Update on California ADR Ethics

Several months back, I wrote Increasing Ethical Scrutiny in ADR which was about pending legislation in California that would mandate more oversight on the ethics of arbitrators and mediators.   

 Yesterday, California Governor Gavin Newsom signed the bill into law and it goes into effect on January 1, 2025.  While the certification process is voluntary, one would expect that market forces would encourage many (if not most) providers to obtain and maintain their certification under this law. 

 The law is not without its detractors, though.  The professional practices of ADR companies and their neutrals are, by nature, almost always private. An agency policing its neutrals’ compliance with legal ethics rules is likely a murky area of regulation.  Others have noted that this is just a knee-jerk reaction to the embarrassment of the Tom Girardi/Real Housewives of Beverly Hills scandal.  But, given the trust that is necessary in ADR and that this law might better foster that trust, it is still probably a good thing.