Arbitration of attorney fee disputes

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Owens v. Corrigan, 43 Fla. L. Weekly D1461 (Fla. 4th DCA June 27, 2018)

In Owens v. Corrigan, the Fourth District Court of Appeals reversed a trial court’s dismissal of a legal malpractice claim arising out of an underlying child custody case. The trial court dismissed the legal malpractice action due to the existence of a mandatory arbitration clause in the retainer agreement executed by the plaintiff. 

The appellate court reversed finding that the arbitration clause violated Rule 4-1.5(i) of the Rules Regulating the Florida Bar. While mandatory arbitration of attorney fee disputes may be permissible, the attorney is required to advise the client in writing that he or she should consider obtaining independent legal advice prior to executing an agreement containing a mandatory arbitration clause of fee disputes. The rule also requires the retainer agreement to include a specific disclaimer in bold-faced print recommending that the client consult independent legal advice about the arbitration clause:

NOTICE: This agreement contains provisions requiring arbitration of fee disputes. Before you sign this agreement you should consider consulting with another lawyer about the advisability of making an agreement with mandatory arbitration requirements. Arbitration proceedings are ways to resolve disputes without use of the court system. By entering into agreements that require arbitration as the way to resolve fee disputes, you give up (waive) your right to go to court to resolve those disputes by a judge or jury. These are important rights that should not be given up without careful consideration.

If the retainer agreement containing the arbitration clause of fee disputes “does not conform with Rule 4-1.5(i), the provision may be unenforceable on its face.”  Id., quoting Feldman v. Davis, 53 So. 2d 1132, 1137 (Fla. 4th DCA 2011).  In reaching its conclusion, the court also noted that “[l]awyers owe ethical obligations and duties to their clients that exceed what the common law requires of arm’s length contracting parties.”

In his dissent, Judge Jeffrey T. Kuntz found fault with the reasoning of the majority.  Because the underlying cause of action was grounded in legal malpractice, not an attorneys’ fee dispute, Judge Kuntz considered Rule 4-1.5(i) inapplicable to the case. A legal malpractice claim fit within the broad parameters of the arbitration clause. 

Considering Florida’s strong public policy favoring arbitration of disputes, Judge Kuntz concluded that “we should not strike the entire agreement in reliance on an inapplicable rule” and instead believed the appropriate course of action was to “sever those portions of the clause relating to fees and enforce the remainder of the signed contract.”

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