Attorney Fee Agreement Requiring Arbitration Upheld

December 2001

by Edward Poll, J.D., M.B.A., CMC

As noted in the ABA Journal, a Michigan Court (Watts v. Polaczyk, No. 212953), upheld an attorney's fee agreement which required arbitration. The Michigan Rule of Professional Conduct 1.8 (h)(1), which mirrors the ABA Model Code, bars lawyers from entering agreements which prevent future malpractice liability without clients having independent representation to approve such clauses. The court went beyond the ethics rule in its decision; it went to the strong public policy favoring arbitration as noted in the state's general arbitration statute.

This appellate decision was a surprise to legal scholars because Watts did not have independent counsel when he signed the first attorney fee agreement. One expert says that this decision is on the extreme end of upholding arbitration provisions, protecting lawyers and not insisting on independent counsel. Another scholar says that this does not limit lawyers prospective liability, it merely alters the venue for the decision. Any such arbitration provision will have a better chance of being honored, irrespective of the jurisdiction, if it is clearly worded and easily understood.

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December 2001