Arbitrators: Be Cautious When Sanctioning Attorneys

A Colorado appellate court recently held that arbitrators do not have the inherent power to sanction an attorney personally for misconduct. 

See Herrera v. Santangelo Law Offices, P.C., No. 20CA2105, 2022 WL 3269739 (Colo. App. Aug. 11, 2022), decision available here.

In this Colorado case, an attorney for a party in an arbitration proceeding fabricated a settlement and made false representations to the arbitrator regarding the purported settlement.  As a sanction, the arbitrator ordered the attorney, in his personal capacity, to pay almost $150,000 to opposing counsel to cover attorney’s fees incurred in responding to the lawyer’s falsehoods.  A Colorado appellate court ultimately found that the arbitration agreement between the parties did not cover or bind the attorney who was representing a party in the proceeding; there was no obligation for this attorney to arbitrate any personal liability for sanctions for misconduct in connection with the proceeding.  The appellate court vacated the arbitrator’s award of sanctions against the attorney.

Although the court found there was no inherent power to issue sanctions, the court recognized that arbitrators should be able to control and protect arbitration proceedings from misconduct, and it seems that if there is no inherent power to sanction attorneys, it may be hard to keep attorney misconduct in check.  However, the court suggested that safeguards can still exist.  For example, arbitrators could ask attorneys appearing before them to explicitly agree to the arbitrator’s authority to issue sanctions against them, and arbitral rules may already recognize such a power.  Furthermore, the court observed that disciplinary proceedings could be brought against lawyers for misconduct in connection with arbitration proceedings (e.g., the ABA Model Rules of Professional Conduct governing attorneys include standards regarding an attorney’s duties in connection with “tribunals,” and the ABA Model Rules expressly define tribunals to include binding arbitration proceedings.  But state adoption of these ABA Model Rules, and in particular, adoption of the ABA’s definitions, may vary.)  In addition, the court recognized the possibility that attorney misconduct can open the door to issuing sanctions against the attorney’s clients, and such a threat of sanctions against clients may help keep their attorneys in check.  

In what ways should arbitrators implement safeguards to ensure an efficient, fair hearing with no abusive or unprofessional conduct?  This case raises a larger issue about good practices for arbitrators to remain in control of the proceedings.  I believe it is important for an arbitrator to set a tone from the very beginning, and throughout a proceeding, that unprofessional or abusive conduct will not be tolerated. This Colorado case suggests that before an arbitration even begins, an arbitrator may want to review the arbitration agreement and governing arbitral rules to determine if the power to sanction already exists. If such a power is not explicitly recognized in the agreement or arbitral rules, an arbitrator should consider seeking, from the very outset, the consent of the attorneys regarding the power to sanction.

Imre Szalai

Professor Szalai graduated from Yale University, double majoring in Economics and Classical Civilizations, and he received his law degree from Columbia University, where he was named a Harlan Fiske Stone Scholar. After graduating from law school, Professor Szalai practiced antitrust law in New York City, and then he practiced complex…