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I was recently appointed as the chair of the Joint Committee on Fee Disputes and Conciliation. Upon beginning my term, I was struck by both the immense value that the committee offers to attorneys and clients and the way that common misconceptions about the program can cause prospective participants  to lose the opportunity to reap the benefits

Part 137 of the Rules of the Chief Administrative Judge of the State of New York establishes an attorney-client “Fee Dispute Resolution Program” (the “FDRP”). For the First Department, this program is implemented through the committee—a collaboration between the Office of Court Administration, the New York County Lawyers Association (NYCLA), the Bronx County Bar Association and the Association of the Bar of the City of New York.

Many attorneys opt to take part in the program because it is reliable, neutral and streamlined. The staff and neutrals are experienced in handling fee disputes, allowing parties to resolve their matters efficiently. The fees are modest and operate on a sliding scale, ensuring that resolving the dispute will not be disproportionate to the amount in controversy. Mixed arbitration panels consisting of both attorney and lay neutrals ensure that the committee is not biased toward clients or attorneys.

Attorneys and clients can also take advantage of the committee’s mediation services, helping parties to resolve their fee disputes by agreement. This allows for the possibility of a continued relationship between the attorney and the client. Additionally, this option often boosts the parties’ satisfaction with the result.

A client can unilaterally initiate a case; however, an attorney may only initiate a claim with the committee if the client has already agreed to resolve fee disputes through the committee. Many attorneys and clients choose to agree to utilize the FDRP when they begin the representation and include such a provision in their engagement agreement. Many attorneys are not able to take advantage of the program because they have not properly attained client consent.

In any event, attorneys are required to inform clients of their rights under Part 137 on two occasions: (1) engagement agreements must state that clients may have a right to arbitrate fee disputes under Part 137 (See 22 NYCRR 1215(b)); and (2) when a fee dispute arises or where the attorney seeks to commence an action against the client for attorney’s fees, attorneys must send their client the “Notice  of Client’s Right to Arbitrate” (UCS 137-1 [Dispute over Fees] or UCS 137-2 [Dispute over Refund]) forms, available on the NYCLA website

If you would like your fee disputes to be handled by the committee, it is advisable to use the following language in your engagement agreement verbatim: “[The client] has received and read the official written instructions and procedures for Part 137 of the Chief Administrator Rules and agrees to resolve fee disputes under this Part.  Attorney and Client understand that they are not required to sign this agreement.  Client understands that in the absence of this agreement, (s)he would have the right to choose whether or not to participate in this program.”  (See UCS 137-13 Consent to Resolve Fee Dispute by Arbitration Pursuant to Part 137.2(b) of the Rules of the Chief Administrator, Visit the New York Unified Court System’s website).

Generally, a party who is unsatisfied with the result of a fee dispute arbitration through the committee may elect to file a court action for a trial de novo. Many attorneys and clients agree to waive this right to prevent the costs and time investment involved in a court case. This also requires informed and knowing consent in a signed writing, which can be included in an engagement agreement, or in a separate agreement. (See UCS 137-14 Consent to Submit Fee Dispute to Arbitration Pursuant to Part 137.2(c) of Rules of the Chief Administrator and to Waive the Right to Trial De Novo, Visit the New York Unified Court System’s website).

Utilizing the FDRP has been a source of confusion for many participating attorneys. Many cases filed by both attorneys and clients are dismissed for noncompliance with the rules. While Part 137 provides  the  rules, the following account for the majority of dismissed cases:

  1. The dispute must be in the proper geographic jurisdiction. The committee, for example, only hears cases where a material part of the legal services was rendered, or if the attorney maintains an office in Manhattan and/or the Bronx.
  2. The claim must not involve representation in criminal matters.
  3. The committee will not intervene in claims involving substantial legal questions like professional malpractice or misconduct.
  4. The committee only hears claims for amounts in dispute between $1,000 and $50,000 (unless otherwise consented to) and may only award monetary relief in the form of legal fees.
  5. The claim must not be more than two years old.

The services of the FRDP are in high demand because of its expertise, efficiency and pragmatism. My hope is that by increasing awareness of the program and its requirements, attorneys will be able to take advantage of this fair, functional, and cost-saving program.

Lew Tesser, a partner in Tesser, Ryan and Rochmanm is the chair of the Part 137 Joint Committee on Fee Disputes and Conciliation.