Monday, June 18, 2012

Retainer Agreement Sufficiently Clear

The New York Appellate Division for the First Judicial Department has affirmed a arbitrator's decision interpreting a retainer agreement in favor of a law firm:

In this proceeding alleging the law firm's breach of performance of a
retainer agreement, including breach of an alleged oral agreement to have a
particular attorney in its firm serve as lead counsel in an underlying matter,
the client failed to preserve its arguments that the law firm did not meet its
burden of demonstrating that the client fully understood the terms of the
parties' retainer agreement, and that public policy rendered such retainer
agreement unenforceable, as these arguments were not sufficiently brought to the
attention of the arbitrator. The client did not explicitly argue that the law firm
violated public policy by failing to ensure that the client fully understood the
terms of the parties' retainer agreement. It only argued that parol evidence was
needed because the retainer agreement, as written, was allegedly incomplete
and/or ambiguous.

Were we to reach the merits of the client's public policy argument, we would
find it unavailing. The parties agreed to arbitrate any disputes arising from
their retainer agreement, and there is no basis to conclude that the asserted
public policy ground (requiring a client's full knowledge and understanding of
an attorney-client retainer agreement) was violated. The arbitrator's award
dismissing the client's challenge to the legal fees that were due in accordance
with the express terms of the parties' amended written retainer agreement had a
rational basis, inasmuch as the Arbitrator found the written retainer arrangement to be unambiguous and to constitute a fully integrated agreement that would satisfy the requirements of 22 NYCRR 1215.1 The arbitrator's rejection of the sophisticated client's argument that sought inclusion of claimed oral terms that would modify the clear terms of the amended retainer agreement was rationally based in contract principles, including New York's parol evidence rule, and the criteria for allowing modification of written terms without altering them was not established by the client. Since the terms of the fully integrated retainer agreement were unambiguous, there was no basis to consider parol evidence.

Moreover, the client's argument that the arbitrator, in deciding the
dismissal motion, denied it "fundamental fairness" by refusing to accept the
truth of its allegations regarding the oral promise, including that the parties
intended this oral promise to be a component of the parties' retainer agreement,
thereby precluding it from offering evidence to demonstrate the parties'
understanding in regard to the alleged oral promise, is unavailing. It was
within the province of the arbitrator to find, as a matter of law, that the
retainer agreement was not ambiguous, notwithstanding the client's claims that alleged oral promises were intended to be added as components of the written retainer agreement. Since an arbitrator's award ordinarily will not be vacated even if founded upon errors of law and/or fact, there is no basis to vacate this award founded upon applicable contract principles.

Furthermore, the arbitrator appropriately rejected the client's attempt to
modify the clear terms of the parties' fully integrated retainer agreement.
There was no basis to conclude that the alleged oral agreements were merely
collateral to the retainer agreement (as amended), that they did not tend to
contradict the terms of the retainer, and that the oral modifications would
otherwise ordinarily be omitted from a writing. (citations omitted)

(Mike Frisch)

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