The District of Columbia Court of Appeals is set to hear a case this month challenging its own authority to set rules for the D.C. Bar. At issue is whether mandatory arbitration of attorney-client fee disputes runs afoul of the law.

The case centers on a soured professional relationship between two local solo practitioners. Barbara Walker, an Alexandria, Va., attorney, hired Washington lawyer Pamela Stuart in 2003 to handle a pension benefits claim against Walker’s former employer.

When Stuart gave Walker a bill for $84,254 two years later, Walker refused to pay, challenging the fees and the quality of Stuart’s work. Stuart claimed Walker knew the rates, misrepresented her ability to pay and then balked when the invoice arrived. In 2008, Stuart sued Walker in District of Columbia Superior Court for breach of contract and fraud.

Walker asked for arbitration under D.C. Bar Rule XIII, which requires mandatory arbitration in attorney-client fee disputes. Superior Court Judge Judith Macaluso granted the request, over Stuart’s objections, in June 2009, staying proceedings pending arbitration. Stuart appealed. Ordering arbitration against her wishes unconstitutionally denied her access to the courts, she argued. She also claimed that the appeals court, which sets rules for the D.C. Bar, overstepped its legal bounds when it adopted Rule XIII in the mid-1990s.

A split three-judge appellate panel dismissed the case in October 2010 on jurisdiction, finding that Macaluso’s order was not an appealable final order resolving the case. Stuart successfully petitioned for a rehearing before the full court, which is scheduled for Dec. 19.

The appeals court will consider the bounds of its own authority in two areas — first, whether it can hear appeals of Superior Court orders granting mandatory arbitration, and second, whether mandatory arbitration is legal.

Walker, who did not respond to requests for comment, is representing herself. “Public confidence would be severely undermined by a ruling in this case rejecting mandatory fee arbitration,” Walker wrote in her brief. If an attorney refuses to participate in a voluntary program, she wrote, the client’s options are to drop the claim or sue, which they may not have the money or experience to do.

Stuart, who is also representing herself, counters that arbitration can put attorneys at an unfair disadvantage. “There really are significant differences between having a trial before a judge…and having basically an informal presentation to three arbitrators, one of whom is a layperson,” she said.

When previous fee disputes went before a judge, Stuart said, “if I did the work, I got paid.” But in cases that went to arbitration, she said, “I received approximately half of what I was owed with no explanation.”

‘LONG-STANDING POLICY’

Before Stuart can get the court to consider mandatory arbitration, though, she will have to get past jurisdiction.

The District of Columbia Council revised local law governing arbitrations with the Arbitration Act of 2007, which allowed appeals of orders granting arbitration. Previously, only orders denying arbitration could be appealed. In the first, now-vacated appellate decision in Stuart’s case, the judges found that the council unlawfully expanded the appeals court’s jurisdiction to include nonfinal orders.

Stuart, supported by briefs from the District’s Office of the Attorney General and the council’s Office of General Counsel, argues that Macaluso’s order had the practical effect of being final. “It ends any consideration of Stuart’s claims on the merits by the Superior Court,” Stuart wrote in her brief. The arbitrators don’t give a reason for an award, she wrote, so while she can appeal to the trial judge, the lack of grounds means “the appeal right is totally illusory.”

Walker deferred to an amicus brief penned by the D.C. Bar Attorney/Client Arbitration Board to argue against jurisdiction. The board, represented by Anne Harkavy and Susan Friedman of Wilmer Cutler Pickering Hale and Dorr, is claiming that the trial judge only paused the underlying proceedings, and that Stuart could appeal later. “A contrary decision would frustrate this Court’s long-standing policy against piecemeal review,” the board wrote in its brief.

If the judges find jurisdiction, they will then weigh whether the court can legally mandate arbitration, as well as whether mandatory arbitration is constitutional.

According to an American Bar Associ­ation survey released in July, the District and 11 other states require mandatory arbitration of fee disputes. Barry Cohen, a Crowell & Moring partner specializing in professional-responsibility issues, said a growing number of state bars are considering mandatory arbitration. “In a typical dispute, the lawyer has got all the advantage…so the bar thinks, ‘We ought to provide a less expensive way to resolve these things and make it mandatory, if that’s what the client wants,’ ” Cohen said.

Stuart isn’t the first to challenge such a rule, he said. “At some point, some lawyer is going to complain about it and roll the dice and take a chance at challenging it. Why? Because the lawyer would probably prefer to be in court where he or she has the advantage,” he said.

Cohen said he wasn’t aware of any state where mandatory arbitration was ruled unconstitutional, or where courts rolled back a mandatory program. He added, however, that Stuart is right to point out that the District’s court system operates differently from other states because it was set up by Congress.

Stuart argues that, under the D.C. Code and the Home Rule Act, the appeals court is limited in the types of rules it can make for the D.C. Bar. Denying attorneys access to the court through mandatory arbitration falls outside the scope of those laws, Stuart wrote in her brief. “Mandatory arbitration being imposed upon lawyers as a class of litigants makes lawyers into second-class citizens,” she wrote.

Walker, in her brief, wrote that being a lawyer is a privilege, not a right, and that Stuart agreed to follow the rules when she joined the D.C. Bar.

“The power of the Court of Appeals to regulate the bar is broad enough” to condition membership on agreeing to mandatory arbitration, Walker wrote. “One who elects to practice law in the District of Columbia voluntarily submits herself to this Court’s jurisdiction over the practice of law.”

Contact Zoe Tillman at ztillman@alm.com.