Arbitration of claims has gained traction over the years as a faster and relatively inexpensive alternative to trial court proceedings. However, it is not always advantageous to forego the right to a judge and a jury. An individual who holds a claim or potential claim should give careful thought to where that claim may ultimately be litigated. In a contract situation, that decision is frequently made at the time of execution through arbitration clauses, most of which are considered valid and enforceable.
When a client hires a lawyer, the engagement is customarily and properly memorialized through a written Retainer Agreement. What the client must understand is that the Retainer Agreement is a contract much like any other, enforceable through its terms and conditions. Commonly, fee disputes between attorneys and clients are determined in arbitration, and indeed, clients have a right to have their fee claims arbitrated without foregoing the right to bring an action in Court. R. 1:20A. But armed with an arbitration clause, can an attorney force a former client to arbitrate a dispute between them, even one sounding in legal malpractice, effectively removing the judge and jury from the equation?
Recently, the New Jersey Courts have had to determine whether an arbitration clause, embedded in a Retainer Agreement, could be enforced when the client later sued the attorney for legal malpractice. In Delaney v. Dickey, 244 N.J. 466 (2020), the New Jersey Supreme Court faced this precise question and answered it with a multi-faceted analysis. First, the Supreme Court held that an arbitration clause in a Retainer Agreement is so material so as to require the attorney to discuss the benefits and detriments of the clause with the client. Thus, the failure of the attorney to do so makes the arbitration clause unenforceable. Id. at 496 (citing the Rules of Professional Conduct and the duty to communicate pursuant to RPC 1.4(c)). The Supreme Court made clear, however, that its new rule would be applied prospectively from the date of its decision, December 21, 2020. Id. at 474.
Accordingly, on a going-forward basis, a client may challenge the validity of an arbitration clause in an attorney Retainer Agreement if the clause was not explained or not adequately explained to the client. However, Retainer Agreements containing arbitration clauses entered into prior to the date of decision do not carry with them the same protections which post-date Delaney.
This dynamic again came into play in the recently-decided matter of Micro Tech Training Ctr. V. DeCotiis Fitzpatrick & Cole, 2021 N.J.Super.Unpub. LEXIS 3159 (App.Div, December 27, 2021). There, the Plaintiff sued its former counsel for legal malpractice, and the attorneys sought to move the matter to arbitration pursuant to an arbitration clause contained in the parties’ 2017 Retainer Agreement. The trial court entered an order staying the claim and compelling arbitration, and the client appealed. The Appellate Division confirmed the order. In so doing, the Appellate Division held that the arbitration clause terminology referring to “any differences or disputes arising between us relating to your represent” was sufficiently unambiguous and broad so as to include legal malpractice claims. Secondly, the Appellate Division held that the plaintiff could not take advantage of the rights outlined in Delaney, as the 2017 Retainer Agreement pre-dated the Delaney decision. The legal malpractice dispute thus had to be arbitrated and not litigated in the Courts.
The commitment to arbitrate a future claim arising from a contract is multi-faceted and complex, even more so when it pertains to the attorney-client relationship. There are choices to be made by a client at the time of engagement and possible strategic decisions regarding venue to be made should a claim arise particularly one sounding in legal malpractice. Superimposed upon this is an understanding that a client’s rights in this regard are affected by when the written engagement took place.
Contact Our Hackensack Legal Malpractice Attorney
If you’ve suffered harm due to your lawyer’s actions, you may be entitled to file a New Jersey legal malpractice claim. However, succeeding in a New Jersey legal malpractice claim can be difficult without the assistance of an experienced Hackensack legal malpractice attorney. At Rosenblatt Law, our experienced attorneys will conduct a thorough investigation of your situation and determine whether your attorney’s actions or inactions constitute legal malpractice. We’ll then advise you on the best course of action based on your unique circumstances and work diligently to achieve a successful outcome in your New Jersey legal malpractice case. If you believe you have been harmed by your attorney, please contact our office today to schedule a consultation.