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May lawyers ask their clients to sign pre-dispute arbitration agreements that include malpractice claims?  David Hricik has written a comprehensive discussion of lawyer-client arbitration agreements, including the malpractice issue.  Because it is available online, we will not attempt to duplicate that material at this site.  To go to the article, click here.  Subsequent opinions on this subject will be cited here.


        Warning about Insurance.  As the reader can see from the Hricik article and from what follows on this page, much of the authority on this issue recognizes the validity of malpractice arbitration clauses in retainer agreements.  Nothing at either place addresses the impact of such a provision on a law firm's malpractice insurance coverage.  Many in the malpractice insurance industry do not like to be bound by such provisions.  They may want a jury trial, or the right to discovery, or the right to appeal.  Some may claim that an arbitration provision provides a policy defense or otherwise obviates coverage.  Therefore, any law firm desiring to use such a provision should be crystal clear about its insurance carrier's position on coverage.

       Ethics Opinions.  ABA Op. 02-425 (2002).  The Committee has opined that lawyers may include binding arbitration clauses for malpractice claims in their client agreements, provided the lawyer makes certain disclosures.  These include advising the client about waiving a jury trial, broad discovery, and the right to appeal.  The footnotes to the opinion contain many citations to cases and ethics opinions; an excellent research tool.  Ala. Op. 2002-04 (November 2002) holds that arbitration clause is enforceable provided client is independently represented when signing it.  Me. Op. 170 (1999) (with three dissents) (not in the Hricik materials) approved an arbitration clause for malpractice claims and did not require the client to seek independent counsel.  Tex. Op. 586 (Oct. 2008) (consistent with ABA Op. 02-425 (2002).

         Treatise.  Rotunda & Dzienkowski § 1.8-9(a)(4).     

        Gemmel Pharmacies, Inc. v. Vienna, 2003 Cal. App. Unpub. LEXIS 11352 (Cal. App. Dec. 4, 2003).  The court discussed the circumstances under which a pre-dispute agreement to arbitrate a legal malpractice case would be appropriate.  The court resolved the issue in this case, saying:

1.    The arbitration clause itself is fairly broad, stating: "In case any controversy shall arise between Client and Attorney under this contract, which the parties shall be unable to settle by agreement, such controversy shall be determined by arbitration." However, the limiting clause "under this contract," when viewed in the context of an agreement concerning fees, costs, and billing rates, supports our view that the arbitration clause was meant to be applied only to fee disputes, and not to legal malpractice or breach of fiduciary duty actions.                                                   

      Ober v. Mozingo, 2002 Cal. App. Unpub. LEXIS 2902 (Cal. App. 2002).  The court upheld an engagement letter clause requiring that malpractice claims be subject to arbitration.  The court further held that the lawyer need not explain what rights the client was waiving and that the clause calling for arbitration need not be in a special typeface.

        Where Arbitration Agreement Signed by just a Director of a Corporation, it Is not Binding on the Corporation.  Platypus Wear, Inc. v. Cahill, 2006 Cal. App. Unpub. LEXIS 1152 (Cal. App. Feb. 7, 2006).  Plaintiff corporation (“Corp.”) sued Law Firm for malpractice.  Law Firm moved to compel arbitration, because it had an arbitration clause in its engagement letter with Corp.  The problem was that the signatory for Corp. was only a director and not, as he called himself, President.  The trial court found that the engagement letter was not binding, and the appellate court, in this opinion, affirmed.

        Thornton v. Higgins, 2003 Ohio 7078 (Ohio App. 2003).  The court ruled that advance agreements to arbitrate malpractice claims are not enforceable.  However, the opinion does seem to suggest that the agreement might be enforceable if the client actually sought and received advice from another lawyer regarding the agreement.  The holding seems to follow Ohio Op. 96-9 (1996).

        Theis Research, Inc. v. Brown & Bain, 386 F.3d 1180 (9th Cir. 2004).  Brown & Bain (B&B) represented Theis in patent litigation.  It did not go well for Theis.  Theis had an agreement with B&B that required all disputes between them to be arbitrated.  An arbitration commenced, in which Theis claimed B&B was guilty of malpractice, and the arbitrator found no liability on the part of B&B.  In the arbitration Theis also sought a finding that the arbitration clause was void because B&B had a conflict of interest when it asked Theis to sign it.  (Nowhere in this opinion does the court indicate the nature of the alleged conflict of interest.)  The arbitrator denied that request, upholding the validity of the arbitration clause.  At the conclusion of the arbitration Theis filed an action in the Northern District of California, claiming, among other things, that the arbitration clause was void because of B&B’s conflict of interest.  The district judge held that Theis could not raise the conflict of interest point in court because he had already raised it in the arbitration and lost.  The trial court confirmed the arbitration decision as to B&B’s liability.  On appeal, in this decision, the Ninth Circuit affirmed, including upholding the ruling that the conflict of interest claim was barred because the arbitrator had decided it.

       Taylor v. Wilson, 180 S.W.3d 627 (Tex. App. 2005).  The lawyer/defendant in this malpractice action asked the court to compel arbitration pursuant to the arbitration clause in the fee agreement.  The trial court found that the case fit the “personal injury“ clause in the Texas Arbitration Act, and denied arbitration.  The appellate court reversed, holding that this was not a “personal injury” case.  The court did not discuss the other issues that usually come up in arbitration clause cases, such as whether the agreement disclosed the denial of jury trial, the client’s opportunity to seek other counsel, etc.

        New York courts approved malpractice arbitration clauses in Broadcast News Networks, Inc. v. Loeb & Loeb, LLP, 834 N.Y.S.2d 656 (N.Y. App. 2007); Matter of Derfner&Mahler, 683 N.Y.S.2d 509 (App. Div. 1999); and Theis v. Bryan Cave LLP, 826 N.Y.S.2d 54 (App. Div. 2006). 

        Harris v. Albany Lime & Cement Co., 2008 Ga. App. LEXIS 470 (Ga. App. April 24, 2008).  Court held that arbitration clause inserted by lawyer in business agreement with client was not enforceable.  Not a lawyer malpractice context.

        Ginter v. Belcher, Prendergast & Laporte, 2008 U.S. App. LEXIS 15382 (5th Cir. July 18, 2008).  In its retainer agreement Lawyer inserted a clause providing that the client could bring a malpractice case in Louisiana state courts only.  In this opinion the court held that the provision was enforceable.  The court analogized to those decisions that held that arbitration clauses for malpractice were enforceable.  One judge dissented.  He believed that Lawyer was acting as both a lawyer and adoption broker, thereby subjecting Lawyer to Rule 1.8(a).

        General Nutrition Corp. v. Gardere Wynne Sewell, LLP, 2008 U.S. Dist. LEXIS 66703 (W.D. Pa. Aug. 12, 2008).  General Nutrition Corp. ("General") brought this legal malpractice action against Law Firm.  Law Firm moved to compel arbitration pursuant to an arbitration clause in a retention agreement Law Firm had entered into with GNC Corp. ("GNC").  The retention agreement contained language that provided that Law Firm's only client was GNC and not members of GNC's corporate family.  General produced evidence that General and GNC were separate legal entities.  In this opinion the court denied the motion to compel arbitration, finding that General was not a party to the agreement.  [Note: the opinion does not reveal the connection, if any, between General and GNC.  Nor, does our quick research get to the bottom of it.  Surely, they were related somehow, or Law Firm never would have attempted the use the GNC agreement in the suit by General.  Law Firm's corporate family language, no doubt designed to avoid disqualification in other contexts, certainly proved troublesome in this proceeding.]

        1199 SEIU United Healthcare Workers East v. Lily Pond Nursing Home, 2008 U.S. Dist. LEXIS 74481(S.D.N.Y. Sept. 29, 2008).  This is a suit by a union for nursing home employees against a nursing home company to confirm an arbitration award of benefits under collective bargaining agreements.  Plaintiffs moved for summary judgment.  One of the grounds for opposing the motion was that the nursing home company had discovered that two of its lawyers were board members of labor organizations affiliated with the plaintiff organization in this case.  The court rejected the conflict of interest argument.  First, the court said that a conflict of interest is not automatically grounds for vacating an arbitration award.  Second, the court held that the arbitrator's award was so clearly in conformance with the collective bargaining agreement, that the conflict of interest could not have had anything to do with the result.

        Simply Fit of N. Amer. v. Poyner, 2008 U.S. Dist. LEXIS 74457 (E.D.N.Y. Sept. 26, 2008).  Court held that in New York the court, not the arbitrator must rule on a motion to disqualify.  But, in Reuter Recycling of Fla., Inc. v. City of Hallandale, 2008 Fla. App. LEXIS 17335 (Fla. App. Nov. 12, 2008), the court held that if the arbitration agreement is broad enough, arbitrators have the jurisdiction to rule on a motion to disqualify.

        Mintz & Fraade, P.C. v. Beta Drywall, LLC, 2011 Fla. App. LEXIS 3911 (Fla. App. March 23, 2011).  The court ruled for arbitration of a malpractice case without discussing ethics.

        Johnson, Pope, Bokor, Ruppel & Burns, LLP v. Forier, 2011 Fla. App. LEXIS 8899 (Fla. App. June 15, 2011).  In this opinion the court held that pre-dispute agreements to arbitrate legal malpractice claims are enforceable.  The court said that while there are "ethical issues," citing Brian Spector, Predispute Agreements to Arbitrate Legal Malpractice Claims: Skating on Thin Ice in Florida's Ethical Twilight Zone?, 82 Fla. B.J. 50 (2008), there is no rule in Florida prohibiting such agreements.

        Pham v. Letney, 2010 Tex. App. LEXIS 1534 (Tex. App. March 4, 2010).  This is a legal malpractice suit.  Lawyer moved the trial court to compel arbitration because there was a provision in the retainer agreement for binding arbitration under the Federal Arbitration Act.  The trial court, believing the agreement was invalid, denied the motion.  In this 2-1 decision the appellate court granted mandamus (reversed the trial court).  First, the majority held that the agreement was not under the Texas statute that invalidated arbitration clauses in personal injury cases (split of authority in Texas regarding legal malpractice claims).  Second, the court held that the Federal Arbitration Act could be incorporated, notwithstanding arguments that "interstate commerce" was not implicated.  Third, the court held that the the agreement was not unconscionable.  Last, the court held that the agreement did not violate Texas' version of Model Rule 1.8(h) (limiting lawyer's liability).  All of this was in the face of Client's contention that Lawyer never explained the arbitration provision and did not recommend that Client seek the advice of other counsel, factors that drove the dissent.

        Desert Outdoor Advertising v. Superior Court, 2011 Cal. App. LEXIS 784 (Cal. App. June 17, 2011).  In this opinion the court held that an agreement to arbitrate malpractice claims was enforceable.  The agreement came in mid-representation.  The lawyer did not mention the arbitration clause, and an earlier agreement did not have an arbitration clause.  However, the lawyer told the client to read it carefully and see other counsel about it.

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