Legal Malpractice

Fee Disputes and Rule 137: When is it a Dispute?

By (Andrew Lavoott Bluestone)

One has to shake the head and ask why all the effort goes into a law suit that will [or is so likely to] fail?  The question is multiplied when plaintiff is an attorney seeking fees.

Rule 137 seems pretty comprehensive and exacting.  Attorney who seeks a fee needs to serve th client with an opportunity to arbitate.  Here in Messenger v Deem ; 2009 NY Slip Op 29501 ;Decided on December 7, 2009 ;Supreme Court, Westchester County ;Giacomo, J. we see what turns out to be a total waste of time for everyone, including the jurors.
 

"In his complaint, plaintiff alleged that "Pursuant to Second Department case law, notice of right to arbitrate legal fees need not be provided to a client who never disputes the reasonableness of an attorney's legal fees...Defendant never disputed the reasonableness of Plaintiff's fees." (Complaint at ¶¶6-7.)

In her answer [FN1], defendant denied the allegations of the complaint and plead thirteen affirmative defenses including that plaintiff was not entitled to an attorney's fee because of his: failure to provide defendant with notice of arbitration before commencement of the suit ."
 

"Part 137 of the Rules of the Chief Administrator of the Courts provides for a Fee Dispute Resolution Program. A mandatory Arbitration Procedure is set forth therein for all representations that commenced on or after January 1, 2002, and is applicable "to all attorneys admitted to the bar of the State of New York who undertake to represent a client in any civil matter." 22 NYCRR 137.1.

Plaintiff argues that the mandatory arbitration provisions of Part 137 are inapplicable to the instant matter because, like in the Scordio matter, there was no disagreement as to the amount of attorney's fee due to plaintiff, and that defendant [*3]simply did not pay what was due. In Scordio, the Appellate Division, Second Department held that the mandatory arbitration notice provided for by then Court Rule 136.5 did not apply where the client did not dispute the reasonableness of the fees charged, and specifically declined "to follow the rule adopted by the Appellate Division, First Department, which obligates an attorney to send such a notice even in the absence of any fee disagreement with a client." Scordio v. Scordio, 270 AD2d at 329, 705 NYS2d at 59.

Court Rule 136.5, upon which Scordio was premised, was repealed in January 2002 and replaced with Court Rule 137.6. Former Rule 136, which was applicable only to domestic matters has been subsumed by the newer Part 137 which, with limited exceptions that are not alleged here, is applicable to all civil matters. Court Rule 137.6 is applied in the same manner as former Rule 136.5. See, Abinanti v. Pascale, 41 AD3d 395, 837 NYS2d 740 (2nd Dept., 2007); Borah, Goldstein, Altschuler, Schwartz & Nahins, PC v. Lubnitzki, 13 Misc 3d 823, 822 NYS2d 425 (N.Y.Civ.Ct., 2006). "

"A "fee dispute" (22 NYCRR §137.2) or a disagreement as "to the attorney's fee" [22 NYCRR §137.6(a)] is not only found when the former client complains as to time billings on a line by line basis. Under Part 137, arbitrators are entrusted to "determine the reasonableness of fees for professional services". 22 NYCRR §137.0. Here the defendant "disputed the reasonableness of the fees" plaintiff was charging. See, Scordio v. Scordio, supra , 270 AD2d at 329, 705 NYS2d at 59. The "reasonableness" of the fee cannot be limited to disputes as to whether an attorney should have charge "1.0 hours of billing time" instead of "1.2 hours of billing time". If such were the case a simple audit of the bill would be all that was necessary. Instead, arbitrators are given authority to evaluate and make a subjective finding of reasonableness. For something to be reasonable it must be fair and proper under the circumstances. To hold otherwise would render the Rule impotent and unenforceable. "

Full post as published by New York Attorney Malpractice Blog on December 15, 2009 (boomark / email).