NY Court Backs Attorney Fee Arb Award Review (Web)
July 16, 2008
A lawyer who agreed to binding arbitration with his client is still entitled to seek de novo review of an arbitration award in state court, a New York state court trial judge ruled. The case means that a law providing for fee-dispute arbitration review must be specificially waived.
The case is reported in yesterday’s New York Law Journal, and is available at http://www.law.com/jsp/article.jsp?id=1202422970558.
Attorney Richard L. Gold, of New York City’s Morelli and Gold, represented Paul H. Altman in a visitation and child support dispute with his former girlfriend. Gold’s retainer agreement, the NYLJ reports, stated: “[I]n 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.”
After the lawyer-client relationship soured, Gold sought $25,000 in attorney fees. Altman exercised his right to take the fee dispute to arbitration, and was awarded nearly $5,000 when the arbitration panel cut Gold's total fees by $25,000, according to the article.
Gold then sought de novo review of the award in state court. Altman moved to dismiss the court action, arguing that the retainer agreement shielded the award from de novo review.
But the arbitration agreement wasn’t specific enough. Justice Carol Robinson Edmead, of the New York Supreme Court, which is the state’s trial-level court, disagreed with Altman. She found that Part 137.2 (c) of the Rules of the Chief Administrative Judge indicates parties to an attorney fee dispute may consent to a waiver of de novo review--and, therefore, interpreted the section to mean that parties must make a waiver explicit.
The rule allowing de novo review of arbitration awards in attorney fee disputes was added to the state’s attorney fees arbitration scheme as “a measure of comfort and an element of protection,” according to the NYLJ, at the same time the state adopted the right to mandatory fee arbitration in 2001.
Altman will appeal Edmead's denial of his motion to dismiss the de novo review, telling the NYLJ that the decision turns a provision designed to protect consumers into “a sword for lawyers to escape the consequences of an arbitration they agreed to.”