Thank you for sharing!

Your article was successfully shared with the contacts you provided.
An attorney who included a provision in a retainer agreement providing that any future fee disputes with his client would be subject to “binding” arbitration, may nonetheless pursue litigation to reverse an arbitration award that cut his claim for fees by $25,000, a Manhattan judge has ruled. Supreme Court Justice Carol Robinson Edmead ( See Profile) ruled attorney Richard L. Gold was not bound by the award because the retainer agreement did not contain a prescribed waiver of both his and his client’s right to litigate anew the issues resolved in the arbitration. Granting clients a right to take fee disputes in the range of $1,000 to $50,000 to mandatory arbitration was one of a series of reforms initially recommended in 1995 by a commission appointed by Chief Judge Judith S. Kaye to restore “public confidence in the entire legal system” that had become “seriously eroded.” The requirement for mandatory arbitration of fee disputes within the defined range, without regard to the subject matter of the retention, took effect on Jan. 1, 2002. Under an earlier rule, mandatory arbitration was required starting in late 1993 for fee disputes arising in matrimonial matters, including visitation and support disputes in Family Court. Prior to the adoption of those provisions in the Rules of the Chief Administrative Judge (now Part 137), clients had no right to take their fee disputes to mandatory arbitration. Clients and their lawyers, however, could agree to mandatory arbitration, and many county bar associations ran programs for the arbitration and mediation of fee disputes. The rule as finally adopted contained a provision allowing either attorneys or their clients to seek a de novo review. That requirement was adopted to add a measure of comfort and an element of protection, then-Chief Administrative Judge Jonathan Lippman said in introducing the program in 2001 (NYLJ, Jan. 29, 2001). Justice Lippman, who is now the presiding justice of the Appellate Division, First Department, also said that in other states with mandatory fee arbitration programs de novo reviews are almost never requested. Other reforms subsequently adopted by the court system as a result of the Kaye committee’s 1995 report included requiring mandatory continuing legal education for all of the state’s attorneys; providing for monetary sanctions against attorneys who engage in frivolous litigation; a requirement that attorneys give clients a “letter of engagement” spelling out the services to be provided and fees paid; and a code setting standards for “civility” in lawyers’ dealings with each other and judges. In April 2002, Mr. Gold, of Morelli & Gold, was retained by Paul H. Altman to represent him in a dispute with a former girlfriend involving visitation and support for their son. The retainer agreement, which Mr. Gold drafted, stated: ” . . . in the event that a dispute arises between us concerning our attorneys’ fees and expenses, you have an absolute right to have those disputes resolved through arbitration which will be binding upon both our firm and yourself.” Over the course of the next four years, the attorney-client relationship frayed. The two parted ways in 2006, with Mr. Gold claiming that Mr. Altman owed him $25,000. At that point, Mr. Gold informed Mr. Altman of his right to take the dispute to mandatory arbitration and provided him copies of the relevant regulations and guidelines, including the requirement for de novo review and the requirements for a waiver of that right. Mr. Altman filed for arbitration, and after a several-hour hearing on May 22, 2007, a panel consisting of two lawyers and a lay person cut Mr. Gold’s fees to $30,000 from $55,734, with the net result that he had to return $4,943 to Mr. Altman. The arbitration was conducted under a program run by the New York County Lawyers’ Association. Mr. Gold then sought a de novo review of the award, filing Morelli & Gold v. Altman, 602145/07. Mr. Altman, who represented himself, moved to dismiss the lawsuit, claiming that the arbitration award was binding and not subject to judicial review. Mr. Altman, however, had been represented by a lawyer at the arbitration. Mr. Altman said he will appeal Justice Edmead’s ruling denying his motion to dismiss the lawsuit. He criticized the decision as turning a provision designed to protect consumers into “a sword for lawyers to escape the consequences of an arbitration they agreed to.” Mr. Gold declined to comment. But, in legal papers filed with Justice Edmead he defended the clause in the retainer agreement as “making Altman aware that his election to proceed to arbitration would bind us both,” not that the ruling itself would be binding. Mr. Gold also defended his legal work, stating that he had initially negotiated “a very favorable Stipulation of Settlement” and had prevailed for Mr. Altman in two of three subsequent, and related, Family Court proceedings commenced by Mr. Altman’s former girlfriend. The third proceeding had not been concluded by the time the representation had ended, Mr. Gold stated. In finding that Mr. Gold could proceed with a de novo proceeding, Justice Edmead concluded that the retainer agreement did not contain the waiver of de novo review in the form required by Part 137 (c) of the Rules of the Chief Administrative Judge. Under that rule, as implemented by the 18-member board of governors that oversees the statewide program, Justice Edmead wrote, “both parties” are required to acknowledge that they “agree to waive their rights to reject the arbitrator(s) award by commencing an action on the merits (de novo) within 30 days after the arbitrator(s) decision has been mailed.” Also both the attorney and client must state they “understand that they are not required to waive their right to seek a trial de novo.” Because the retainer agreement did not contain “the express waiver language required by [Part] 137.2(c),” Justice Edmead concluded, Mr. Gold’s lawsuit seeking a fresh look at his fee claim may proceed. “Despite language suggesting otherwise in their Representation Agreement,” the judge concluded, “the parties retained their right to seek judicial de novo review of their dispute over fees.”

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.