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Potential Conflict of Interest

Thursday, September 25, 2025 12:25 PM | Anonymous

5 Common Conflicts of Interest for Corporation Directors

An arbitrator is retained by the ABC law firm to be a neutral wing arbitrator in a matter where the arbitration clause states that each side retains an arbitrator and the two select a Chair. During the course of the arbitration, a different attorney at the ABC law firm calls the arbitrator directly to retain her services for a mediation. May the arbitrator engage in a conversation with this attorney? May the arbitrator agree to the new retention? How would you handle this situation?

What are your thoughts?


Comments

  • Thursday, September 25, 2025 12:55 PM | Daniel F. Sciannameo, MAI
    This has been an ongoing issue in real estate related arbitrations, namely ground rent resets, where appointment of chairs, or third arbitrators, has been challenged because they have worked with an attorney on one side in another matter. The arbitration field in NYC for real estate matters is very finite and you would be hard pressed for a neutral who has no worked for the few attorneys who are active in this field.
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  • Thursday, September 25, 2025 12:56 PM | David E. Robbins
    The key word here is "neutral." There would be, in my opinion, an appearance of non-neutrality if the neutral arbitrator agreed to this retention, even though mediators are by definition neutral. The arbitrator would have to disclose the second retention, in my opinion. It's so important to maintain the sanctity of arbitrations.
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  • Thursday, September 25, 2025 1:00 PM | Jack Levin
    The arbitrator can listen to the ABC law firm lawyer calling about the potential mediator appointment. The arbitrator should disclose the pending arbitration to the caller. If the caller wants to proceed, the arbitrator must disclose the potential mediator appointment in the pending arbitration.
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    • Thursday, September 25, 2025 2:40 PM | Steve Skulnik
      That's what I would do too, but I would understand that I would take the risk of being removed as arbitrator after making the disclosure to the parties in the arbitration.
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  • Thursday, September 25, 2025 1:03 PM | Nasri H Barakat
    I believe that the call from the "different" attorney is inappropriate during the pendency of the current matter. I believe that the arbitrator should cut the conversation short before receiving any additional information. Furthermore I believe that the arbitrator should inform the panel of the contact made and that the chair of the tribunal should admonish the attorneys to refrain from ex parte communications with the arbitrators until the panel permits such communications; which normally occur after the issuance of the award or the perhaps other final disposition of the matter at hand.
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  • Thursday, September 25, 2025 1:04 PM | Peter Rundle
    For me, this is more a question of "should" versus "could." The appearance of impartiality is my test. If I were counsel on the other side - or her client - would this situation concern me? Of course it would. Don't fall victim to the perceived need to chase or accept every potential engagement. The sea is full of other well-qualified neutrals.
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  • Thursday, September 25, 2025 1:08 PM | GARY W JAVORE
    San Antonio has a relatively small number of construction law neutrals. I would advise the second attorney that I need to clear the conflict before accepting service. I would send a disclosure to the case manager of the request to mediate and have the AAA handle the disclosure. If there is an objection, I would decline the mediation.
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  • Thursday, September 25, 2025 1:16 PM | George Lobman
    The safest response is unfortunately I cannot since I am already involved in another matter with your firm. That maintains the appearance of no conflicts.
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    • Friday, September 26, 2025 1:26 PM | Henry Parr
      I agree
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  • Thursday, September 25, 2025 1:21 PM | Beverly
    The arbitrator may sign on to mediate but must alert the case manager of this engagement and disclose whether subject matter is the same so counsel may decide whether to challenge.
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  • Thursday, September 25, 2025 1:27 PM | Eric D Kuritzky
    The arbitrator should turn down the attorneys offer because the appearance of conflict in the arbitration.
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  • Thursday, September 25, 2025 1:27 PM | Robbie MacPherson
    I would say only that I had a conflict and could not accept the invitation to act as a mediator. I would also disclose the contact to the other panel members and the attorneys in the arbitration.
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  • Thursday, September 25, 2025 1:41 PM | Raoul East Drapeau
    My first question is whether the mediation is for a different case, or the same one the arbitrator was hired for. If the proposal to mediate is for the same case, then I would not even discuss that possibility. If it is for another case, then it all depends on my schedule. Either way, it raises important concerns about conflict of interest and privacy.
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  • Thursday, September 25, 2025 1:51 PM | Robert Prather
    May talk to attorney about mediation.
    Disclose contact to arbitration parties and pane.
    Do not accept mediation assignment.
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  • Thursday, September 25, 2025 2:08 PM | Geoffrey BH
    I would advise ABC's lawyer that already I had been appointed by his colleague's Client and notify both Parties in the arbitration hat you had declined the invitation as a matter of course.

    So you lose a mediation fee - tant pis - if you don't have other fish to fry, you're too committed to ADR. Get on with your mainstream practice (... ise in USA).
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  • Thursday, September 25, 2025 2:20 PM | Anonymous
    I would say thank you for thinking of me but I am a neutral arbitrator appointed by one of your partners in another matter so I cannot discuss this potential appointment with you.

    We need to be very careful about the appearance of impropriety to keep the confidence of people who use arbitration and to avoid giving the anti-arbitration forces ammunition.
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  • Thursday, September 25, 2025 2:25 PM | Mark Bunim
    I would take the call and if the ABC firm wanted to go ahead, and assuming there was no one in the ABC law firm involved in the mediation that was also involved in the arbitration, and no factual interrelatedness, I would notify all counsel in the arbitration. If none objected, I do not see a problem (in this hypothetical) in proceeding as the mediator. If, however, I was the Chair of the arbitration, I would not entertain accepting the mediation. Of greater interest is what happens if the other wing's appointing counsel's office was the one that contacted me to be the mediator. Would full disclosure clear the air and allow one to serve as the mediator? That gets more complicated and would be a great hypothetical for next week.
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  • Thursday, September 25, 2025 3:13 PM | Anonymous
    The arbitrator should disclose the mediation request to the parties in the pending arbitration and offer to decline the mediation case if any party in the arbitration objects.
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  • Thursday, September 25, 2025 4:24 PM | Hon. Deanne Wilson, JCS (ret.)
    The AAA has stricken sitting arbitrators who have accepted such offers . I would not even speak to the attorney who called me, just as I would not have an ex parte conversation with an advocate who was appearing before me. As far as disclosing the phone call, I would discuss the situation with the administrator, as there are many factors to be considered, one of which is the progress of the arbitration. The entire situation is very close to setting up an appearance of a conflict.
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  • Thursday, September 25, 2025 4:31 PM | Judge Victor Bianchini
    This is a very difficult question. Normally, a mediator, even if serving as an arbitrator on a different case, should not be disqualified from serving. After all, a mediation does not allow the mediator to make any decisions, and the parties are free to reject the mediator's efforts, particularly if the mediator appears to be giving advice contrary to the party's interests. However, mediators can sometimes influence the outcome of a mediation subtly and he/she could affect the outcome. On the other hand, this set of facts indicates that 1) the mediator is serving as an arbitrator and the call for the mediation assignment comes from the same law firm as the firm serving one of the parties in Arbitration. My thought is that technically, it is not improper to accept the mediation assignment, but it doesn't have a good look to it. If it is the same law firm out of the same office, then the Arbitrator should not agree. If the attorney works for the firm in a different office in another city or location, then I think it would be ok. In other words, "it depends."
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  • Thursday, September 25, 2025 4:49 PM | Daniel Brooks
    It would have to be disclosed to both parties and the other arbitrators. If undisclosed, the approach could lead to vacatur of the award. Kern v. 303 East 57th Street Corp., 204 A.D.2d 152, 611 N.Y.S.2d 547 (1st Dep’t 1994). Taking the call or the mediation is probably not a good idea, even if disclosed; it creates an appearance of impropriety.
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  • Saturday, September 27, 2025 7:50 AM | Dustin Hecker
    I have declined mediations on this circumstance. It puts the one attorney in the arbitration in an unfair position. Object and potentially not succeed and perhaps annoy the arbitrator. Or don't object to avoid that.
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