Fee Arbitration Attorney

Most people, and even some attorneys, are not aware that the Arizona State Bar Association offers fee arbitrations to resolve fee disputes. I have arbitrated and mediated fee disputes on behalf of the bar since 2007. I have seen positive outcomes from this process. Fee Arbitration resolves fee disputes in a relatively simple fashion, which requires a much smaller investment of time and money than other traditional means (i.e. litigation).

Attorney’s fees can be quite expensive, as most clients know. After all, law firms have overhead such as IT, software, office and staff expenses, and marketing. And the professional degree takes years of schooling to get, and continuing education to keep. But there are times when the attorney and the former client disagree about the fees. This can be for a lot of reasons. The outcome can impact how they each see the fees, as can the length of time the  matter took to resolve. Sometimes fees are overstated. At other times, the fee is fair, maybe even lower than could have been charged, but the client has not received an adequate explanation of what they are paying. It is also common that if bills are not sent monthly, the client will not recall the steps that went into the bill, and the large sum due will be a painful pill to swallow.

When the client and the attorney are not able to resolve this on their own, they can resort to an fee arbitration through the Arizona State Bar Association. After having the opportunity to mediate a settlement, the fee arbitration is a proceeding in which the parties will present their positions regarding the reasonableness of the fees.

Rule VI.G., Ariz.R.Arb.F.D., provides that the burden of proof in arbitrations is on the attorney to show by a preponderance of the evidence that the fees and costs are reasonable. This Rule applies in hourly fee cases AND in flat fee cases–even when the fee agreement states that the fee is non-refundable.

The Arizona Rules of Professional Conduct, ER 1.5(a) sets forth eight factors which a lawyer must consider to determine if the fees are reasonable, or if the lawyer should issue a refund. The factors to be considered in determining the reasonableness of a fee include the following:

  1. the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
  2. the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;
  3. the fee customarily charged in the locality for similar legal services;
  4. the amount involved and the results obtained;
  5. the time limitations imposed by the client or by the circumstances;
  6. the nature and length of the professional relationship with the client;
  7. the experience, reputation, and ability of the lawyer or lawyers performing the services; and
  8. the degree of risk assumed by the lawyer.

If this looks complex, that is because it is. This can be a very difficult metric even for a practiced attorney to apply. It is next to impossible for the lay person. There are significant ethics opinions on the issue, and it has been the subject of many legal cases. Even so, attorneys AND former clients often proceed without representation in the arbitration. This is not a good idea, especially if there are significant fees at issue.

Both the attorney and the former client should use an attorney to represent them in the arbitration

For the attorney, you have the burden to prove that you are entitled to the fees. You might be inclined to proceed unrepresented, however, it is important to remember what Abraham Lincoln famously said: “He who represents himself has a fool for a client.” This issue is too significant to go it alone. If you do not meet the burden, you will likely have to pay money to the former client that you may not have. And if you are not able to pay the award within thirty days, the matter may be referred to Lawyer Discipline. The amount awarded can also cause you to be referred. You must be familiar with the right cases and ethics opinions to support the retention of fees.

For the client, the burden may be on the attorney, but you cannot expect this to be an easy win for you. You may have a feeling that the fees are unfair, but attorneys keep meticulous records of their activities on your behalf, and these records will help them establish the billing. It may seem like paying twice to use an attorney in the fee arbitration, but you are much more likely to have a better result with one than without.

And an added advantage to both the attorney and the client is that even before the matter is heard a settlement can be negotiated. This has the advantage of resolving the dispute before it goes any further. But if a settlement is not reached, you will be prepared for the arbitration.

Whether you are an attorney, or the former client, I am available to represent you or be your expert witness

I have been an active committee member since July, 2007. This does not give me any influence with other committee members or Arbitrators. But it does mean that I have arbitrated many fee disputes in this time, and I have mediated many others. I have also read many Arbitration Awards by other arbitrators, as well as many ethics opinions and cases on the subject. If you would like to discuss having me represent you with your fee dispute, please call or use the contact form to reach me.