Fee arbitration: The best remedy for you and your client.

While many attorneys may have had the good fortune to never have been involved in a fee dispute with a client, others have not been so fortunate. In fact, there is a good likelihood that you will, during the course of your practice, have one or more disputes with clients concerning the fair and reasonable value of your legal services.

A fee dispute may take many forms and can be the result of a variety of factors, including: uncertainty and/or lack of communication concerning the refundability of retainers; the fractional amounts of time to be charged; whether one or more lawyers or other professionals within a firm will be charging for time spent and at what respective rates; whether monthly. statements containing itemizations of time and expenses are to be provided; exactly what a flat fee is intended to cover; how a contingent fee is computed (i.e. on the gross recovery or after deducting costs); whether the client is responsible for costs advanced by his or her lawyer; and, the applicability and/or enforceability of charging and retaining liens for unpaid legal services, among other questions and issues.

As an alternative to litigating attorney-client fee disputes, and as an alternative to a client's initiation of a grievance proceeding, The Florida Bar, as a public service, has established a state-wide fee arbitration program. The Fee Arbitration Program was created by the Supreme Court in 1989 in response to a petition by The Florida Bar urging the need for a voluntary procedure to resolve fee disputes between members of the Bar and their clients. As a result, Chapter 14, the Fee. Arbitration Rule, was added to the Rules Regulating The Florida Bar. [1]

Procedures

While the process is considered voluntary, once both parties consent to arbitration by signing and filing an Agreement to Arbitrate with the requisite filing fee, the process formally commences. [2] Both parties are bound by the award. [3] Each, party, in advance of the hearing, is required to submit a concise statement of his/her position including the amount claimed or in controversy.[4] The sole arbitrator or chairperson of the panel presides at the hearing and rules on the admission and exclusion of evidence and on questions of procedure, although the hearing is intended to be informal in nature without strict adherence to Florida's rules of evidence or civil procedure. [5]

Each party is entitled to be represented by an attorney. Upon request by a party, arbitrators may issue subpoenas for the attendance of witnesses and for the production of documents. Also, upon the request, of a party, depositions may be allowed, but only for the perpetuation of testimony; all other pre-hearing discovery is prohibited. [6]

For disputes of $2,500 or less, a single volunteer attorney-arbitrator presides. For amounts in excess of $2,500, three-member panels are appointed by the circuit chair and consist of at least one attorney and one nonlawyer. Each of our 20 judicial circuits throughout the state have a fee arbitration committee comprised of a Bar-appointed chair who is responsible for staffing the committee volunteers (lawyers and nonlawyers), handling fee dispute intake, and making arbitrator appointments for the particular disputes. Except as modified in Rule 14, the provisions of Florida's Arbitration Code (Chapter 682, Florida Statutes) apply. Additionally, no aspect of fee arbitration is confidential and, "upon inquiry," all records, files, proceedings, and hearings "shall be made available to anyone." [7]

By way of example, the Sixth Circuit has been averaging approximately two to three fee arbitrations a month with most having been client-initiated, yet some have been initiated by the attorney. When compared to contested civil or Bar proceedings, the fee arbitration process is a welcomed alternative. In fact, most all of the participants -- volunteer panel members and contestants alike -- have generally agreed that the process proceeds at a progressive pace and is efficient with only the most relevant and probative information being considered. As a result, arbitration awards are considered fair. In addition, the contesting parties themselves are usually grateful for the opportunity to have been able to obtain an expedited resolution to the dispute while still being able to Present their cases and be heard.

The experience, of participateing as a volunteer panel member is genuinely re warding. The lawyer and nonlawyer panel members gain greater insight into a variety of communication mishaps which are typically responsible for the greatest number of fee disputes. Addition ally, the nonlawyer gains greater respect for lawyers generally for having devised a system which professionally and efficiently addresses client-related problems and, resolves them. Hopefully, over time this view will be shared by more of the general population. And, from the lawyer participant's perspective, each arbitration is instructive on how best to avoid repeating the same mistake in one's own practice. This is usually true whether the arbitration was lawyer-or client-initiated.

The Hearing

The arbitration hearing is required to take place within 45 days after the panel chair or sole arbitrator is in receipt of the assignment. The award shall be rendered within 10 days after the close of the hearing unless extended for good cause. [8] Written notice of the hearing must be provided to the parties not less than 10 days prior to the scheduled start date. [9] The arbitration may proceed in the absence of a Party who, after receiving notice, fails to appear or request a postponement. [10] Hearings, once having been set, may only be postponed upon a showing of good cause. Most circuit chairs, however, will make every effort to be flexible and accommodating to the particular scheduling needs of the parties.

At the hearing, witnesses are sworn and the parties are permitted a full opportunity to present evidence. [11] This typically includes correspondence, billing records, fee agreements, and settlement/disbursement schedules where final fees and costs have been computed. Former clients, and attorneys have the absolute right to be represented by counsel, or to represent themselves. [12] Additionally, in lieu of an actual hearing, Chapter 14 of the Rules provides that all of the evidence maybe presented by written submissions of the parties, so long as both sides agree. [13]

Jurisdiction

The jurisdictional basis under Rule 14 for the resolution of fee disputes by circuit arbitration committees concerns disputes over "a fee Paid, charged, or claimed for legal services rendered by a member of The Florida' Bar. [ldots] [14] Usually, the sole issue for determination at the arbitration hearing concerns the fair and reasonable value of the services rendered. To this end, the arbitrators may consider all factors deemed relevant, including the intention and understanding of the parties at the time the representation began, as well as the specific factors for determining the reasonableness of a fee enumerated in Rules 4-1.5(b) arid (c) of the Rules of Professional Conduct. [15]

Interestingly, in addition to traditional, fee disputes between lawyer and client, Rule 14 provides that circuit arbitration committees have jurisdiction to resolve disputes between members of The Florida Bar. [16] Moreover, circuit arbitration committees may even assume jurisdiction over and resolve pending civil actions or Bar proceedings involving fee disputes concerning the reasonableness of a fee, as well as fees alleged to constitute violations of the Rules Regulating The Florida Bar, so long-as the matter is specifically referred by the court or Bar counsel, respectively. [17]

Enforcement

If the party against whom the award made does not comply with the arbitration award, then the party in whose favor the award was rendered 'may have the award confirmed and enforced in the circuit court pursuant to Florida Statutes Chapter 682. [18] The Bar's Rules also provide that the circuit chair shall designate an attorney member of the committee, or other volunteer member of The Florida Bar, to represent the former client in enforcing or defending the award under Chapter 682, at no cost to the client other than actual litigation expenses. [19]

Preventive Measures

While fee arbitration is the preferred remedy over contested litigation, the overriding preference in all circumstances is to avoid the fee dispute in the first place. Early discussion with your client about all aspects of your billing arrangement, including expected retainers, how same will be applied, what type of "costs"' your client can expect to be billed for, your expectations for timely payment, and a description of your approach to the case with the corresponding amounts of time and costs you will be incurring, are all critical communication issues with any client whether this is the first matter for which you are engaged, or one more of a series of matters you have undertaken.

Many of the disputes resulting in fee arbitrations could have been avoided. Through simple routine Practices clients can be kept more informed and involved with their case. From the start, the use of a written fee agreement signed by the client helps describe exactly what the billing rates are and how they are applied. Also, you can describe which costs and expenses are the client's responsibility with a definition of those routine costs that are authorized, and those extraordinary costs which require prior client approval.

The fee agreement is also the best place to address what happens if the client fails or refuses to pay outstanding amounts owed. Such issues may include your right to accrue interest; your right to recover attorney's fees if you are forced to litigate or arbitrate a fee dispute; and, your right to a charging lien against client recoveries, if necessary, to secure payment. This also is the place to describe such additional matters as your right to retain any excess fees recovered, when "prevailing party" fees are awarded by the other side, as well as any other particular issues unique to the engagement.

The required written disclosures in contingent fee contracts and accompanying presumed reasonable rates for personal injury, wrongful death, and product. liability cases are specifically addressed in Rule 4-1.5(f). And, of course, the written fee agreement is the best place to require that all disputes must first be referred to The Florida Bar Fee Arbitration Program for resolution. [20]

While it is true that all practitioners would prefer to avoid fee disputes -- between attorneys and between clients and attorneys -- the undeniable trend is that fee disputes will remain and probably continue to increase. To the extent a matter becomes contested and third party intervention is necessary, certainly one of the most expeditious, fair, and cost effective approaches for resolution is fee arbitration. While most circuits within the state are probably reporting increases in the number of arbitrations held, this can also be seen as a positive development since every arbitrated, fee dispute means one less matter litigated in a trial court or before a Bar grievance, committee. The process works and has produced solid results.

Murray B. Silverstein chairs the Sixth Circuit Fee Arbitration Committee and is a parter in Powell, Carney, Hayes & Silverstein, P.A., with offices at One Progress Plaza, Suite 1210, St. Petersburg 33701.

(1.) 542 So.2d 975 (Fla. 1989)

(2.) Rule 14-4.1(a)

(3.) Rule 14-5.2(a)

(4.) Rule 14-4.1(a)

(5.) Rule IV.F.

(6.) Rule IV.D.

(7.) Rule 14-5.1

(8.) Rule II.F.

(9.) Rule IV.A.

(10.) Rule IV.B.

(11.) Rule IV.D.

(12.) Rule. IV.C.

(13.) Rule IV.D.

(14.) Rule 14-1.1(a)

(15.) Rule IV.G.

(16.) Rule 14-1.1(c)

(17.) Rule 14-1.1(b)

(18.) Rule 14-5.1; Rule VI, and Rule VII

(19.) Rule VII

(20.) Model language has recently been approved by The Florida Bar's Standing Committee on Fee Arbitration: