March 2008

Finding a Way Out of Disputes

by Darlene Neumann

When Michelle thinks about her former lawyer, Paul, a feeling of frustration comes over her. She hired Paul to represent her in a personal injury case. However, after a few months, she began to feel she was being overcharged and she became annoyed by Paul’s lack of communication. She had growing concerns about his handling of the case. Finally unable to maintain her trust in Paul any longer, she fired him. Now Paul and his firm are left unpaid for the hours of work they had put into the case.

Not every lawyer will face the type of fee dispute just described. Clients, for the most part, do pay their bills, even if the outcome does not favor them. But what if you are faced with a client who refuses to pay? If, after making a good-faith effort to explain the charges, your client still balks, what are your options? You could threaten him with collections or file a lien — not pleasant options for either side. Probably the worst option is to sue the client and risk retaliation in the form of a malpractice claim or accusation of ethical violations.

Fortunately for WSBA members and their clients, the Bar offers a forum for both sides to resolve their disputes. Since the mid-1970s, the Alternative Dispute Resolution (ADR) Program has provided fee arbitration to help the public and members resolve arguments over fees. In 1999, the program began to offer mediation as an additional alternative.

Fee Arbitration

While both programs address fee disputes, fee arbitration seems to be favored by clients. It gives them an opportunity to tell their stories and explain their positions to a neutral third party. For WSBA members, the programs are voluntary, confidential, and non-disciplinary. The cost is minimal (between $75 and $125) compared to private ADR providers who charge hundreds of dollars per hour for mediation and arbitration services. The lawyers and nonlawyers serving on the Bar’s fee arbitration and mediation panels are experienced, trained volunteers who understand the dynamics of the lawyer-client relationship.

That relationship is the cornerstone of the Fee Arbitration Program, whose sole purpose is to determine the fair and reasonable value of the lawyer’s legal services to the client. Both sides must agree on the amount in dispute and agree to arbitrate. Although participation is voluntary, a lawyer is encouraged, as a matter of conscience, to participate in either arbitration or mediation established by the Bar (RPC 1.5 Comment 9). The authority of the Bar to mediate disputes voluntarily brought by parties is also provided for in APR 16.

Michelle turned to the ADR Program after receiving a letter from Paul’s firm informing her that she would be sent to collections if she did not pay her outstanding bill. She first considered filing a grievance. All she really wanted, though, was a way to resolve the dispute between her and Paul that was fair. “I was worried that it would hurt my credit. I didn’t feel his charges were reasonable, so I was glad to find out there was a program available to decide this,” said Michelle.

After one side proposes ADR, the respondent has 30 days to decide whether to agree or decline to participate. If the respondent agrees, the ADR program coordinator assigns an arbitrator (or mediator, if the mediation program was selected) who is as close as possible to the geographical location of the parties. The ADR program has panel volunteers throughout the state, making the service available to all members and their clients.

For Paul, the decision to arbitrate was not a quick one. He thought about the amount of preparation time involved — time that could be better spent earning fees rather than defending them. He considered how likely it was that his former client might file a bar complaint if he declined. In the end, Paul agreed to participate because he believed his fees were fair and reasonable and the program offered a way to finally resolve the lingering dispute with his former client.

For disputes under $10,000, a single lawyer-arbitrator is assigned to hear the matter. For disputes of $10,000 and over, a three-member panel consisting of one lawyer and two nonlawyers is assigned. Hearings usually take place within 30 to 60 days after assignment of the arbitrator. The hearings are informal, and clients do not have to be represented by counsel. In the spirit of the consumer-protection movement begun in the 1970s, the ADR program is intended as an economical forum for clients to resolve their disputes without having to take on the additional expense of hiring another lawyer.

After the hearing is complete, the arbitrator generally issues a decision within 30 days. Parties are notified of the award by the ADR program coordinator. Unless there was a procedural violation which prejudiced the rights of either party, the award is binding and cannot be appealed. For those seeking to end their disputes once and for all, fee arbitration provides that result in one session.

Mediation

Mediation is a broader program with a different approach. It can be used for lawyer-to-lawyer disputes such as dissolution of partnerships, or disputes involving experts or other professionals. It is often used for fee disputes, since issues such as miscommunication and misunderstanding are often components of such disputes and can be addressed non-confrontationally in mediation.

Mediation allows the parties the chance to resolve the dispute themselves with the assistance of a neutral third party. The program uses a facilitative method to help both sides communicate and identify solutions. It requires the active involvement of both sides and often results in a more satisfactory resolution, since a settlement crafted by the parties is more likely to be complied with voluntarily. Mediation can be stopped at any time if one side no longer wishes to continue. If the parties reach a settlement, the mediator assists them in putting it into writing, which then becomes binding. If mediation fails to resolve the matter, the parties are free to pursue fee arbitration as another alternative.

At times, it may be impossible for a lawyer to avoid fee disputes or disputes with others. The ADR Program offers members and the public an effective way to resolve differences and avoid costly litigation — which is something that even disputing sides can agree is a good thing. 

Program guidelines and forms can be found at www.wsba.org/lawyers/services/adr.htm or by contacting ADR Program Coordinator Darlene Neumann at 206-733-5923 or 800-945-9722, ext. 5923, or darlenen@wsba.org. Darlene holds a B.A. from the University of Washington and a Paralegal Certificate from the University of Washington Extension.