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Bochetto & Lentz is still responsible for paying a $124,000 arbitration award to an ex-associate who has since been suspended from the bar for stealing money from the firm, the state Superior Court has ruled, rejecting the argument that public policy would preclude paying money to a lawyer who engaged in such conduct.

“We note there exists no published decision in this commonwealth that has utilized public policy as a ground to vacate an arbitration award involving an attorney’s unethical conduct, and we decline to carve out such a rule in this instance,” Judge Sallie Updyke Mundy said for the three-judge panel in the memorandum opinion in Sigman v. Bochetto & Lentz.

The court said the public’s interests were previously addressed through the state’s attorney disciplinary system and a vacation of the arbitration award would result in a “redundant punishment.”

From July 2005 to March 2006, attorney Scott P. Sigman was an associate at Bochetto & Lentz. During that time, according to the opinion, he breached his fiduciary duties to the firm by stealing money from clients, the law firm and third parties. After disciplinary proceedings, the state Supreme Court suspended Sigman from the practice of law for 30 months.

Before much of Sigman’s conduct was known to the firm, the parties entered into an agreement to terminate Sigman’s employment. As part of that agreement, Sigman would receive specific referral fees for the cases he worked on or played a role in generating, Mundy said. The agreement also outlined that the parties would go to arbitration before Harris Bock if there was a dispute.

Sigman later sued the law firm for failure to pay him more than $227,000 in fees he said were owed him under the agreement. The parties went to arbitration, and the arbitrator found that, while Sigman engaged in “multiple violations of his fiduciary obligations,” he was nonetheless entitled to a portion of the fees. The arbitrator awarded Sigman $123,943, Mundy said.

Bochetto & Lentz name partner George Bochetto said Thursday the misconduct leading to Sigman’s 30-month suspension only came to the firm’s attention after the separation agreement had been reached.

“I think this is a very, very important issue for Pennsylvania and I do intend to take it to the Supreme Court,” Bochetto said.

Brian S. Chacker of Gay Chacker & Mittin represented Sigman.

“We are pleased that both the trial court and the Superior Court recognize the importance of the arbitration process and the deference that should be given to an arbitrator’s decisions, particularly where a full hearing on the merits was held after substantial discovery was completed,” Chacker said. “We are hopeful that the Superior Court’s decision will bring this matter to a conclusion so that all parties can put this behind them.”

On appeal to the Superior Court, Bochetto & Lentz argued the arbitration award should be vacated because it contravenes well-established public policy, or, in the alternative, the court should review the case de novo and determine that Sigman’s “abhorrent” conduct must result in the forfeiture of all compensation.

Bochetto & Lentz argued the arbitration was against public policy as outlined in the Pennsylvania Rules of Professional Conduct.

Mundy said a trial court has limited authority to vacate a common-law arbitration award, with the appellant required to show the award was a result of fraud, misconduct, corruption or some other irregularity. She said Bochetto & Lentz was afforded a comprehensive arbitration hearing conducted over the course of two days. She said the firm failed to show there was any sort of misconduct in reaching the arbitrator’s decision.

“Our Supreme Court has recognized that where a party seeks to invalidate an arbitration award on the basis of public policy, as is the case here, ‘such public policy … must be well-defined, dominant and ascertained by reference to the laws and legal precedents and not from general considerations of supposed public interests,’” Mundy said. “To the extent B&L cites case law that is applicable to statutory arbitration, in an attempt to have its public policy argument applied to this matter of common-law arbitration, we decline to do so.”

Mundy noted that the Philadelphia trial court judge who heard the case initially said the question as to punishment becomes how much is enough. The trial court, Mundy said, noted Sigman’s suspension, sanctions, public embarrassment and career disruption.

The trial court said “‘it borders on disingenuous to claim that B&L is entitled to all fees generated by [Sigman], especially in light of the reduction imposed by the arbitrator,’” Mundy said, quoting from the trial court opinion.

As to Bochetto & Lentz’s second issue on appeal, Mundy said the court declined to conduct a de novo review of the case when there was no case law to suggest appellate courts have done such a thing in common-law arbitration cases.

“[B]&L’s attempt to relitigate these theories on account of its dissatisfaction with the arbitrator’s findings is not a proper basis upon which to vacate the arbitration award,” Mundy said.

Judge Cheryl Lynn Allen and Senior Judge James J. Fitzgerald III joined Mundy in the decision.

Gina Passarella can be contacted at 215-557-2494 or at gpassarella@alm.com. Follow her on Twitter @GPassarellaTLI.

(Copies of the 18-page opinion in Sigman v. Bochetto & Lentz, PICS No. 14-0980, are available from The Legal Intelligencer. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.) •