When lawyers act as mediators or arbitrators: legal practice and insurance consequences in South Australia

This article was first published in the Law Society of South Australia Bulletin in March 2026.

Legal practitioners who act as mediators or arbitrators occupy an unusual position within the South Australian regulatory framework. When performing those neutral functions, they are generally not engaged in ‘the practice of the law’ or ‘engaging in legal practice’ within the meaning of those terms in the Legal Practitioners Act 1981 (SA) (‘LP Act’). That distinction has consequences for costs disclosure, professional discipline and, most practically, compulsory professional indemnity insurance.

Legal practice under the LP Act

Section 21 of the LP Act restricts the practice of the profession of the law to qualified legal practitioners. Section 21(2) provides that a person practises the profession of the law if, acting for fee or reward on behalf of another person, they undertake work of the types described in subparagraphs (a)–(e). Those paragraphs focus on representation, advocacy, preparation of legal documents and other work characteristically undertaken for a client.

The LP Act defines ‘legal services’ as ‘work done, or business transacted, in the ordinary course of engaging in legal practice’. The definition is circular but functional. It ties ‘legal services’ to the concept of engaging in legal practice. Section 21 assists in identifying the core activities that constitute practising the profession of the law, while recognising that incidental matters will also fall within the concept of legal services.

Acting as a neutral mediator or arbitrator does not readily fall within those categories. Even where a mediator adopts an evaluative style, or assists parties in reducing agreed terms to writing, the defining feature of the role remains neutrality. A mediator or arbitrator does not act ‘on behalf of’ a party in advancing that party’s legal rights. Rather, the neutral person facilitates negotiation or determines issues independently of partisan interests.

This interpretation accords with both history and modern professional practice.

Historically, the Australian legal profession developed from the divided English professions of barristers and solicitors, whose central functions were to represent others in courts and legal transactions. Admission to practise was tied to the privilege of standing in the place of another within the institutions of justice. Representation and agency were defining characteristics. Mediation and arbitration, by contrast, are not representative roles.

Secondly, mediation and arbitration have never been confined to lawyers. Australian Commercial Arbitration Acts (for example, the Commercial Arbitration Act2011 (SA)) impose no requirement that an arbitrator be legally qualified. In practice, arbitrators are frequently engineers, architects, accountants or other subject‑matter experts selected for technical knowledge. Mediation developed even more broadly, drawing from social work, psychology, industry and community leadership. National accreditation under AMDRAS and the statutory Family Dispute Resolution Practitioner (FDRP) registration under the Family Law Act 1975 (Cth) are both open to non‑lawyers. The regulatory landscape, therefore, assumes that neutral ADR is not a monopoly of the legal profession.

Professional discipline outside legal practice

The fact that mediation and arbitration are not ordinarily ‘legal practice’ does not place lawyer‑neutrals beyond regulation. Section 68 of the LP Act concerns unsatisfactory professional conduct arising in connection with the practice of law. Section 69, however, permits a finding of professional misconduct even where conduct occurs otherwise than in connection with legal practice, if the conduct would justify a conclusion that the practitioner is not a fit and proper person to practise.

A lawyer acting as a mediator, therefore, remains subject to professional discipline, albeit through a different conceptual pathway. The regulatory question shifts from whether the conduct was deficient legal work to whether it reflects adversely on the practitioner’s character.

Civil liability and insurance

Mediators and arbitrators may still incur civil liability under their contracts of appointment or pursuant to statutory regimes. For that reason, AMDRAS accreditation and FDRP regulations require practitioners either to hold professional indemnity insurance or to be protected by statutory immunity.

A practical issue for lawyer‑mediators is whether South Australia’s compulsory professional indemnity scheme covers liabilities arising from neutral ADR work. In my view, the short answer is, ‘Often yes, but with some caveats’.

Schedule 2 to the Legal Practitioner Professional Indemnity Insurance Scheme 2025 (‘PI Scheme’) provides that the insurer will indemnify the insured against civil liability incurred ‘in connection with the Insured’s Legal Practice’. That phrase requires careful attention.

The Scheme defines ‘the Insured’s Legal Practice’ to include the legal practice carried on by the Insured practitioner or firm. This is a description of the insured business, not the work itself. It is distinct from the statutory concept of ‘legal practice’ under the LP Act.

‘Legal Practice’ is also defined in the PI Scheme to mean ‘the provision of such legal services as are usually provided by a legal practitioner in private practice in Australia’ while holding a practising certificate. The Scheme does not separately define ‘legal services’, but Schedule 4 provides that undefined terms take their meaning from the LP Act unless the context otherwise requires.

Two interpretive steps are therefore necessary.

First, what constitutes ‘legal services’ for the purposes of the PI Scheme? On one view, the phrase ‘such legal services as are usually provided’ refers to services commonly supplied by lawyers in private practice, whether or not those services are exclusively legal in nature. On another view, it refers only to services that fall within the statutory conception of legal practice under the LP Act.

The interpretive clause suggests that, absent contrary context, the LP Act definition applies. If so, neutral mediation and arbitration may not themselves constitute ‘legal services’.

Secondly, however, the insuring clause does not require that liability arise from the provision of legal services. It requires only that the civil liability be incurred ‘in connection with the Insured’s Legal Practice’. Australian courts have repeatedly described the phrase ‘in connection with’ as one of broad import, requiring a practical or commercial nexus rather than a strict causal relationship.

This shifts the focus from the nature of the activity to its relationship with the insured business.

If a lawyer conducts mediation or arbitration as part of an established law practice (through the same entity, under the same practising certificate, and billing fees into that practice), a strong argument exists that any resulting liability is incurred ‘in connection with’ that legal practice. The mediation work forms part of the commercial activities of the insured business, whether or not it is also a ‘legal service’.

Conversely, if a practitioner ceases providing traditional legal services to clients and operates solely as a mediator or arbitrator, the business may no longer satisfy the PI Scheme’s definition of a ‘Legal Practice’, which assumes the provision of legal services, as those are defined. In that scenario, mediation work may fall outside the scope of the compulsory PI Scheme.

This distinction is consistent with the structure and purpose of the PI Scheme. Compulsory cover is designed to protect consumers of legal services (broadly understood) and to support confidence in the regulated legal profession. Where neutral ADR work is conducted as an adjunct to, and through, an insured legal practice, it maintains a sufficient commercial and organisational connection. Where the practitioner’s business is no longer that of a legal practice, the justification for coverage under the statutory PI Scheme weakens.

Practical implications

Three practical observations follow.

First, lawyer–mediators and lawyer–arbitrators should ensure that mediation and arbitration services are conducted clearly within their insured practice, not through a separate entity.

Secondly, those who intend to practise exclusively as neutrals should not assume that a practising certificate and payment of a premium guarantee appropriate insurance cover. Separate or extended cover may be required.

Thirdly, accreditation bodies assessing compliance with AMDRAS or FDRP insurance requirements should be aware of the difference between statutory compulsory cover tied to an active legal practice and independent professional indemnity cover obtained specifically for neutral ADR services.

The regulatory framework does not treat mediation and arbitration as legal practice in the traditional sense. Nonetheless, when undertaken through an active and insured law practice, neutral ADR work will often bear a sufficient connection to that practice to attract cover under South Australia’s compulsory professional indemnity scheme. Careful attention to structure, disclosure and policy wording remains essential.

This article is not intended to provide legal advice. The views are those of the author and may not accord with the view of Law Claims in individual cases.

Adam Rosser is an AMDRAS Accredited Mediator and a Fellow of the Chartered Institute of Arbitrators.