Alternatives DIGEST STATE ADR Virginia’s court system has been a leader on issues involving mediator credentialing, and its work has influenced other jurisdictions. Forced to deal with a large population of nonattorney mediators, the state’s court system has looked long and hard at the intersection of mediation and the practice of law. The result is that Virginia lawyers, along with nonlawyer neutrals, are now o n notice as to exactly what they can and cannot do when they mediate. Geetha Ravindra, director of the Virginia Supreme Court’s dispute resolution services department, reviews the state’s efforts, and summarizes its sure-to-be-influenPage 2 1 tial conclusions. ........................ ADR BRIEFS Standardized procedures that resolve disputes over Internet names get their first test, and the ADR numbers from PricewaterhouseCoopers’annual law department spending survey. ....Page 23 ANNUAL INDEX The Index to Volume 17 is a comprehensive subject and author listing of every article that appeared in Altcmarives in 1999. ............................ Page 27 DEPARTMENTS CPR News ................................ Page 22 ADR Briefs ............................... Page 23 Cartoon by Cullum ..................Page 23 CPR 20 Past, 20 Future ..........Page 2 4 Online Info ..................Pages 2 6 814 0 PULL-OUT FEATURE CPR INSTITUTE FOR DISPUTE RESOLUTION WWW.CPRADR.ORG VOL. 18, NO. 2 FEBRUARY 2000 Balancing Mediation with Rules on Unauthorized Practice BY GEETHA RAVINDRA Following a series of communications between the Office of the Executive Secretary In Virginia, it is generally believed that people and the Virginia State Bar, a conference was from all backgrounds have a wealth of h o w l held in 1997 to provide mediators with inedge, experience, and skills they can bring to formation regarding what constitutes the unmediation. There currently are 1,000 certiauthorized practice of law and on how to write fied mediators who come from a variety of mediated agreements for parties without viodisciplines including law, social work, counlating any UPL rules. This conference unforseling, and education. tunately heightened mediator anxiety and But that positive setting for alternative disexacerbated tensions between attorney and pute resolution set up a clash. In 1996, a Virnonattorney mediators. ginia Circuit Court held for the first time that In an effort to explore this area in greater a nonlawyer mediator had engaged in the un. . depth and provide clearer inforauthorized practice of law by mation to mediators on these providingmediation clientswith complex ethics and practice legal options, as well as developquestions, the Department of ing a legal instrument on their STATE Dispute Resolution Services of behalf. [Editor:note: See Geetha the Supreme Court of Virginia Ravindra, “When Mediation BeADR received a Fall 1998 grant from comes the Unauthorized Practice of Law,” 15Alternatives94 (July/ the State Justice Institute-an Alexandria, Va., nonprofit orAugust 1997).] ganization set up by Congress For Virginia mediators, this to study ways to improve state justice syscase raised important questions regarding tems -to develop a set of guidelines to assist whether mediation constitutes the mediators in avoiding the practice of law practice of law; when mediating disputes. how to empower disputantsto make their The resultingvirginia UPL Guidelinesare own decisionswithout giving legal advice; the first comprehensive resource on the issue how to meet the needs of disputantsand of mediation and the unauthorized practice provide the services they request withof law. While they focus on Virginia’s UPL out engaging in the unauthorized pracrules and standards of ethics, practitioners in tice of law-referred to in this article as the UPL-as a nonlawyer, or dual repother states may find the guidelines informaresentation as a lawyer mediator; and tive, because many already are wrestling with similar questions, and they are sure to conhow to provide a convenient, perhaps one-stop, alternative to adjudication tinue to arise. without engaging in either the unauThe UPL guidelines project began with thorized practice of law or dual reprethe appointment of Prof. Michael R. Smith sentation. of Virginia Commonwealth Universityas lead researcher and reporter, and the creation of a The author is director of the Department of Dispute Resolution Services i n the Administrative Offlce of UPL committee including judges, lawyers, the Supreme Court of Virginia i n Richmond. She was mediators, and Virginia State Bar staffers. a member of the committee formed that helped write Smith studied existing information on methe state‘s unauthorized practice of law guidelines, which are discussed i n this article. (continued on page 38) Balancing Mediation with Rules on the Unauthorized Practice of Law in Virginia (continued from front page) diation and the UPL around the country and surveyed more than 150 bar associations. He also reviewed the various tests courts use to determine when an activity constitutes the practice of law. Smith then studied Virginia’s Supreme Court Rules, legal ethics opinions and UPL committee opinions, statutes, and ethical standards that address this issue. Only North Carolina that had engaged in a similar study of mediation and UPL. Furthermore, neither the Virginia State Bar nor the Virginia Legislature had addressed the question specifically of what constitutes the practice of law in the mediation context. MEDIATION I N THE CONTEXT OF UPL Mediation is a process for resolving disputes, which already may have ripenedinto suits by the time they reach mediation or will end up in litigation if they are not resolved by mediation. In either case, parties often invoke legal norms in an effort to resolve disputes. So mediators may be called upon to provide law-related information to the parties or to provide legal evaluationsof the parties’ positions. Or mediators may find it w e l l to ask reality-testingquestions of the parties that implicate legal issues. And if a settlement is reached, the mediator may be asked or may take it upon himself or herself to assist the parties in committing the agreement to writing. State bar associations throughout the country, and the CPR-Georgetown Commission on Ethics and Standards in Alternative Dispute Resolution, have recognized that mediation is a law-related activity. Lawyers who practice mediation typically are subject to professional responsibility rules that govern attorney conduct in their respective states. Depending upon how the practice of law is defined in a jurisdiction, a typical mediation session may involve a range of activities by the mediator that approaches the practice of law. The two most common categories of mediator activities that may involve the practice of law are: *The application of law to facts, and Drafting settlement agreements that may be viewed as legal instruments. LEGAL INFORMATION OR ADVICE? Supreme Court of Virginia Rule Part 6, 0 I (B)(1) states that an attorney-client relationship exists and one is deemed to be practicing law whenever “one undertakes for compensation, direct or indirect, to advise another, not his regular employer, in any matter involving the application of legal principles to facts or purposes or desires.” The rule, however, doesn’t prohibit giving legal information to disputing parties, nor does it Responsibility for Certified Mediators also prohibit mediators from giving legal advice. In fact, the ethical standards require mediators to inform the parties in writing, before the mediation begins, that the mediator does not provide legal advice. This provision reflects the requirements of Code of Virginia 0 8.01-576.12 relating to court-referred cases, which states that a court shall set aside a mediated settlement agreement upon a showing of misconduct by the neutral. As defined in this code section, misconduct “includes the failure of the neutral to inform Lawyer-mediators giving advice during a mediation risk violating rules against dual representation. apply to mediators who are not being compensated (either directly or indirectly). The crux ofUPL Rule Part 6 , s I(B)(l) is its prohibition against nonattorneys applying general legal principles to specific facts, purposes, or desires and then communicating legal advice to other persons. The term “legal advice” has not been precisely defined in Virginia, much less in the mediation context.The UPL guidelines committee concluded after almost a year of discussion, that at a minimum the following would appear to constitute legal advice in the mediation context: A mediator provides legal advice whenever, in the mediation context, he or she applies legal principles to facts in a manner that (1) predicts a specific resolution of a legal issue or (2) directs, urges, or recommends a course of action by a disputant or disputants. Like UPL Rule Part 6 $I(B)( l), the Virginia Standards of Ethics and Professional the parties in writing at the commencement of the mediation process that: (i) the neutral does not provide legal advice. ... ” Although an attorney qualified to practice law in Virginia and serving as a mediator could not be charged with the unauthorized practice of law for giving legal advice during mediation, the attorney-mediator would violate mediator ethics if he or she gave legal advice, and any resulting settlement agreement could be challenged and set aside by a court on the ground of mediator misconduct. The attorney also would be subject to professional discipline by the Virginia State Bar for violating Rule 2.1 1 of the Virginia Rules of Professional Conduct, which prohibits a lawyer-mediator from giving legal advice during mediation. Finally, a lawyer-mediator who gave legal advice to one or both of the parties during mediation may have engaged in dual representation in violation of Rule l .7. (continued on following page) (continued from previous page) Virginia’s UPL guidelines state that a mediator may provide legal resource and procedural information to disputants. Providing copies of statutes or reference information is permissible. Mediators may make statements that generally declare the state of the law on a legal topic and may ask reality-testingquestions that raise legal issues so long as they do not predict resolutions of legal issues or direct decision-making. A mediator also may inform the parties about the mediator’s experiences with a particular court or type of case if it is information obtained through personal observation or empirical research. Mediators may inform the parties as to the legal ramifications of a mediated agreement based on the Virginia Code, but not advise the parties as to the agreement’s enforceability. A mediator may not make specificpredictions about the resolution of legal issues or direct a party’s decision-makmg. A more comprehensive explanation of these points, along with examples, may be found in the complete guidelines. PREPARING MEDIATED AG RE EM E NTS Supreme Court of Virginia Rule Part 6, § I(B)(2) provides that a person is practicing law whenever “one, other than a regular employee acting for his employer, undertakes, with or without compensation, to prepare for another legal instruments of any character, other than notices or contracts incident to the regular course of conducting a licensed business.” Yet despite this Supreme Court rule prohibiting lay people from preparing legal instruments, the Virginia mediation statutes refer to the preparation of written agreements by nonattorney mediators. In defining the various terms used in the dispute resolution chapter of the Code ofVirginia, § 8.0 1-576.4 states that “‘dispute resolution services’ includes screening and intake of disputants, conducting dispute resolution proceedings, drafting agreements, and providing information or referral services.” [Emphasis added.] Furthermore, § 8.01-576.1 1 contemplates that written agreements would emerge from mediation sessions by providing that such agreements are “enforceable in the same manner as any other written contract.” Finally, in defining misconduct by neutrals, 4 8.01-576.12 states that upon the motion of a party, a court “shall vacate a mediated agreement reachedin a dispute resolution proceeding” if the neutral fails to inform the disputants in writing of certain specified information. [Emphasis added.] Consequently, the Virginia mediation statutes appear to authorize the preparation by mediators ofwritten agreements that may be enforceable as contracts. But contracts are legal instruments, and the Virginia Supreme Court UPL rules prohibit nonattorneys from drafting legal instruments. The Virginia State Bar has authorized attorney-mediators to act as scriveners in committing mediated agreements to writing. The State Bar’s Legal Ethics Committee, however, has cautioned attorney-mediators that if they provide agreement-writing services beyond those of a scrivener, then they have engaged in the practice of law, which is prohibited in the mediation context by Rule 2.10(e) of the new Virginia Rules of Professional Conduct. This rule states that “a lawyer who serves or has served as a third party neutral may not serve as a lawyer on behalf of any party to the dispute.” If an attorneymediator steps outside of the role of a scrivener and draft a contract for the disputing parties, he or she would be acting as a lawyer for the parties, which is prohibited by Rule 2.1 O(e). instruments in which they include legally operative terms not requested or contemplated by the parties during the mediation process. Allowing mediators to prepare written agreements for the parties facilitates the efficient resolution of disputes and minimizes the costs to the parties, who may not desire or be able to afford their own attorneys. Acting as a scrivener, a mediator may prepare settlement agreements and memorandums of understanding for the parties. The particular form of an agreement does not necessarily determine its enforceability as a contract. Mediators in Virginia may simply copy the agreement as dictated by the parties or by choosing particular words or phrases to include in the agreement so long as the parties indicate that the language chosen by the mediator accurately reflects their desires. A mediator should not add provisions to an agreement beyond those specified by the disputants. Where a statute or court requires that a certain provision be included in a written agreement, the mediator has not engaged in the practice of law. Mediators may use court-approved forms when preparing a mediated agreement, although generally, the preparation of court orders is considered the practice of law. It is Acting as a s c r ive ne r, a mediator may prepare settlement agreements and memorandums of understanding for the parties. The UPL Committee also concluded that the Virginia mediation statutes, particularly § 8.0 1-576.4, authorize nonattorney mediators to prepare written agreements for disputing parties so long as they, like attorney-mediators, limit their drafting services to those of a scrivener. This harmonization of the UPL rules and the mediation statutes gives mediators the flexibility to assist the parties in committing their mediated agreements to writing but stops short of allowing mediators to draft standard practice in many Virginia courts to provide agreement forms that contain signature lines to either order a case’s dismissal pursuant to the agreement or to convert the agreement into a court order. This practice, however, is supervised by courts and carries !B less risk to the public. For more information on this project or to request a copy of the Guidelines, contact author Geetha Ravindra at 804-786-6455.