A Second Bite: Fee Disputes and De Novo Options

By Sandor T. Boxer and Jack Goetz

 

While the Business and Professions Code section 6200 et. seq. requires California lawyers to participate in the Mandatory Fee Arbitration process, the time involved in doing so can be both distracting and potentially disruptive to the everyday business of providing services for clients. Many lawyers are surprised that such arbitrations are not binding unless both sides agree to binding arbitration after the dispute has arisen.1  The consequence is that any party unhappy with the outcome of non-binding Mandatory Fee Arbitration can seek, if timely and otherwise properly requested, a de novo proceeding, i.e., the second bite.2 Thus, the matter already arbitrated must be re-litigated, involving even greater time commitments for the parties.  While the opportunity for this de novo proceeding is required by law, a methodology for minimizing the time away from their law practice is often valued by both attorneys and their clients. The Los Angeles County Bar Association (LACBA) now offers an attractive and cost-effective alternative for the resolution of the second bite aspect of the Mandatory Fee Arbitration process.

LACBA’s specific program for these binding de novo arbitration proceedings is based on its long experience with its successful Mandatory Fee Arbitration program.   One such possibility is for the parties to agree, usually in the retainer agreement, that the de novo proceeding will be determined by a LACBA binding arbitration.3 A sample clause that can be utilized in a retainer agreement can be found at the website of LACBA.4  Additionally, the parties can stipulate to a de novo binding arbitration following a non-binding award by a written stipulation that essentially incorporates the same language.

Why select binding arbitration through LACBA as the de novo alternative?  LACBA’s Attorney-Client Mediation and Arbitration Services division has the most experience in fee arbitrations. The Association has (a) arbitrated fee disputes for longer than the Mandatory Fee Arbitration program has been in existence and has administered thousands of fee arbitration cases, (b) arbitrated more fee disputes than any other program in the State, including the State Bar itself and (c) trained a cadre of fee arbitrators for decades.

 The program is governed by the “Attorney-Client Arbitration Program Rules.”5 The Rules will:

  1. Provide a de novo proceeding with an emphasis on prompt resolution with limited prehearing procedures, including limited rights of discovery.

  2. Provide the parties a special panel of arbitrators with extensive fee arbitration experience to arbitrate the matter. The panel for this program is limited to arbitrators who have years of experience in arbitrating attorney-client fee disputes.

  3. Provide the parties with a cost-effective arbitration. Each member of the panel from which the arbitrator is selected sets his or her own rate of compensation and the amount of that compensation can be ascertained by the parties before that potential arbitrator is selected. 

For further information, please contact LACBA’s Attorney-Client Mediation and Arbitration Service by calling (213) 896-6541, emailing acmas@lacba.org, or by visiting lacba.org/ACMAS.



Business and Professions Code §6204(a).

2 Business and Professions Code §6203(b).

3 The de novo proceeding can, if the parties agree, be a binding arbitration instead of a court proceeding. Schatz v Allen Matkins Leck Gamble & Mallory LLP, 45 Cal.4th 557 (2009).

4 See http://www.lacba.org/need-legal-help/attorney-client-mediation-arbitration-service-clients/sample-arbitration-clauses

5 The Rules can also be found at https://www.lacba.org/need-legal-help/attorney-client-mediation-arbitration-service-clients.

 


Contact ACMAS: (213) 896-6541, lacba.org/ACMAS.