Is There an Arbitration Clause in Your Employment Agreement With Your Client?
By Michael Geigerman
The ABA in Formal Opinion Number 02-425 (February 20, 2002) approved the use of a binding arbitration clause for the resolution of disputes concerning fees and malpractice claims between attorneys and their clients. Not a big deal for Missouri attorneys as numerous Informal Advisory Opinions from the Office of Chief Disciplinary Counsel (OCDC) had previously approved their use (see Opinions 990130, 960066, and 940153.)
The OCDC opinions stress that the attorney has an obligation to “...orally point out this provision and to explain it, to the extent necessary for the individual client.” (OCDC, 990130). The ABA opinion requires the client to have “�been fully apprised of the advantage and disadvantages of arbitration and has given her informed consent to the inclusion of the arbitration provision in the retainer agreement.” (ABA Opinion 02-245).
Of course, Missouri attorneys will need to include the warning provided in Section 435.460R.S.Mo.
It may not be a good idea to have an arbitration clause in the agreement for the following reasons:
- It could be a public relations nightmare when one considers your innumerable and otherwise satisfied clients;
- It lowers the cost threshold for a disgruntled client to file a fee dispute or malpractice claim.
- It opens the door for you to discuss ADR with your client;
- It would be proof positive that your are thinking of the welfare of your malpractice carrier and yourself (right now the Bar Plan offers a 2.5% reduction on the base rate for if the attorney/firm has a policy to participate whenever possible in a fee dispute resolution program prior to filing suit over fees.)
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