Law Firm's Arbitration Push in Malpractice Dispute Fails at High Court
The justices on Monday turned back a challenge to a Maine ruling that requires attorneys to obtain informed consent from prospective clients that any future legal malpractice claims will be submitted to binding arbitration.
The high court declined review in
Bernstein, Shur, Sawyer & Nelson v. Snow. The law firm, represented by
Jenner & Block partner
Matthew Hellman, challenged
a ruling in December by the Maine Supreme Judicial Court. Hellman argued the Federal Arbitration Act, or FAA, should preempt the state-law rule.
"The Maine SJC adopted a rule subjecting attorney-client engagement agreements to a heightened 'informed consent' requirement, on the ground that those agreements 'waive' the client’s 'fundamental right' under the Maine Constitution 'to a jury trial in civil matters,'" Hellman wrote in the
petition. "It is difficult to imagine a clearer articulation of a legal rule that violates the FAA."
The case stemmed from Bernstein Shur's engagement with Dr. Susan Snow, who hired the firm to represent her in civil proceedings related to the distribution of her father's estate. Snow signed Bernstein's standard terms of engagement, which included an arbitration clause.
The clause dealt specifically with fee disputes and stated that "any other dispute that arises out of or relates to this agreement or the services provided by the law firm shall also, at the election of either party, be subject to binding arbitration.”
Snow later sued the firm for alleged malpractice, and the law firm moved to compel arbitration.
Relying on Maine Rules of Professional Conduct and opinions by the ABA Standing Committee on Ethics and Professional Responsibility and the Maine Professional Ethics Commission, the state high court said attorneys must "effectively communicate" clients that malpractice claims are covered under the arbitration agreement.
"The attorney must also explain, or ensure that the client understands, the differences between the arbitral forum and the judicial forum, including the absence of a jury and such ‘procedural aspects of forum choice such as timing, costs, appealability, and the evaluation of evidence and credibility,'” the court said.
On the preemption question, the state high court concluded: "Here, the requirement in question—that attorneys fully inform a client of the scope and effect of a contractual provision requiring the client to submit any malpractice claims against the firm to arbitration—does not 'singl[e] out' arbitration agreements, and is therefore not preempted by the FAA."
Snow's counsel,
Benjamin Donahue of
Hallett Whipple Weyrens in Portland, Maine, had
urged the justices to deny review.
Donahue argued the state high court's ruling "does not 'target arbitration either by name or by more subtle methods,' but even-handedly applies to arbitration agreements the same standard of informed consent that applies to other transactions between attorneys and clients that involve significant matters in which the parties have potentially conflicting interests."
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