Fee Arbitration

Sherrie Bennett

If you've tried unsuccessfully to work out your issues with your lawyer's billing, fee arbitration may be a good alternative to going to court.

Bar associations (in at least 41 states) have voluntary fee dispute arbitration programs designed to help you resolve billing issues with your lawyer. You and your attorney must agree in writing to take your dispute to an arbitrator, a neutral third party who hears all the evidence from you and others, reads over any relevant documents and reaches a written decision on what the fee should be.

Mandatory fee arbitration, which requires you and your lawyer to participate in arbitration before proceeding to court, is the norm in:

• Alaska
• California
• Maine
• Minnesota
• New Jersey(where attorneys must agree to mandatory arbitration but clients can bypass the process and take their dispute directly to court)
• New York (for divorce cases)
• North Carolina
• South Carolina
• Wyoming (for contingency fee cases)

Binding arbitration means you and your lawyer are bound by whatever the arbitrator decides, and can't appeal it or take the matter to court later. Nonbinding arbitration allows you to file a lawsuit if you aren't happy with the arbitrator's decision.

Arbitration Process

Arbitration hearings tend to be less formal than court hearings, but you should be prepared to discuss the facts as you see them and present whatever evidence you have in a respectful manner. Your presentation should be concise and focus on why you believe the lawyer's fees are too high. It's especially important to steer clear of any personal attacks on your lawyer.

It's inappropriate to communicate with an arbitrator, except as to procedural issues such as when the hearing will be held, any subpoenas to be issued, any hearing rules and how the arbitrator expects the evidence to be presented. Any communications with the arbitrator should probably be in writing, and you should send a copy of everything to your lawyer.

If you have a witness who doesn't really want to come to the hearing, you may need to have the arbitrator or fee dispute administrator issue a subpoena.

At the arbitration hearing, your lawyer will be allowed to ask you questions it's called "cross examination" and you'll be able to question your lawyer as well. The arbitrator may also have questions for one or both of you.

Evidence

An arbitrator will consider many factors in deciding what an appropriate fee should be, including:

• The skill level required to handle your case
• The lawyer's skill and experience levels
• What was at stake in the case and the case's final outcome
• Unknown circumstances that required the lawyer to spend more time than originally anticipated
• How much time the lawyer actually spent on the case
• How much time a lawyer of sufficient skill and experience level would be expected to spend on the case
• How much thought and negotiation went into the fee agreement
• How much payment your lawyer has already received

The arbitrator will also consider written documents, such as:

• Fee agreements signed and understood by you
• Billing statements
• Correspondence about the billing statements
• Copies of cancelled checks showing your payments
• Other documents sent to you by the lawyer
• All documents in the lawyer's case file

If there isn't a written fee agreement, the lawyer is still entitled to what would be considered a "reasonable fee", based on what other lawyers of similar skill and experience level charge in your local area. The arbitrator will also consider whether you and your lawyer came to an oral agreement on what his or her charges should be.

Arbitration Award

An arbitrator will likely take the matter "under advisement", with a written decision called an "award" within a reasonable time after the arbitration hearing.

When you receive the letter outlining the arbitrator's award, you'll also likely get info on your options after arbitration. It's especially important to note any deadlines you must meet in order to appeal an arbitration award.

If the arbitration is nonbinding, you'll have the option of not abiding by the arbitrator's award and taking the matter to court. But even if you end up in court, you'll know that you tried every alternative short of a lawsuit first.

Related Resources on lawyers.com

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Web Links:

- State Arbitration Links
- State Bar Associations