Are the local bar associations, administrators, and volunteer arbitrators in New York's fee-dispute program covered by state defense and indemnification?

Plain-English summary

The Chief Administrative Judge asked the AG about defense and indemnification under Public Officers Law § 17 for three categories of people involved in the New York State Attorney-Client Fee Dispute Resolution Program: the local bar associations that run local programs, the individuals administering those local programs, and the volunteer arbitrators and mediators (called "neutrals"). The Program is established by Joint Rules of the Appellate Division and Rules of the Chief Administrator (22 N.Y.C.R.R. Part 137 and § 1230.1), with a Board of Governors appointed by the Chief Judge and Presiding Justices overseeing it.

The AG drew a clean line. Bar associations and administrators: no. Volunteer neutrals: yes, if the Board adopts proposed governance amendments.

The legal test. POL § 17 covers any "employee" of the State for civil action defense and indemnification. § 17(1)(a) defines employee broadly: anyone holding a position by "election, appointment or employment in the service of the state, whether or not compensated, or a volunteer expressly authorized to participate in a state-sponsored volunteer program." Independent contractors are excluded.

Bar associations. Not elected, not employed, and not appointed by the Board. Board approval of a local program is regulatory approval, not appointment. The AG drew the analogy to a county social services program reviewed and approved by the State Department of Social Services under Social Services Law § 473: the county isn't a state employee just because the State signs off on the program design. The bar associations are similarly outside § 17.

Administrators of local programs. The bar associations select these individuals. The Board only approves the local program structure and receives information about who the contact person is (22 N.Y.C.R.R. § 137.4(b)(5); Standards § 4(C)(4) and 5(A)). Without Board appointment, the administrators don't fit the § 17 definition. If they are "employees" of anyone, they are employees of the bar associations, not the Board.

Neutrals. This is the interesting part. Under the rules as they stood, the bar associations recruited and assigned neutrals; the Board provided training. The AG concluded that as the structure stood, the Board's supervision wasn't deep enough to convert volunteer neutrals into state-sponsored volunteers. But the Board was preparing to amend the Standards. Under the proposed changes, the Board would approve each neutral after reviewing qualifications, would have power to remove a neutral for failure to meet the standards, and would prescribe the assignment procedure. Local programs would still pull from the list of Board-approved neutrals, but the list and the rules would come from the Board.

With those amendments, the AG concluded, the neutrals would be "volunteers expressly authorized to participate in a state-sponsored volunteer program," eligible for § 17 coverage. The reasoning followed Op. Att'y Gen. No. 2000-F1 (volunteer attorneys advising pro se litigants in OCA-supervised program) and Op. Att'y Gen. No. 92-F7 (court-appointed disciplinary counsel volunteers). Each program had state-agency control over volunteer selection and direct supervision; that's what made it state-sponsored.

The AG also flagged, in a footnote, that neutrals in local programs administered by district administrative judges (rather than by bar associations) would be covered under existing principles, because the judges are state agents and the supervisory chain runs through the State directly.

Independence of the neutral. One careful note: the AG was clear that the supervisory power the Board would gain under the proposed amendments wouldn't reach the substance of an arbitrator's or mediator's decision in a particular case. § 17 coverage flows from administrative supervision, not control over outcomes. The neutral remains independent in deciding the dispute.

Currency note

This opinion was issued in 2004. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: What does Public Officers Law § 17 do?
A: It requires the State to defend and indemnify its employees in civil actions arising from acts within the scope of public employment. § 17(2) covers defense; § 17(3)(a) covers indemnification. Coverage depends on the person being an "employee" as defined in § 17(1)(a).

Q: Why aren't bar associations 'employees' of the State?
A: Because the Board does not appoint them. It approves the local program they propose, which is regulatory approval analogous to State Department of Social Services approval of a county adult-services plan under Social Services Law § 473. Regulatory approval doesn't create employment.

Q: Why didn't the administrators qualify?
A: The bar associations choose them, not the Board. The Board's role is limited to approving the program and receiving contact information. Without Board appointment, they aren't State employees within the § 17 definition.

Q: What made the neutrals eligible (or about to be eligible)?
A: The proposed Board amendments would establish State-level appointment (Board approval after credential review), State-level removal authority, and State-prescribed assignment procedures. Combined with State-provided training, that level of oversight converts the neutrals into volunteers "expressly authorized to participate in a state-sponsored volunteer program."

Q: What about neutrals in programs run by administrative judges instead of bar associations?
A: The AG concluded those neutrals are already covered. Administrative judges are agents of the State, and they appoint and supervise the neutrals directly.

Q: Does the Board's oversight extend to how neutrals decide cases?
A: No. The AG was explicit that the supervisory authority for § 17 purposes doesn't reach the substance of arbitration decisions. The neutrals remain independent decisionmakers.

Background and statutory framework

The Attorney-Client Fee Dispute Resolution Program is established by Joint Rules of the Appellate Division at 22 N.Y.C.R.R. § 1230.1 and Rules of the Chief Administrator at 22 N.Y.C.R.R. Part 137. The Board of Governors is appointed by the Chief Judge and Presiding Justices of the Appellate Division (22 N.Y.C.R.R. § 137.3(b)) and oversees the operation of the Program (22 N.Y.C.R.R. § 137.3(g)). Local bar associations (or, where no bar association serves a county, district administrative judges) operate the local programs. Standards and Guidelines issued by the Board flesh out the operational requirements.

The relevant POL § 17 precedents trace the line between regulatory oversight and employment. Op. Att'y Gen. No. 96-F9 covered members of regional service councils designated by the Commissioner of Health, treating designation as appointment. Op. Att'y Gen. No. 89-F2 covered members of local emergency committees appointed by an Executive Department committee. Op. Att'y Gen. No. 98-F11 and No. 87-F10 dealt with state agency employees serving on advisory bodies as part of their job duties.

The state-sponsored volunteer cases are Op. Att'y Gen. No. 2000-F1 (volunteer attorneys advising pro se litigants in OCA-supervised program) and Op. Att'y Gen. No. 92-F7 (court-appointed attorneys in disciplinary system). Both involved state-agency appointment and direct State supervision of the volunteer activity.

Citations and references

Statutes:

• Public Officers Law § 17 (defense and indemnification)
• Public Officers Law § 17(1)(a) (definition of employee)
• Public Officers Law § 17(2) (defense)
• Public Officers Law § 17(3)(a) (indemnification)
• Public Officers Law § 17(4) (procedural requirements)
• Social Services Law § 473

Regulations:

• 22 N.Y.C.R.R. § 137 (Rules of the Chief Administrator)
• 22 N.Y.C.R.R. § 137.3(b), (g)
• 22 N.Y.C.R.R. § 137.4(b)
• 22 N.Y.C.R.R. § 1230.1 (Joint Rules of the Appellate Division)
• Board of Governors of the NYS Attorney-Client Fee Dispute Resolution Program, Standards and Guidelines

Prior AG opinions:

• Op. Att'y Gen. No. 2000-F1
• Op. Att'y Gen. No. 98-F11
• Op. Att'y Gen. No. 96-F9
• Op. Att'y Gen. No. 92-F7
• Op. Att'y Gen. No. 89-F2
• Op. Att'y Gen. No. 87-F10

Source

• Landing page: https://ag.ny.gov/libraries-documents/opinions/opinions-year
• Original PDF: https://ag.ny.gov/sites/default/files/opinions/2004-F3_pw.pdf

Original opinion text

PUBLIC OFFICERS LAW § 17; SOCIAL SERVICES LAW § 473; 22 N.Y.C.R.R. §§ 137.3(b), 137.3(g), 137.4(b), 1230.1.

The bar associations through which the New York State Attorney-Client Fee Dispute Resolution Program is implemented, and the individuals who administer the program, are not eligible for defense and indemnification under Public Officers Law § 17. The individual arbitrators and mediators, however, are.

February 17, 2004

Jonathan Lippman
Chief Administrative Judge
Unified Court System
140 Grand Street, Suite 704
White Plains, New York 10601

Formal Opinion
No. 2004-F3

Dear Judge Lippman:

You have requested an opinion regarding whether various individuals and entities involved in the New York State Attorney-Client Fee Dispute Resolution Program ("Program") implemented through local bar associations ("local programs") are eligible for State-provided defense and indemnification under Public Officers Law § 17. You specifically ask whether (1) the bar associations themselves; (2) bar association employees, officers and directors, and members who administer or assist in the administration of the local programs; and (3) volunteers who serve as "neutrals" are "employees" as defined in section 17. We conclude that neither the bar associations nor the individuals who administer the local programs are eligible for State-provided defense and indemnification. In the event the Board adopts proposed amendments to the standards governing the operation of the local programs, however, we conclude that the volunteers who serve as neutrals would be eligible for State-provided defense and indemnification.

I. Fee Dispute Resolution Program

Part 1230 of the Joint Rules of the Appellate Division provides that the Chief Administrator of the Courts shall establish a fee arbitration program ("Program") to provide for the resolution by arbitrators of fee disputes between an attorney and a client based upon representation in civil matters. 22 N.Y.C.R.R. § 1230.1. Part 137 of the Rules of the Chief Administrator establishes the Program under the direction of a Board of Governors ("Board"). 22 N.Y.C.R.R. Part 137. The Board is appointed by the Chief Judge and the Presiding Justices of the Appellate Division. Id. § 137.3(b).

The Program is administered and implemented through local programs, which must be approved by the Board before they can provide dispute resolution services. See Board of Governors of the New York State Attorney-Client Fee Dispute Resolution Program, Standards and Guidelines ("Standards") § 3(B). The Board provides training for arbitrators and mediators that adjudicate disputes under the auspices of the Program, collectively called "neutrals." Standards § 2(E). The Board also monitors local programs, 22 N.Y.C.R.R. § 137.3(g); Standards § 7(B).

To the extent possible, local programs are conducted through local bar associations. 22 N.Y.C.R.R. § 137.3(g); Standards §§ 2(D), 3(A). Bar associations that wish to implement a local program must submit to the Board for the Board's approval written procedures for the proposed local program. Standards § 4.

Once the Board approves a local program, the participating bar association is responsible for the operation of the local program. The bar association conducts the daily administration of the local program. Standards § 5(A). The bar association must also recruit, select, provide for the training of, and maintain a sufficient qualified pool of neutrals. Standards § 4(C)(2) and (3). The bar association assigns these neutrals to specific disputes. Id. § 8(A).

We have been further advised that the Board is prepared to amend the Standards to provide greater oversight of neutrals by the Board. Under the proposed changes, the Board would approve appointments of neutrals recommended by local programs, after review of a prospective neutral's qualifications. The Board would also have the power to remove a neutral for failure to meet the requirements of Part 137. Under the proposed amendments, while the bar association would still assign neutrals to specific disputes, the procedure for assignment would be prescribed by the Board.

II. Analysis

Section 17 of the Public Officers Law provides that the State generally must provide for the defense of an employee in "any civil action or proceeding in any state or federal court arising out of any alleged act or omission which occurred or is alleged . . . to have occurred while the employee was acting within the scope of his public employment or duties." Pub. Off. Law § 17(2). The State generally must also indemnify its employees. Id. § 17(3)(a).

Under section 17, "employee" is defined as "any person holding a position by election, appointment or employment in the service of the state . . . whether or not compensated, or a volunteer expressly authorized to participate in a state-sponsored volunteer program, but shall not include an independent contractor." Pub. Off. Law § 17(1)(a).

A. Bar Associations and Administrators

The definition of "employee" under section 17 generally requires service to the State by virtue of "election, appointment or employment." Neither the bar associations nor the individuals administering local programs hold a position in the service of the State by election. Nor do they serve the local programs by virtue of employment by the State. The question remains as to whether they serve through appointment by the State. We believe that they do not.

First, with regard to the bar associations through which local programs operate, while local programs must be approved by the Board, the bar associations themselves are not appointed or selected by the Board, a factor which we have found relevant to section 17 determinations in the past. See Op. Att'y Gen. No. 96-F9; Op. Att'y Gen. No. 89-F2. Board approval of a local program proposed by a bar association is, we believe, analogous to approval by a regulatory agency of a program presented by an entity within the agency's jurisdiction, such as, for example, a social services program run by a county but subject to approval by the State. See, e.g., Social Services Law § 473.

With regard to the individuals administering the local programs, the selection of a particular individual is left wholly to the bar associations, not to the Board. To the extent that these individuals are "employees," they would be employees of the bar associations rather than of the Board.

We thus conclude that the bar associations and the individuals administering local programs, because they do not "hold[] a position by election, appointment or employment in the service of the state," are not "employees" of the Board for purposes of Public Officers Law § 17.

B. Neutrals

With respect to the neutrals volunteering within a local program operated by a bar association, assuming the adoption of the proposed amendments to the Standards, we believe that they will be eligible for defense and indemnification by the State.

Under section 17, a "volunteer expressly authorized to participate in a state-sponsored volunteer program" is considered an employee. We have previously concluded that a program is a State-sponsored volunteer program where it was established and administered by a State agency and the volunteers were appointed and directly supervised by State employees. See Op. Att'y Gen. No. 2000-F1; Op. Att'y Gen. No. 92-F7.

In the instant situation, the Program was mandated and established by the State. Neutrals receive training by the Board. Moreover, with the proposed changes, while the Program would still be administered by the local bar associations, the bar associations would not have unlimited discretion in their oversight of the neutrals. Instead, that discretion would be significantly limited by the Board, who would appoint neutrals and have the power to remove them from their positions. Additionally, the ability of a bar association to assign neutrals to specific matters would be cabined by the Board's requirement that the bar association follow a specific procedure in assigning qualified neutrals. We thus believe that, subject to the adoption of the proposed modifications to the Standards, the Board will exercise supervision over the neutrals sufficient to qualify the Program as a "State-sponsored volunteer program" such that neutrals will be eligible for section 17 coverage.

We note that the independence of the neutral to decide a dispute before him is not subject to the control of either the bar association or the Board. Thus, the supervision either entity has over the individual neutral does not extend to results in particular matters.

In sum, we conclude that the bar associations implementing the Program through local programs are not appointed by the Board, and thus that they are not "employees" of the Board eligible for State-provided defense and indemnification. We are of the further opinion that because the individuals administering local programs are not selected by the Board but rather by the bar associations, they are not "employees" of the Board and thus are not subject to coverage under Public Officers Law § 17. We believe, however, that, subject to the adoption of the proposed amendments to the Standards discussed above, the individuals volunteering as neutrals, appointed and trained by the Board, and subject to removal by the Board, as well as to the Board's procedure for assignment to particular matters, are "volunteers" eligible for State-provided defense and indemnification.

Very truly yours,

ELIOT SPITZER
Attorney General