LEO #1684 ATTORNEY AS MEDIATOR; SUBSEQUENT REPRESENTION ADVERSE TO
          A PARTY INVOLVED IN UNRELATED MATTER MEDIATED BY ATTORNEY

You have presented a hypothetical situation in which an attorney
acts as a mediator between an individual investor (Investor A) and
an investment brokerage firm (Firm).  During mediation, attorney
acquires information concerning internal rules and operations of
Firm, which information is disclosed subject to the obligation of
confidentiality under the mediation rules.  After completion of the
mediation, attorney is approached by another investor (Investor B)
seeking representation against the same Firm.  Investor B knows
nothing of Investor A or the prior mediation.  Investor B's
allegations concern different securities, purchased through a
different registered representative of the Firm.  However,
information about the Firm learned by attorney during the mediation
applies to Investor B's case.

Under the facts you have presented, you have asked the committee to
opine as to the propriety of attorney's accepting representation of
Investor B against the Firm, after attorney gained relevant
information about the Firm during prior mediation.

The appropriate and controlling disciplinary rules relative to your
inquiry are DR 5-105(D) which states that a lawyer who has
represented a client in a matter shall not thereafter represent
another person in the same or substantially related matter if the
interest of that person is adverse in any material respect to the
interest of the former client unless the former client consents
after disclosure and DR 4-101(B)(2) & (3) which prohibit an
attorney from knowingly using a confidence or a secret of his
client either to the disadvantage of his client or to the advantage
of the attorney or a third person, unless the client consents after
full disclosure.  Also applicable is EC 5-20 which states that a
lawyer is often asked to serve as an impartial arbitrator or
mediator in matters which involve present or former clients.  He
may serve in either capacity if he first discloses such present or
former relationships.  After a lawyer has undertaken to act as an
impartial arbitrator or mediator, he should not thereafter
represent in the dispute any of the parties involved in the
mediation.

The committee has previously opined that attorneys are permitted to
engage simultaneously in the practice of law and related endeavors. 
(LEO 1368).  Once involved as a mediator, an attorney is prohibited
from representing either party as an advocate in the subject matter
of the mediation.  (LEOs 511, 544, and 849).  The committee has
also opined that mediation is not the per se practice of law;
however, the activities involved and the subject matter to which
they apply closely resemble the practice of law.  (LEO 1368).  The
Code of Professional Responsibility applies to attorneys acting in
a fiduciary relationship even where no attorney-client relationship
exists.  [LEOs 1301 (trustee), 1335 (trustee), 1442 (lender's
agent) and 1617 (executor, trustee, guardian, attorney-in-fact or
other fiduciary)].  The Virginia Supreme Court also anticipated
that mediators would be members of other professions and provided
their standards for professional responsibility would not limit the
responsibilities a mediator may have under codes of ethics
promulgated by any other profession to which the mediator belongs. 
Va. Sup. Ct., Standards of Ethics and Professional Responsibility
for Certified Mediators, Para. J (March, 1993).

In the facts you present, the committee opines that the Code of
Professional Responsibility applies to the conduct of the attorney
serving as a mediator and requires an analysis of whether the
representation of Investor B is substantially related to the matter
the attorney mediated for Investor A and the Firm.  The committee
has previously declined to define "substantially related" since it
is a fact-specific inquiry requiring a case-by-case determination. 
(LEO 1652).  Although no precise test for "substantial relatedness"
under DR 5-105(D) has been established, the committee has
previously declined to find substantial relatedness in instances
that did not involve either the same facts (LEO 1473), the same
parties (LEOs 1279, 1516), or the same subject matter (LEOs 1399,
1456).  
However, the committee notes that the federal courts have ruled on
this subject using the test of whether an attorney could reasonably
have been exposed to client confidences and secrets in the former
matter. Rogers v. Pittston Company, 800 F. Supp. 350 (W.D. Va.
1992), aff'd. without op., 996 F.2d 1212 (4th Cir. 1993).  It is
not necessary to demonstrate that confidences were actually
received by the attorney, since such a standard would place an
unreasonable burden on the moving party.  Id. at p. 353, citing
Westinghouse Elec. Corp. v. Gulf Oil Corp., 588 F.2d 221, 224 (7th
Cir. 1978).  Where matters are determined to be substantially
related, and there was a reasonable chance that the attorney
received confidences in the first matter, an irrebuttable
presumption arises that confidences were exchanged.  Id. at p. 353,
citing Duncan v. Merrill Lynch, 646 F.2d 1020, 1028 (5th Cir.
1978), cert. denied, 454 U.S. 895, 70 L. Ed. 2d 211, 102 S. Ct. 394
(1981).

A confidence refers to information protected by the attorney-client
privilege under applicable law, and a secret is defined as other
information gained in the professional relationship that the client
has requested be held inviolate or the disclosure of which would be
embarrassing or would be likely to be detrimental to the client. 
[DR 4-101(A)].  In the hypothetical facts presented, the mediator
learned information about the internal rules and operations of the
Firm having a bearing on the quality of the Firm's supervision of
its agents.  This information was disclosed by the Firm subject to
the confidentiality requirement under the mediation rules. See, Va.
Sup. Ct., Standards of Ethics and Professional Responsibility for
Certified Mediators, Para. F(1)(b) (March, 1993); Va. Code Ann.
Section 8.01 - 581.22.  It is clear that the Firm would not want
any information disclosed subject to a confidentiality requirement
used against them on behalf of a future claimant, particularly when
it may be detrimental to their defense of another claim.

Since the attorney received confidences of the Firm during the
mediation with Investor A, it is necessary to determine if the
nature of the confidence is sufficient to merit the attorney's
disqualification.  Mere familiarity with a corporation's workings
or personality of its representatives is not enough, when standing
alone, to disqualify an attorney where it cannot reasonably be said
that in the course of the former representation the attorney might
have acquired information related to the subject of the present
litigation.  Chantilly Constr. Corp. v. John Driggs Co., 39 Bankr.
466 (Bankr. E.D. Va. 1984).  

In this case, the committee notes that the information disclosed
during the mediation was specifically given subject to the
mediator's duty to keep it confidential and that it involves the
same subject matter at issue in Investor B's case.  Therefore, the
committee opines that the matters are substantially related and the
attorney is precluded from undertaking representation in Investor
B's case.  Confidentiality is critical to maintaining a mediator's
ability to work impartially and neutrally with both parties to
resolve their differences.  Similarly, the confidentiality required
of attorneys under DR 4-101 also exists to encourage complete
candor and truthfulness between attorneys and their clients without
fear of later repercussions.  Moreover, the confidentiality statute
for mediators specifically prevents the use of information
disclosed and used during mediation from subsequently being used in
litigation between mediating parties.  Therefore, it would
certainly be improper to permit the same attorney to use this
information against a party on behalf of a future client simply
because the attorney acquired the information while serving as a
mediator when they would not be permitted to use it if they
acquired it while serving as an advocate.

The committee further opines that the Code of Professional
Responsibility permits the consent of a client after full
disclosure to cure this conflict.  The committee cautions attorneys
from relying heavily on client consent because there are
circumstances in which consent may be withdrawn at a later time. 
LEO's 1354 & 1652; Commercial & Sav. Bank v. Brundige, 5 Va. Cir.
33, 34 (1981).

[DRs 4-101(A), 4-101(B)(2) & (3), 5-105(D); EC 5-20; LEOs 511, 544,
849, 1279, 1301, 1335, 1354, 1368, 1399, 1442, 1456, 1516, 1617,
1652; Va. Sup. Ct., Standards of Ethics and Professional
Responsibility for Certified Mediators, Para. J (March, 1993);
Rogers v. Pittston Company, 800 F. Supp. 350 (W.D. Va. 1992),
aff'd. without op., 996 F.2d 1212 (4th Cir. 1993; Westinghouse
Elec. Corp. v. Gulf Oil Corp., 588 F.2d 221, 224 (7th Cir. 1978);
Duncan v. Merrill Lynch, 646 F.2d 1020, 1028 (5th Cir. 1978), cert.
denied, 454 U.S. 895, 70 L. Ed. 2d 211, 102 S. Ct. 394 (1981);
Chantilly Constr. Corp. v. John Driggs Co., 39 Bankr. 466 (Bankr.
E.D. Va. 1984); Commercial & Sav. Bank v. Brundige, 5 Va. Cir. 33,
34 (1981)]

Committee Opinion
July 8, 1996