(e). While Rule 8.4(e) is not implicated every time an attorney fails to perform under a contract, it would be implicated here because the contract was made in connection with representation of a client in a pending matter and non-performance would have the potential to adversely impact the availability and cost of mediation generally, to the detriment of other litigants.