Florida 4th DCA finds fee agreement arbitration clause unenforceable since the clause failed to comply with Florida Bar Rule 4-1.5(i)

Hello everyone and welcome to this Ethics Alert which will discuss the recent Florida 4th District Court of Appeal opinion which held that an arbitration clause in a fee agreement was unenforceable since it violated Florida Bar Rule 4-1.5(i) by failing to advise the client to consider consulting independent counsel.  The case style is Lindsay Owens v. Katherine L. Corrigan & KLC Law P.A., No. 4D17-2740, 2018 Fla. App. LEXIS 9174 (Fourth DCA June 27, 2018) and the opinion is here: https://www.4dca.org/content/download/244172/2149993/file/172740_1709_06272018_09290264_i.pdf

According to the opinion, the plaintiff filed a three-count legal malpractice action against the defendants alleging negligent representation in a dependency case, which caused her to lose custody of her children. The defendants moved to dismiss the litigation since the plaintiff had signed a fee agreement requiring her to submit the dispute to binding arbitration. The fee agreement included the following arbitration clause:

Any controversy, dispute or claim arising out of or relating to our fees, charges, performance of legal services, obligations reflected in this letter, or other aspects of our representation shall be resolved through binding arbitration in Broward County, Florida, in accordance with the Fee Arbitration Rule (Chapter 14) of the Rules Regulating the Florida Bar, and judgment on the award may be entered in any court having jurisdiction thereof. [YOU ACKNOWLEDGE THAT BY AGREEING TO ARBITRATION YOU ARE RELINQUISHING YOUR RIGHT TO BRING AN ACTION IN COURT AND TO A JURY TRIAL.]

The trial court dismissed the litigation, finding that the parties had “entered into an agreement to arbitrate that was not waived.”  On appeal, the plaintiff argued that the trial court’s order violated her right to due process by denying her a proper forum; the arbitration clause in the fee agreement was unenforceable because it violated Florida Bar Rule 4-1.5(i) by failing to include the independent counsel notice required under the rule; and the arbitration provision was ambiguous as to whether it required arbitration of a legal malpractice claim.

The opinion addressed plaintiff’s Florida Bar Rule 4-1.5(i) argument, finding it to be dispositive. The opinion stated that there are three elements for a court to analyze in deciding whether the arbitration of a dispute will be required: whether there is a valid written agreement to arbitrate; whether an arbitrable issue exists; and whether the right to arbitration was waived.

Florida Bar Rule 4-1.5(i) prohibits lawyers from making an agreement with a client for mandatory arbitration of fee disputes without providing the written Notice required by the rule, which includes advising the client that he or she should consider consulting with another lawyer and obtaining independent legal advice. Rule 4-1.5(i) provides:

(i) Arbitration Clauses. A lawyer shall not make an agreement with a potential client prospectively providing for mandatory arbitration of fee disputes without first advising that person in writing that the potential client should consider obtaining independent legal advice as to the advisability of entering into an agreement containing such mandatory arbitration provisions. A lawyer shall not make an agreement containing such mandatory arbitration provisions unless the agreement contains the following language in bold print: 

NOTICE: This agreement contains provisions requiring arbitration of fee disputes. Before you sign this agreement you should consider consulting with another lawyer about the advisability of making an agreement with mandatory arbitration requirements. Arbitration proceedings are ways to resolve disputes without use of the court system. By entering into agreements that require arbitration as the way to resolve fee disputes, you give up (waive) your right to go to court to resolve those disputes by a judge or jury. These are important rights that should not be given up without careful consideration. 

The defendants argued that Florida Bar Rule 4-1.5(i) did not apply since there was no fee dispute; however, the opinion rejected that argument and found that, although the arbitration clause might require arbitration of matters other than fee disputes, the clause clearly violated the Florida Bar rule by failing to provide the required notice.

The opinion held that the fee agreement violated Florida Bar Rule 4-1.5(i) and was unenforceable on its face since it required mandatory arbitration of future fee disputes without giving plaintiff the required written notice that the client “should consider obtaining independent legal advice as to the advisability of entering into an agreement containing such mandatory arbitration provisions.”

Bottom line:  This Florida appellate opinion held that mandatory arbitration clauses in fee agreements must comply with Florida Bar Rule 4-1.5(i) and, as a part of that notice, the client must also be advised in writing to consider consulting with independent counsel.  If the clause fails to comply with these requirements, it is rendered unenforceable.

Be careful out there.

Disclaimer:  this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

29605 U.S. Highway 19 N. Suite 150

Clearwater, Florida 33761

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

Joseph Corsmeier

about.me/corsmeierethicsblogs

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About jcorsmeier

Joseph A. Corsmeier is an “AV” rated attorney practicing in Clearwater, Florida. He concentrates his practice primarily in the areas of defense of attorney disciplinary matters before The Florida Bar, attorney admission matters before the Florida Board of Bar Examiners, and professional license and disciplinary matters before the Boards of the State of Florida. He provides expert analysis and opinion on conflict of interest and other attorney disqualification and legal malpractice issues and he testified as an expert in the Florida courts. He served as an Assistant State Attorney in the Sixth Judicial Circuit from 1986 to 1990 where he prosecuted felonies exclusively from June 1987, and as Bar Counsel for The Florida Bar’s Department of Lawyer Regulation from 1990 to 1998. He also practices in the areas of estate planning and Medicaid qualification, workers’ compensation, and labor law. Mr. Corsmeier is the author of numerous articles for various bar publications, has spoken at numerous local and statewide seminars on various topics, including ethics and professionalism, and was an instructor of legal ethics for paralegals at Rollins College until the Tampa campus closed. He received his undergraduate degree from Florida State University and his J.D. from Mercer University. He is admitted to practice in all Florida Courts, the Supreme Court of the United States, the United States Court of Appeals for the Eleventh Circuit, and the Middle District of Florida. He is a member of The Florida Bar, American Bar Association, the Association of Professional Responsibility Lawyers, and the Clearwater and St. Petersburg Bar Associations.
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