Eric S. Blum And David J. Hesseltine Provide Some Tips On What Fee Arbitrators Focus On In Mandatory Fee Arbitrations.
Under the Mandatory Fee Arbitration Act (Bus. & Prof. Code, § 6200 et seq.), attorneys and clients must first arbitrate a fee dispute through a local county bar’s fee arbitration process unless that process is waived by the client (although it can be voluntarily agreed to). In the July 2016 issue of The Orange County Lawyer, OCBA’s Mandatory Fee Arbitration Committee co-chairs Eric S. Blum and David J. Hesseltine provides some insight into what many fee arbitrators focus on in mandatory fee arbitrations and what lawyers can do to avoid client representation problems:
· Attorney arbitrators in the OCBA process must have practiced for at least four years and non-attorney arbitrators cannot have any legal training;
· Lack of communication—not understanding the billing process and what attorney did—is the most common reason clients claim they were overcharged;
· Clients frequently complain about the inadequacy of billings to explain what work was done;
· Attorneys who fail to understand the difference between a “nonrefundable” retainer and “advanced fees”;
· The most common problem the authors see with fee agreements is the failure to comply with the statutory requirements of Business and Professions Code section 6147 so that the agreements are enforceable and the lawyer is not relegated to quantum meruit recovery;
· An attorneys’ failure to understand what they can and cannot put into fee arbitration provisions;
· Fee agreements which fail to adequately define the scope of the attorney’s services;
· Block billing is the method that most frequently leads to a client challenging an attorney’s bills;
· Another common shortcoming in billings is only providing a simple description of the work performed followed by the total amount of fees charged (e.g., lack of specificity, failure to indicate you performed the task, no hourly rate);
· The authors suggest that attorneys explain upfront to the client how the fee agreement operates, with litigators explaining that the client will be charged for unsuccessful work efforts;
· Attorneys should state how statutory or contractual fees will be divided (put another way, who the fees go to following a recovery of fees);
· In contingency cases, attorneys should keep contemporaneous time entries of their work efforts and explain the measure of compensation should their representation be terminated; and
· Attorneys should exercise billing judgment—writing off hours and reflecting that in billings for both the benefit of the client and a possible future fact finder.