Originially from: World Arbitration and Mediation Review (WAMR)

ABA Ethics Committee Opines That Legal Malpractice Claims Are
Arbitrable
On February 20, 2002, the ABA Committee on Ethics and Professional
Responsibility issued Formal Opinion 02-425. In that document, the committee
addressed the ethical propriety of retainer agreements between attorneys and
clients that contain arbitral clauses which require that fee disputes and malpractice
claims be submitted to arbitration. While the committee concluded that such
contract provisions did not violate ethical standards, it conditioned their ethical
acceptability upon a number of factors. First, the client’s acceptance of the
agreement to arbitrate such disputes must be based upon informed consent.
Second, the effect of the arbitration agreement cannot be to limit or exclude the
lawyer’s liability exposure to the client:
It is ethically permissible to include in a retainer
agreement with a client a provision that requires the
binding arbitration of fee disputes and malpractice
claims provided that (1) the client has been fully
apprised of the advantages and disadvantages of
arbitration and has been given sufficient information to
permit her to make an informed decision about whether
to agree to the inclusion of the arbitration provision in
the retainer agreement, and (2) the arbitration provision
does not insulate the lawyer from liability or limit the
liability to which she would otherwise be exposed under
common and/or statutory law.
In explaining its position, the committee emphasized the distinction
between fee disputes and professional malpractice claims. Many, if not most, bar
associations have implemented arbitral procedures for addressing fee disputes.
Rule 1.5 of the Model Rules of Professional Responsibility (MRPR) authorize
“fee arbitration programs”; in fact, there are ABA Model Rules for Fee