Summary of Facts Provided
Attorney is in-house counsel for an insurance company and, from time to time, defends the company in arbitrations. Attorney also assigns defense of arbitrations to other in-house counsel or external counsel with input from the company's claims department. The claims department also must approve designations of arbitrators made by Attorney and requested that Attorney appoint as arbitrators external counsel who in the past have received defense assignments from Attorney and who, it is implied, will be considered for future defense assignments.
Each arbitrator must sign an oath of complete impartiality and swear that, except as disclosed in writing, he or she has no financial or personal interest in the outcome of the case and no existing or past financial or business relationships with any of the parties or their attorneys, "that will affect my impartiality or create an appearance of partiality or bias."
Issues and Conclusions
A. May Attorney designate as an arbitrator external counsel who will not disclose the past relationship with the insurance company and the possibility of future defense assignments, or proceed with arbitration knowing that the designated arbitrator has not disclosed such relationship? No. Failure of the designated arbitrator to disclose the past and possible future relationship with the insurance company is misconduct, "involving dishonesty, fraud, deceit or misrepresentation" in violation of Colorado Rule 8.4(c) and may be conduct prejudicial to the administration of justice under Colorado Rules 8.4(d). Colorado Rule 8.4(a) prohibits an attorney from knowingly assisting or inducing another to violate the Colorado Rules or violating the Rules through the act of another. If Attorney designates an arbitrator or proceeds with an arbitration under these circumstances, Attorney's conduct would itself violate Colorado Rules 8.4(c) and possibly 8.4(d), as well as 8.4(a).
B. If the designated arbitrator fails to make proper disclosure, is Attorney obligated to report that failure to the Grievance Committee of the Colorado Supreme Court? If the circumstances are such that Attorney has knowledge that the designated arbitrator has committed a violation of the Colorado Rules, "that raises a substantial question as to that lawyer's honesty, trustworthiness, or fitness as a lawyer in other respects," Attorney is obligated to make such a report pursuant to Colorado Rule 8.3(a).