Saturday, February 22, 2014
The Alaska Supreme Court affirmed an arbitration award in a claim against an attorney brought by the girlfriend of a former client.
The court held that the former client's claim that the award was procured by fraud was not reviewable.
In doing so, I would respectfully suggest, the court gives cold comfort to former clients who invoke the Bar's arbitration procedures and expect a decent result.
The attorney was retained (through the girlfriend) to represent the defendant on federal drug charges.
At the arbitration, they testified that they understood the fee arrangement was $25,000 if the matter did not go to trial, $50,000 if there was a trial and $75,000 if the trial required experts.
The attorney was paid $75,000 in cash up front. The cash was wrapped in a grocery bag.
The client pleaded guilty on the morning of trial. He sought return of "at least" $50,000. The attorney refused, claiming that the arrangement was for a flat, non-refundable fee.
At the arbitration, the attorney produced a purported fee agreement to support his "non-refundable" claim. The client and girlfriend denied that the agreement was genuine and claimed fraud. The girlfriend asserted that she had not signed it.
The arbitration panel found the fee to be reasonable. While the arrangement may have violated ethical rules governing fees, the panel accepted the attorney' version of the fee arrangement and told the client that he could complain to the bar counsel about the potential ethics rule violations.
The court here found that the courts no authority to review the client's claim that the award was procured by fraud.
The attorney thus gets to keep the $75K (and presumably the grocery bag).
To put it mildly, the Bar's fee arbitration process worked very well from the point of view of the lawyer. For the client, not so much.
The court offered little recourse even where the fee may have violated Rule 1.5. (Mike Frisch)