Thursday, August 25, 2011

No Stay Of Arbitration Awards When Attorney Declares Bankruptcy

In an opinion issued today, the New Jersey Supreme Court has held that fee arbitration and disciplinary proceedings qualify for relief from an automatic stay when an attorney declares bankruptcy.

From the headnotes of the court's decision:

The attorney fee arbitration system in New Jersey has been used since 1978 to enhance the confidence of the public in the bar and the judicial system, an important governmental function. Attorneys are required to submit to fee arbitration proceedings, and ensuring attorneys' adherence to it is an important regulatory goal because it facilitates the expedited resolution of fee disputes between attorneys and clients and fosters public confidence in the legal profession. Bolstering of the fee arbitration process and restoration of public confidence in the authority of fee arbitration committees to resolve fee disputes are at the heart of the Court's action.

The action to suspend [the attorney] from practice is to redress his disregard of determinations of the fee arbitration committee in the exercise of the authority delegated to the committee by the Court, and although [he] may have to satisfy the fee awards in favor of his clients to forestall suspension, that requirement is entirely collateral to the primary purpose of supporting the fee arbitration process and retaining public confidence in the system.

The stay of suspension ordered by the Court is vacated and [the attorney] is suspended from the practice of law in accordance with the order accompanying this opinion, pending his full compliance with the  of the January 27, 2011 order and the applicable provisions of Rule 1:20-20.

(Mike Frisch)

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