On occasion, a client or litigant in propia persona may decide that they do not want to pay their attorney’s bill and may ask for information about their rights and responsibilities regarding a fee dispute. We have all heard it. “I could have done that myself!” “That Shyster! What did I pay him for?” “I was told that it would only cost $500, not $5,000.” The never-ending ulcer producing rhythm and chorus of the dissatisfied non-paying client.
In Marin County, we are fortunate enough to have a long-running successfully operated Mandatory Fee Arbitration with a committee of competent attorneys (and laypersons for the 3-person panel) ready, willing and able to serve to resolve these issues in a fair and expeditious manner.
The purpose of this article is to provide a summary of the essentials of the Mandatory Fee Arbitration Fee Arbitration Program in Marin County to enable you to correctly identify when a dispute is a proper subject for mandatory fee arbitration and refer parties to our bar association program, if appropriate.
What is the Mandatory Fee Arbitration Program?
The Mandatory Fee Arbitration Program (“the Program”) provides an opportunity to have a volunteer arbitrator resolve attorney fee and cost disputes between clients and attorneys through an informal, low-cost alternative to the court system. The arbitrator determines whether the fees and costs charged by the attorney are reasonable for the services provided. The Program is authorized by Business and Professions Code section 6200 et seq. Fee arbitration is voluntary for the client, unless the parties previously agreed to arbitrate their disputes with the Program. Fee Arbitration is mandatory for the attorney if the client requests it. (See Bus. & Prof. Code §6200, subd. (c).)
How does the Program work?
Most Marin County fee arbitrations are conducted through our local bar association’s State Bar approved Mandatory Fee Arbitration Program. Jurisdiction usually lies in the county where the legal services were provided, where the attorney maintains an office, or where the client lives. Our local bar rules should be consulted to determine if jurisdiction exists. If our local program lacks jurisdiction, or if either party declares that he/she cannot obtain a fair hearing at the local level, the State Bar Office of Mandatory Fee Arbitration will assume jurisdiction of the matter.
Are All Disputes With an Attorney Covered by the Mandatory Fee Arbitration Program?
No. Fee disputes where the fee or cost to be paid by the client has been determined pursuant to statute or court order are not covered. (See Bus. & Prof. Code §6200, subd.(b)(3).) For example, court ordered or statutorily set attorney’s fees in family law, bankruptcy or probate cases are not covered by the Program. Nor are claims for affirmative relief against the attorney for damages or otherwise based upon alleged malpractice or professional misconduct. (See Bus. & Prof. Code §6200(b)(2).) However, evidence of professional negligence or misconduct is admissible in the fee arbitration hearing.(Bus. & Prof. Code §6203, subd. (a.).)
What are the Client’s Rights Before an Attorney May File a Lawsuit to Collect Unpaid Attorney’s Fees?
Prior to or at the time of service of summons or claim in an action against the client, or prior to commencing a proceeding as an alternative to arbitration under the Mandatory Fee Arbitration Program, the attorney shall forward a written notice to the client of his or her right to arbitration under the Program. The Notice shall be the Marin County Bar Association’s State Bar-approved Notice of Client’s Right to Arbitration. The client’s failure to request fee arbitration within 30 days of his or her receipt of the Notice is deemed to be a waiver of the right to arbitration under the Program. (See Bus. & Prof. Code §6201, subd.(a).) However, the court in this county has been known to order parties to fee arbitration through this program after the 30 days has elapsed and after the attorney has filed suit to collect fees and costs claimed due.
If the attorney has already filed a lawsuit against the client for unpaid fees, the client may elect to either respond to the lawsuit or request fee arbitration. If the client files a response to the lawsuit, after Notice of the right to arbitration is given, technically his or her right to arbitrate the fee dispute is deemed waived. (See Bus. & Prof. Code §6201, subd.(b).) If the client requests fee arbitration, the lawsuit is automatically stayed. (Bus. & Prof. Code §6201, subd. (c).) To alert the court, the client should file the appropriate notice of automatic stay where the lawsuit is pending. To preserve the right to arbitrate, the client should file a request for arbitration promptly. However, as stated hereinabove, the court in this county, recognizing the obvious benefits of our program, has ordered parties to participate in our mandatory fee arbitration as an alternative to the ADR program currently in place within our court process.
What Happens Once Arbitration Is Requested?
To request arbitration, a party submits a completed arbitration request form from the fee arbitration program and pays any required filing fee. A telephone call or letter to the program requesting arbitration will not protect the right to arbitration.
The program will assign a sole arbitrator or a panel of three arbitrators (depending on the amount in dispute) to hear the dispute and determine whether the attorney’s fees and costs were reasonable. If the arbitrator determines that the attorney’s fees were not reasonable, the client may be awarded a refund of attorney’s fees or costs. Alternatively, the arbitrator may determine that no refund is owed or that the client owes fees to the attorney.
Depending on the circumstances, the arbitrator will consider a number of factors in making a decision. These may include: whether there was a written fee agreement; the reasonable value of the attorney’s services; the amount of time the attorney spent on the case; and whether any misconduct or incompetency by the attorney affected the value of the services. The arbitrator will decide the matter based only upon the evidence presented at the hearing. The arbitration award will be served on the parties after the hearing is submitted for decision.
Is an Attorney Necessary for a Party in a Fee Arbitration?
Because the program is intended to be a low cost alternative to the court system, parties do not need an attorney to represent them in a fee arbitration. Either party may choose to hire an attorney at his or her own expense, but the arbitration award cannot include the attorney’s fees incurred for the preparation for, or appearance at the arbitration hearing. (See Bus. & Prof. Code §6203, subd. (a).)
What if the Client Believes that the Attorney Engaged in Misconduct or Malpractice?
The Mandatory Fee Arbitration Program cannot help recover damages or offset expenses incurred by attorney malpractice or misconduct.
If the arbitrator determines that the attorney’s malpractice or professional misconduct reduced the value of the attorney’s services, the arbitrator can reduce the attorney’s fees accordingly. However, the arbitrator cannot offset the fee or order the attorney to pay for any damages the attorney’s conduct may have caused. (See Bus. & Prof. Code §6203, subd. (a).) If there are concerns about attorney malpractice, they should be discussed with an independent attorney.
In addition, a disciplinary complaint may be filed with the State Bar of California by calling the State Bar’s toll-free number: (800) 843-9053. A copy of the pamphlet “What Can I Do If I Have A Problem With My Lawyer?” is available by calling the State Bar. The pamphlet may also be accessed from the internet at www.calbar.ca.gov.
A discipline complaint and a request to arbitrate a fee dispute are separate matters. Filing a complaint may result in disciplinary action against the attorney; however, the result may or may not require the attorney to pay restitution or unearned fees to the client.
Can the Client Still Litigate a Fee Dispute In Court If He/She Is Dissatisfied with the Arbitration Award?
It depends on whether the fee arbitration proceeded as binding or non-binding. Fee arbitrations are non-binding unless the parties agree in writing to binding arbitration after the dispute arises but prior to the hearing. If the arbitration is binding, the award is final and neither party may request a new trial in court. A binding award can only be corrected or vacated for very limited reasons as set forth in Code of Civil Procedure section 1285 et seq. The time period for filing a petition to correct or vacate the award is 100 days from the date of service of the award. (Code. Civ. Proc.§1288.2.)
If the award is non-binding, a party has 30 days from the date of service of the award to file an action in court requesting a trial to reject the award. (Bus. & Prof. Code §6204 (c).) If a trial is not requested within the 30 days by either party, the award automatically becomes binding. In small claims court, the parties may use the Judicial Council forms SC-100 and SC-101 to request a trial de novo. Form SC-101 contains useful information on this process.
How Does the Client Enforce An Arbitration Award Against the Attorney?
An arbitration award must become final before it is enforceable. Generally, that means that the 30-day time period to request trial de novo or the 100-day period to petition to vacate or correct the award must pass. Either party may then request the court to enter a judgment confirming the arbitration award. The client may then enforce the judgment against the judgment debtor. (See Code Civ. Proc.§1287.4.)
If the arbitration award rendered is in favor of the client for a refund of attorney’s fees or costs, the client may request the State Bar for assistance in enforcing the award or judgment. (See Bus. & Prof. Code §6203, subd.(d).) The attorney’s reply may consist of a payment proposal, a claim of financial inability to pay or lack of liability. By statute, the State Bar is authorized to enforce an unpaid award by imposing administrative penalties on the attorney member. It may also seek a State Bar Court order enrolling the attorney on inactive status until the award is paid. (Ibid.)
So, take a deep breath! There is life after a disgruntled non-paying client and a reasonable means to reconcile your differences.
For further information about the Mandatory Fee Arbitration Program, please contact:
Robynn Gaspar, Executive Director
Marin County Bar
To learn more, please call Merrill, Arnone & Jones (MAJ Law) at (707) 528-2882 today.