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Fee ArbitrationLinks
INTRODUCTION
New Jersey lawyers are required to provide either a written
fee agreement, or at least a written communication concerning the fee, to new
clients. This must be done shortly after the lawyer first accepts the case.
Even if you have been regularly represented by the lawyer in the past, you
should discuss any questions regarding the fee to be charged at the initial
conference so that you will have a clear understanding of what the lawyer has
been hired to do and how much the case will cost. Despite agreements and
discussions about fees, sometimes problems arise. Fee disputes, like any
disagreement over the value of services, may be resolved by a lawsuit.
As an alternative to court action, the Supreme
Court of New Jersey has created 17 district fee arbitration committees, which
will resolve, at your request, through binding arbitration, disputes concerning
alleged unreasonable fees. To begin the process of determining whether the fee
charged by your lawyer was reasonable you should dial the Ethics/Fee
Arbitration Hotline, 1-(800)-406-8594. After you provide the zip
code of the attorney's office address, you will be connected to the district
fee arbitration Secretary who will provide you with a Request for Fee
Arbitration Form.
If you have Acrobat Reader, you may print a Request
for Fee Arbitration Form or an Attorney
Fee Response Form. Send the original and five (5) copies to
the district secretary where the
attorney has an office for practice.
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SHOULD YOU USE FEE
ARBITRATION?
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FEE ARBITRATION IS NOT ALWAYS NECESSARY
What should you do if your lawyer's bill seems
unreasonable? Say so. Sometimes unpleasantness can be prevented if you and your
lawyer talk things over. Ask your lawyer to explain why the bill is higher than
you expected. You may find out the case was more complicated and took more time
than you realized. Alternatively, the lawyer may agree that a mistake was made
in the bill.
FEE ARBITRATION VS. CIVIL LITIGATION
If discussion does not solve the problem, you can take
the dispute to court--or to fee arbitration. Fee arbitration is a hearing
conducted by one or more persons not involved in the dispute. Like judges, they
hear the arguments on both sides and decide the outcome of the dispute. Fee
arbitration is impartial, inexpensive and usually faster than going to
court.
A lawyer must send you formal notice of
your right to utilize fee arbitration before the lawyer may institute legal
action to recover a fee. That notice will advise you of your right to choose
the fee arbitration process. In that notice the attorney is also required to
list the name, address and phone of the fee secretary and to advise you that
you have 30 days within which to choose the fee arbitration alternative. The
attorney must wait 30 days from the date of notice before starting the suit. In
most cases, if you promptly choose to take your dispute to arbitration, the
lawyer must arbitrate. If you do not file a Request for Fee
Arbitration form within 30 days of receiving notice from the lawyer, you lose
your right to utilize the fee arbitration system. Most clients are
interested in a speedy, inexpensive method of resolving fee disputes and
animosity is likely to be reduced by the less formal, less adversarial nature
of fee arbitration.
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HOW TO INITIATE THE PROCESS
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COMMENCING FEE ARBITRATION
The fee arbitration process is initiated by your asking
for a Request for Fee Arbitration Form from the secretary of the fee committee
in the district where the lawyer maintains an office for the practice of law.
There are 17 district fee committees throughout the state with jurisdiction
generally conforming to county lines. Forms and information may be obtained
from the appropriate committee secretary. If you are calling from within New
Jersey, use the Ethics/FeeArbitration Hotline, 1-(800)-406-8594,
and, after you provide the zip code of the attorney's office address, you will
be connected to the appropriate district fee
arbitration secretary.
If you have Adobe Acrobat Reader, you may
print a Request for Fee Arbitration Form.
Send the original and four (4) copies to the district secretary where the
attorney has an office.
FILING FEES
A $50 non-refundable administrative
filing fee must accompany all Requests for Fee Arbitration and all Attorney Fee
Responses.
Filing fees must be paid by check payable
only to "Disciplinary Oversight Committee" at the time the Request Form or
Response Form is filed. Non-payment of a required filing fee or dishonor of a
check that has been submitted can result in dismissal with prejudice of a
client's claim and can result in the attorney being barred from further
participation in the case.
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EFFECT OF INITIATING THE PROCESS
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CONFIDENTIALITY
Fee arbitration proceedings are
confidential, except where a lawsuit is filed in a court concerning the fees.
Under Supreme Court Rules, once you file for fee arbitration, you are
required thereafter to keep all communications regarding the fee matter
confidential. You are free to discuss your dissatisfaction with others. You
simply may not disclose the fact that you have filed a fee dispute against the
lawyer. You may not breach this confidentiality by disclosing your fee dispute
to persons other than members of the fee arbitration system, except to discuss
the case with other witnesses or to consult an attorney.
BINDING ARBITRATION
Once you choose to pursue fee arbitration
by signing the binding arbitration form, you are bound by the fee committee's
jurisdiction unless you withdraw your request for fee arbitration within 30
days. The lawyer is also bound by the proceeding. By requesting fee arbitration
both you and your lawyer agree to comply with the decision of the fee
arbitration committee. There is no unconditional right to appeal any
arbitration determination. Appeals are strictly limited to instances of gross
procedural error, obvious legal error or actual fraud.
EXCEPTIONS TO THE RULE OF MANDATORY
ARBITRATION
The fee arbitration procedure is not available in every
case. A fee committee may, in its discretion, decline to arbitrate fee disputes
regarding matters in which no lawyer's services have been rendered for at least
two years or in which the total legal fee exceeds $100,000. The fees in some
kinds of cases, such as worker's compensation cases, are determined by the
court and are not subject to fee arbitration. A fee committee may further
decline to arbitrate disputes in which persons who are not parties to the
arbitration have an interest that would be substantially affected by the
arbitration, such as where someone other than the client will have to make
payment on a fee award. Similarly, when the primary issues in dispute raise
substantial legal questions in addition to the basic fee dispute, such as
claims of legal malpractice, the fee committee may decline to hear the case.
Finally, Fee Committees may not arbitrate a fee for legal services rendered by
the Public Defender's Office.
While fee committees do not have the authority to award
you money damages for legal malpractice, they are permitted to decide the
underlying fee issue if they believe the fee issue can be separated from the
malpractice issue. In such situations, you will not lose your right to later
file a lawsuit for legal malpractice. Finally, if the lawyer gives you proper,
written notice of your right to select fee arbitration, but you fail to secure
and file the appropriate form within 30 days of receiving notice, the fee
committee must decline to accept the matter.
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DESCRIPTION OF THE PROCESS
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PRE-HEARING PROCEDURE
Within 20 days after the fee secretary sends your
Request for Fee Arbitration to the lawyer, the lawyer must file and send you an
Attorney Fee Response on a form provided by the committee. If you have Adobe
Acrobat Reader, you may print the Attorney Fee
Response Form. Send the original and four (4) copies to the district
secretary. A failure to file the response may result in the lawyer being barred
from further participation in the proceeding or in the exclusion of certain
evidence offered by the lawyer at the hearing. The burden of proof to
demonstrate the nature of the fee agreement and the reasonableness of the
ultimate fee is on the lawyer. All basic documentation necessary to carry this
burden should be submitted with the Attorney Fee Response. This documentation
includes (1) a copy of the written fee agreement; (2) all correspondence
confirming or explaining the fee arrangement; (3) the lawyer's time records;
(4) all interim bills and the final bill including costs; and (5) a statement
of all amounts paid on account. Prior to the hearing neither you nor your
lawyer has the right to make formal inquiries or to take depositions. If your
lawyer believes that any other lawyer or member of a law firm is responsible
for, or entitled to, any portion of the fee, it is your lawyer's responsibility
to see to it that that lawyer or firm is made a party to the arbitration
proceeding.
WHO ARE THE ARBITRATORS?
Since 1979, fee arbitration committees have been
composed of both lawyers and public members. Most fee arbitration cases are
heard before panels of three members, composed of either two lawyers and one
public member or three lawyers. However, if the total amount of the fee charged
is less than $3,000, the hearing may be held before a single lawyer member of
the fee committee. All fee committee members are directly appointed by the
Supreme Court of New Jersey and serve without compensation. In the event the
committee determines that an actual conflict of interest exists in any case,
either the member who has the conflict may be disqualified from participation
in the case or the matter may be transferred to another district.
HEARING AND DETERMINATION
After the attorney files the Attorney Fee Response, the
committee will schedule a hearing with at least 10 days notice to the parties.
Arbitration hearings are private and formal; however, they do not require
observance of strict courtroom procedure and evidence rules. Ordinarily both
you and your lawyer appear at the hearing without legal representation;
however, both parties are entitled to legal counsel. All witnesses are sworn;
however, no stenographic or tape-recorded record is made.
Be aware that, when you are given notice of
the time, date and place for the arbitration hearing, it is your
obligation to contact all witnesses you will rely on and to insure their
appearance at the hearing. If the witness is important and will not appear
voluntarily, you may ask the fee secretary to issue a subpoena. You may also
compel the production of documents through subpoenas. You are responsible for
personally serving any subpoenas you request. You also must be prepared for the
hearing by bringing all letters, documents or writings which you wish
the arbitrators to consider.
The hearing panel or single arbitrator must
decide the matter promptly. Except in unusual cases, the arbitration
determination will be decided within 30 days following conclusion of the
hearing. You will be notified of that decision thereafter by the committee
secretary. The unsuccessful party has 30 days from receipt to comply with the
determination.
LIMITED RIGHT OF APPEAL
The amount of the fee as determined by the
fee committee is binding and final. A limited right of appeal to the
statewide Disciplinary Review Board is provided. The grounds for such an appeal
are as follows:
(1) Failure of a panel member with a conflict to be
disqualified;
(2) Failure of the fee committee to substantially comply with
mandatory procedural requirements;
(3) Actual fraud on the part of any
member of the fee committee; or
(4) Gross and obvious mistake of law by the
fee committee.
This limited appeal may be taken within 21
days after receipt of the fee committee's written determination by writing
to the Disciplinary Review Board at P.O.Box 962, Trenton,
NJ 08625, requesting Notice of Appeal forms. These forms, properly
completed, must be returned to the Disciplinary Review Board within 21
days of the date of the letter transmitting the appeal forms. Absent
compelling reasons, the Board will not consider untimely requests for, or
returns of, Notice of Appeal forms. The timely filing of a notice of appeal
automatically stops the collection of any judgment obtained based upon the fee
committee's arbitration determination. All limited appeals are considered by
the Board on the written record. The Board's decision is final.
ENFORCEMENT OF FEE AWARD
If a fee committee orders a lawyer to refund a
portion of the fee to you, the lawyer is required to make such payment within
30 days of receipt of the fee decision. If the lawyer fails to make such
payment, you should write to the Office of Attorney Ethics, which is empowered
to file a motion with the Disciplinary Review Board seeking a recommendation
that the lawyer be temporarily suspended from the practice of law until
compliance is obtained. If the Board determines that a refund has improperly
been withheld, it may recommend to the Supreme Court of New Jersey that the
lawyer be suspended from the practice of law until compliance is achieved. The
Board can also impose additional monetary sanctions on the delinquent lawyer
for failing to abide by the fee committee's ruling. On the other hand if the
fee committee determines that you owe money to the lawyer and you fail to pay
within 30 days, the lawyer may enter the judgment in court. You cannot
relitigate the matter.
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District Fee Arbitration
Secretaries
By Supreme Court rule, fee proceedings must be conducted in
the district where the attorney maintains an office for practice. There are 17
district fee secretaries. Click here for a
complete listing.
CONCLUSION
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AVOIDANCE OF FUTURE FEE DISPUTES
Always ask your lawyer for a written fee agreement, and
make sure you understand exactly what it does and does not cover. If you were
renting a house, you would ask if the costs of heat and water were included in
the rental price. Ask your lawyer specific questions, too. For instance, will
you be charged each |
