FEE ARBITRATOR BASIC TRAINING

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1 2300 Clayton Road, Suite 520 Concord CA MCLE SELF-STUDY TEST State Bar of California Mandatory Fee Arbitration (MFA) FEE ARBITRATOR BASIC TRAINING 1. Business and Professions Code 6200 governs attorney client fee disputes. 2. An arbitrator s failure to render an award for no stated ethical reason or attempting to provide mediation services in the course of the arbitration hearing are some acts outside the normal arbitration process that can subject or program to a suit for civil damages. 3. Arbitrators have the same immunity which attaches in judicial proceedings. 4. Most challenges to jurisdiction are handled by the arbitrator. 5. Mandatory Fee Arbitrations are subject to any applicable statute of limitations such as Code of Civil Procedure 337 and A binding arbitration clause in a retainer agreement is enforceable under B&P Code 6204(a). 7. Private arbitration clauses in fee agreements may not be stayed if a client elects to file a request for MFA. 8. Mandatory Fee Arbitration jurisdiction exists only if an attorney-client relationship existed, but the MFA statute does not confer jurisdiction on the arbitration panel to decide that issue. 9. A request for arbitration may be made by a person who is not the client but who may be liable or entitled to a refund of attorney s fees or costs. 10. A sole attorney arbitrator is assigned to cases with disputes of $25,000 or more, unless both parties agree, in writing, to a three arbitrator panel. 11. To help avoid the appearance of bias as well as determine recusal for actual bias, arbitrators are asked to complete an Arbitrator Statement of Disclosure. 12. After the Program serves the parties the Notice of Appointment of Hearing Panel, parties have fifteen (15) days to file a disqualification or challenge in writing to the Program with a copy to the other party and the arbitrator(s). 13. There is no time limit for holding an arbitration hearing, so after your assignment is confirmed, you may schedule any hearing date that is convenient for you. Page 1 of 6

2 14. CCCBA Rule of Procedure 4.B. (vi) demands the arbitrator to require the parties to submit all supporting documents and a complete written statement of the reasons for the dispute under penalty of perjury within 45 days after the date of service of the Notice of Appointment of Hearing Panel. 15. If no required exchange is ordered by the arbitrator and if either party intends to submit documents, copies must be mailed directly to each arbitrator and to the opposing party at least 10 days prior to the schedule hearing date. 16. Upon receipt of the file, an arbitrator should not take the initiative to shape the issues by contacting the parties for clarification but wait until the hearing to learn the nature of the dispute. 17. Continuances must never be granted once the hearing date has been scheduled. 18. Discovery is not allowed. However, informal exchange of documents should be encouraged by the arbitrator. 19. Although B&P Code 6200(g)(3) allows an arbitrator to issue subpoenas for good cause shown for the attendance of witnesses and the production of relevant documents, as a practical matter, only the appropriate civil court may truly compel attendance/enforcement upon application by a party. 21. CCCBA Fee Arbitration Rule of Procedure 3K (2) offers the arbitrator several options to follow should a party fail to and/or refuse to appear at the hearing. 22. Lay arbitrators assigned to threearbitrator hearing panels are advocates for the client. 23. Fee arbitration hearings should not be conducted in the same manner as a judicial trial. 24. When you meet the client and the attorney at the hearing be extremely formal with the client and then hug the attorney and start talking shop. Because a client will never interpret "shop talk" as grounds for vacation of the award. CCP (a), (b), and (c). 25. The fee arbitration program is designed so that clients can arbitrate without legal training of assistance of counsel. 26. The arbitrator should use plain terms, or if necessary to use legal terms then take time to explain and be sure the unrepresented client understands. 27. B&P Code 6202 makes the attorney/client and work product privileges applicable in the fee arbitrations (and in related proceedings, e.g. trial de novo, petition to confirm award). 20. A hearing may go forward even if one of the arbitrators assigned to a threearbitrator panel does not attend the hearing. Page 2 of 6

3 28. In accordance with CCCBA Rule of Procedure 9B, all arbitration hearings will be closed to the public. However, in the discretion of the arbitrator, an in the absence of any objections by the parties, witnesses may be present during the hearing. 29. In accordance with CCCBA Rule of Procedure 9B the arbitrator, upon request of the client, will permit the client to be accompanied by another person Any such person will be subject to the confidentiality of the arbitration proceedings. 30. It is important to distinguish a support person from a non-attorney advocate, which may raise issue of unauthorized practice of law. 31. Any agreement to be bound must be in writing and made after the fee dispute arises. A binding arbitration clause in a retainer agreement, signed before the dispute arose, is unenforceable. 32. Non-binding arbitration awards do not become binding automatically so they are not as important as binding arbitration awards. 33. A party may withdraw from a binding agreement at any time. 34. If parties wish to settle, they should do so outside the arbitrator s presence. 35. Drafting a stipulated award is up to the discretion of the arbitrator. In no event should the arbitrator memorialize an agreement that appears unfair, unethical or illegal. 36. All testimony must be given under oath or affirmation, administered by the arbitrator. 37. The issue of who has the burden of proof is left to the discretion of the arbitrator but is usually based upon the party best able to produce evidence on a given issue. 38. If the client raises an issue as to whether the attorney performed, the attorney should generally bear the burden of establishing his or her performance. 39. Formal rules of evidence apply. 40. Hearsay is permitted as evidence. 41. Any evidence may be considered if it is of the type and character upon which ordinary people may rely in the ordinary course of serious affairs. 42. Arbitrators should consider the background, experience and relative sophistication of the parties and make every effort to make a full and fair review of the facts. Page 3 of 6

4 43. The attorney has no obligation to explain the ramifications of fee agreement or other documents to be signed by the client; nor to give the client an itemized bill or explain whether or not the billing represents time reasonably spent on behalf of the client. 44. The client s conduct during the course of the representation may be considered by the arbitrator. Such as, whether the client fully informed the attorney as to facts which might affect the outcome of the case; whether the client made reasonable efforts to communicate with the attorney about the fee dispute; client request services beyond the scope of the fee estimate originally provided by the attorney. 45. At the conclusion of the hearing the arbitrator should inform the parties that a notice as to their rights after arbitration will be mailed to them with the award. 46. Any exhibits not returned to the client at the conclusion of the hearing or that the client has not made arrangements to retrieve from the arbitrator within 60 days of service of the award shall be destroyed by the arbitrator. 47. Legislation requiring a written fee agreement will invalidate any agreements not in writing and make noncomplying written agreements voidable as per B&P Code 6146, 6147 and Sections 6147 and 6248 provide that a non-complying agreement is voidable at the option of the client, and that the attorney is entitled to collect a reasonable fee. Therefore an arbitrator should void a fee agreement even if the Page 4 of 6 client does not affirmatively raise the issue. 49. In accordance with Rule of the State Bar Rules of Professional Conduct an attorney may enter into an agreement for, charge or collect an illegal or unconscionable fee. 50. True or Classic retainers are enforceable only if the client has agreed that the amount was paid solely for the purpose of ensuring the availability of the member. 51. It is important to assess the enforceability of a written fee agreement as per Arbitration Advisory If there is no written fee agreement or if the written fee agreement is unenforceable, the attorney is not entitled to a reasonable fee. 53. Civil Code 1598, 1599 and 1608 are important to consider when dealing with the issue of voiding the fee agreement. 54. Bills don t have to clearly state the basis thereof or identify the nature and amount of costs and expenses incurred. 55. Evidence relating to claims of malpractice shall be admissible only to the extent that those claims bear upon the fees or costs to which the attorney is entitled. Arbitrators may rule that the value of attorney s services was lessened due to the way the case was handled and reduce fee.

5 56. If the fee arbitration is relating to claims of malpractice the arbitrator may award affirmative relief. 57. California law suggests there must be a serious violation of the attorney s responsibilities before an attorney who violates an ethical rule is required to forfeit fees. 58. If there was a severe ethical violation then quantum meruit does not apply and an attorney is not entitled to keep fees earned before the conflict arose. 59. Monetary sanctions for misconduct or egregious behavior of a party are not authorized or permissible. 60. To achieve fairness at the hearing, procedural sanctions, such as exclusion of evidence for willful failure to comply with pre-hearing requirement to exchange documents, may be appropriate. 61. Sanctions such as basing the decision on a party s conduct at the hearing or exclusion of a party from testifying are authorized. 62. The arbitrator must follow the required State Bar of California award format provided by the Program when writing the award. 63. There is no requirement for the arbitrator to include a determination of the questions submitted and explanation of how the arbitrator reached his or her decision. 64. Finding of fact in the award may help the parties determine whether or not to seek judicial relief after arbitration. 65. Willful non-attendance at a fee arbitration hearing precludes that party s right to a trial de novo after arbitration. 66. Since only a court can make a final determination of willfulness, the court may consider the arbitrators findings on the subject of a party s failure to appear, so it is not important to include your findings in the award. 67. The State Bar of California may apply penalties to the attorney who is personally responsible for making or ensuring payment of the award so the arbitrator must name the responsible attorney in the award. 68. The award may not include an allocation of the filing fee and shall include an award for any other costs of the arbitration, including attorney s fees resulting from the arbitration proceeding. 69. Interest can be awarded as part of an arbitration award. 70. Per Civil Code 3289(a) if there is an enforceable written contract, and the rate is not usurious, it should be charged. 71. Per Civil Code 3289(b) if interest is to be awarded and there is no agreement of the parties as to the rate to be charged, 99% per annum should be used. Page 5 of 6

6 72. For three-member panels, each member is responsible for the content of the award. If your opinion isn t reflected discuss any additions or changes with the panel chair. 73. A minority vote is sufficient for all decisions of a three-member panel. 74. Any arbitrator who does not agree with the majority of the panel is not entitled to write a dissenting opinion. 75. The original award should be mailed to the CCCBA Fee Arbitration Coordinator within 15 days from the date of the hearing with a single arbitrator; and 25 days for a three-member panel. 76. The CCCBA Fee Arbitration Program must serve the Notice of Your Rights after Arbitration with the award. Service of the award is incomplete without this notice. 77. The time for filing a dissent is different from the time required for filing the award. 78. Under Code of Civil Procedure 1284 an award may be amended within 30 days following service of the award on the parties by motion by a party or sua sponte. 80. The arbitrator(s) or the Program may in its discretion refer an attorney s conduct disclosed in the arbitration proceedings to the State Bar of California for possible disciplinary investigation without violating the confidentiality surrounding these proceedings. DATE SUBMITTED: NAME: STATE BAR #: FIRM: ADDRESS: CITY/STATE/ZIP: PHONE: Mail completed ANSWER SHEET to: CCCBA Attn: Emily Day 2300 Clayton Road, Suite 520 Concord, CA Upon receipt an MCLE certificate and Correct Answer Sheet will be returned to you. The Contra Costa County Bar Association certifies that this activity has been approved for hours MCLE credit (includes 1 hr. Legal Ethics) by the State Bar of California (Provider #393). 79. Service of the amended award does not commence a new time period to request trial de novo. Page 6 of 6