Arbitration Insight No. 23

MICHAEL D. MARCUS’S ARBITRATION INSIGHT NO. 23

THE MFAA AND AN ATTORNEY’S DEMAND TO ARBITRATE THE FEE DISPUTE

Rosenson v. Greenberg Glusker Fields Claman & Machtinger LLP (2012) 203 Cal.App.4th 688 is required reading for all attorneys who have a fee or costs dispute with a client.

In Rosenson, Greenberg Glusker and its client initially participated in nonbinding arbitration pursuant to the Mandatory Fee Arbitration Act. (MFAA; Bus. and Prof. Code section 6200 et seq.) Note that the MFAA does not require the existence of a fee agreement with the client; also, “whereas a client cannot be forced under the MFAA to arbitrate a dispute concerning legal fees, at the client’s election an unwilling attorney can be forced to do so.” (Schatz v. Allen Matkins Leck Gamble & Mallory LLP (2009) 45 Cal.4th 557, 565.) Either party may seek a trial de novo from the MFAA award, unless they had previously agreed in writing to binding arbitration. (Ibid.)

Within 30 days of a nonbinding MFAA arbitration award in favor of Rosenson, Greenberg Glusker filed a demand for binding arbitration pursuant to a retainer agreement. The client chose instead to file a petition to confirm the MFAA award. The trial court granted the client’s petition after finding that the law firm’s demand for binding arbitration was ineffective because it had not filed beforehand an action to compel arbitration. The trial court reasoned that the filing of the demand for arbitration was not the filing of an action under the MFAA. The appellate court reversed the trial court because it held that the law firm’s arbitration demand effectively invoked the arbitration clause without first filing a superior court action to compel arbitration. (Rosenson, supra, at p. 693.)

Rosenson provides both a reminder and a lesson: If a client has opted to engage in the nonbinding MFAA  process, and should the attorney be dissatisfied with the result, the attorney can demand arbitration, without first moving to compel it, if there is an existing written agreement with the client to arbitrate all fee and costs disputes. Without that agreement, the attorney’s remedy is to file a complaint for fees.

Judge Michael D. Marcus (Ret.)

ADR Services, Inc.

1900 Avenue of the Stars, Suite 250

Los Angeles, California 90067

(310) 201-0010

Copyright Michael D. Marcus, March 2012

Please visit my website at www.marcusmediation.com for information about my mediation and arbitration background and experience. Copies of my previous Mediation Messages and Arbitration Insights are available by going to the articles link on the website.

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