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THE ATTORNEY’S FAILURE TO NOTIFY THE CLIENT OF THE CLIENT’S RIGHT TO ARBITRATE A FEE DISPUTE WITHIN TWO YEARS OF WHEN THE LEGAL SERVICES WERE RENDERED PRECLUDES THE ATTORNEY’S ACTION FOR PAYMENT OF THE FEE (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Webber, in a matter of first impression, determined plaintiff-attorney’s failure to timely notify defendant-client of the right to arbitrate a fee dispute required dismissal of the attorney’s action seeking attorney’s fees. The Committee on Fee Disputes and Conciliation (Committee) can not hear fee disputes more that two years after legal services were rendered. Plaintiff-attorney did not notify defendant within two years and the Committee refused to hold the arbitration on that ground:

22 NYCRR 137 gives clients the right to demand arbitration of any fee dispute in an amount between $1,000 and $50,000 (22 NYCRR 137.1[b][2]). The failure of an attorney to participate in fee arbitration is a violation of the ethical rules (Rules of Professional Conduct 22 NYCRR 1200.00) rule 1.4; (see 22 NYCRR 137.11). 137.1 sets out the limitations on the disputes that will be heard by the Committee. This includes matters outside the dollar range, claims inextricably intertwined with malpractice claims, and as relevant here, claims where no legal services have been performed in the prior two years (22 NYCRR 137.1[b][6]). …

Fee arbitration is mandatory if requested by a client or a former client. It is a right of the client. Where, as in this case, an attorney, through their own delay deprives the client of that right, the attorney cannot in good faith claim compliance with the procedures of Part 137. Not only would this effectively give counsel the option of whether to arbitrate, because counsel could control whether the dispute began in two years or less, it would also be directly contrary to the rules, which provide that it is the client’s choice. Filemyr v Hall, 2020 NY Slip Op 04238, First Dept 7-23-20

 

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