MARYLAND STATE BAR ASSOCIATION, INC.
COMMITTEE ON ETHICS
ETHICS DOCKET NO. 2003-02
Partnership of Attorneys and Non-Attorneys to Render Mediation Services
You are a civil and domestic mediator and a licensed Maryland attorney. You have an interest in forming a partnership with several colleagues that would offer only mediation services. Some of your partners would be licensed psychologists who do not possess a license to practice law. You note that mediation is a service which is closely related to the administration of justice, and question whether the combination of lawyers and non-lawyers in such a practice would violate the Rules of Professional Conduct.
The mixed practice you propose raises questions under Maryland Rule of Professional Conduct 5.4. Rule 5.4(a) prohibits a lawyer or law firm from sharing legal fees with a non-lawyer.1 Rule 5.4(b) provides that a lawyer shall not form a partnership with a non-lawyer if any of the activities of the partnership consist of the practice of law. Also, Rule 5.4(d) prohibits the operation of a for profit professional corporation or association with a non-lawyer:
A lawyer shall not practice with or in the form of a professional
corporation or association authorized to practice law for a profit, if:
- a non-lawyer owns any interest therein, except that a fiduciary representative of the estate of a lawyer may hold the stock or interest of the lawyer for a reasonable time during administration;
- a non-lawyer is a corporate director or officer thereof; or
- a non-lawyer has the right to direct or control the professional judgment of a lawyer.
The determinative question, then, is whether your proposed operation would constitute the practice of law.
The Court of Appeals is ultimately responsible for determining what constitutes the practice of law, although the General Assembly has also offered some guidance. Attorney Grievance Comm’n v. Shaw, 354 Md. 636, 732 A.2d 876 (1999). Section10-101 (h) of the Business Occupations & Professions Article, MD. CODE ANN., states that:
- “Practice law” means to engage in any of the following activities:
- giving legal advice;
- representing another person before a unit of the State government or of a political subdivision; or
- performing any other service that the Court of Appeals defines as practicing law.
- “Practice law” includes:
- advising in the administration of probate of estates of decedents in an orphans’ court of the State;
- preparing an instrument that affects title to real estate;
- preparing or helping in the preparation of any form or document that is filed in a court or affects a case that is or may be filled in a court; or
- giving advice about a case that is or may be filled in a court.
Of these, items 1(i), 1(iii), (2)(iii) and (iv) are potentially implicated in alternative dispute resolution.
The Court of Appeals, in addressing the issue of unauthorized practice, recently offered the following criteria:
To determine whether an individual has engaged in the practice of law, the focus of the inquiry should “be on whether the activity in question required legal knowledge and skill in order to apply legal principles and precedent.” In re Discipio, 163 III. 2d 515, 645 N.E.2d 294, 299 (La. 1989) (“Functionally, the practice of law relates to the rendition of services for others that call for the professional judgment of a lawyer.”).
“Where trial work is not involved but the preparation of legal documents, their interpretation, the giving of legal advice, or the application of legal principles to problems of any complexity, is involved, these activities are still the practice of law.” Lukas v. Bar Ass’n of Montgomery County, 35 Md. App. 442, 448, 371 A.2d 669, 673, cert. denied, 280 Md. 733 (1977) (quoting F.T. vom Baur, Administrative Agencies and Unauthorized Practice of Law, 48 A.B.A.J. 715, 716 (1962)).
Attorney Grievance Commission v. Hallman, 343 Md. 390, 681 A.2d 510 (1996).
Further, in Attorney Grievance Comm’n v. Shaw, 354 Md. 636, 732 A.2d 876 (1999), the Court wrote that practice of law is a term of art connoting much more than merely working with legally-related matters. It stressed that the focus of the inquiry is whether the activity in question required legal knowledge and skill to apply legal principles and precedent. The Court also wrote that the practice of law relates to the rendition of services for others that call for the professional judgment of a lawyer.
These decisions suggest that some tasks involved in alternative dispute resolution constitute the practice of law, that is, drafting documents to be filed with the court, applying legal principles to problems, and exercising professional judgment on behalf of others. No decision of the Court of Appeals, however, has expressly addressed or defined the practice of law in the alternative dispute resolution arena.
In its rule-making capacity, however, the Court of Appeals has addressed and defined various practices of alternative dispute resolution (ADR). We first note that the term mediation, as colloquially used, often may refer to a variety of services. The Court of Appeals, however, through Title 17 of the Maryland Rules, has addressed this variety of ADR practices and has specifically defined mediation in a limited manner.
Maryland Rule 17-102(d) defines court-ordered mediation as follows:
“Mediation” means a process in which the parties work with one or more impartial mediators who, without providing legal advice, assist the parties in reaching their own voluntary agreement for the resolution of the dispute or issues in the dispute. A mediator may identify issues and options, assist the parties or their attorneys in exploring the needs underlying their respective positions, and, upon request, record points of agreement reached by the parties. While acting as a mediator, the mediator does not engage in arbitration, neutral case evaluation, neutral fact-finding, or other alternative dispute resolution processes and does not recommend the terms of an agreement. (emphasis added.)
Rule 17-104 sets forth the qualifications of a court-ordered mediator. It provides, in relevant part, that [t]o be designated by the court as a mediator, other than by agreement of the parties, a person must … unless waived by the court, be at least 21 years old and have at least a bachelor’s degree from an accredited college or university. By contrast, Rule 17-105 provides that a person performing non-mediation ADR must either (A) be a member in good standing of the Maryland bar and have at least five years experience in the active practice of law as (i) a judge, (ii) a practitioner, (iii) a full-time teacher of law at a law school accredited by the American Bar Association, or (iv) a federal or Maryland administrative law judge, or (B) have equivalent or specialized knowledge and experience in dealing with the issues in dispute.
These rules draw a distinction, then, between court-ordered mediation and other forms of court-ordered ADR. Court-ordered mediation does not entail many tasks traditionally associated with the practice of law. A court-ordered mediator does not engage in arbitration, neutral case evaluation, neutral fact-finding, or other alternative dispute resolution processes. Nor does such a mediator recommend the terms of an agreement. A court-ordered mediator need not be a lawyer. By contrast, a person appointed to perform non-mediation ADR must be a lawyer, judge, law professor, or someone with equivalent specialized experience.
Your inquiry does not specify precisely the kind of mediation in which you and your partners would engage. To the extent that your practice is limited to court-ordered mediation as defined by Title 17, you and your partners would not be engaged in the practice of law. If, however, either you or your partners engage in any other form of mediation or ADR, this may entail the practice of law and would risk violating Rule 5.4(b) and (d). In such an instance and if the activities are deemed to constitute the practice of law, the sharing of fees with your non-lawyer partners would constitute impermissible fee-splitting in direct contravention of Rule 5.4(a).
You should bear in mind that this Committee lacks the authority to define the practice of law. We cannot state authoritatively that a practice that exceeds the boundaries of court-ordered mediation as defined in Title 17 constitutes the practice of law. Our opinion is based on the limited authority currently available. The Court of Appeals may, in the future, issue an opinion or promulgate rules that more fully illumine this subject. This issue is one that has spawned great division and debate nationally,2 and we do not imply here that it is settled. Rather, we only intend this opinion to highlight a limited safe harbor should you decide to proceed with this venture.
Finally, past inquiries to this Committee regarding ancillary businesses have raised concerns regarding efforts to feed the related law practice. At times, we have found that lawyers can use such ancillary businesses to profit at the expense of clients. See, e.g., Ethics Docket 2002-12 (ownership of private investigation service used by law firm). You have assured this Committee that you will limit yourself to mediation practice and our opinion is based on that representation.
1The rule contains several exceptions not relevant to this discussion.
2See, e.g., In the Matter of Hanson, 2001 Ariz. LEXIS 7 (Ariz. 2001)(attorney in mediation partnership with non-lawyer engaged in impermissible fee splitting and assisted unauthorized practice of law); New Hampshire Ethics Op. # 1993-94/4 (partnership between a lawyer and non-lawyer to provide mediation does not violate the Rules of Professional Conduct); Vermont Ethics Op. 93-5 (lawyer not barred from entering into business relationship with non-lawyer to provide mediation services if practice kept entirely separate from law practice); Pa. Ethics Op. 96-167 (where attorney-mediator and non-legal services are kept distinct from legal services, non-legal services are subject to the Rules of Professional Conduct if mediator knows or should know that the party believes he is receiving the protection of a client-lawyer relationship); Indiana Ethics Op. 1992-5 (by opening filed of mediation to non-lawyers, Supreme Court showed that it did not consider mediation to be a practice of law); Rhode Island ethics Op. 95-1 (lawyer prohibited from engaging in mediation practice with non-lawyer); Florida Ethics Op. 94-6 (operation of a mediation department within a law firm that employs non-lawyer is acceptable, provided the non-lawyers are not owners and the firm conducts the mediation practice in conformity with the Rules of Professional Conduct); Iowa Ethics Op. 96-30 (mediation performed by lawyers is the practice of law); Illinois Ethics Op. 01-05 (payment of referral fees by an attorney-mediation firm deemed unethical fee sharing); N.J. Ethics Op. 676 (mediation performed by lawyers is the practice of law.