ISBA program aims for binding arbitration of disputes over legal billing

Clients who think their lawyer charged them too much have a new way to contest the bill. And so do attorneys whose clients haven’t paid up as they believe they should.

The Indiana State Bar Association’s Attorney Fee Dispute Resolution program is up and running, with about 30 cases referred to date. The cases are confidential, all parties must agree to the voluntary program, and the disputes are to be resolved through binding arbitration.

Carmel attorney Russell B. Cate chaired the ISBA’s Attorney Fee Dispute Resolution Committee whose rules were adopted this year and are available on the state bar’s website. The program is touted as a free benefit for members, and it’s free to all users. Panelists will volunteer their time to decide disputes.

Cate said there were two leading considerations in creating the program — reducing court caseloads by removing fee disputes, and improving relations between attorneys and clients.

“It was very well-received among attorneys,” Cate said. He said the bar is trying to educate legal consumers and practitioners about the program to keep such conflicts out of court.

“Most of the time when folks get to the courthouse, they’re there to file,” he said. “That’s why we think the attorney education component of this is very important.”

New rules

Along with requirements that parties agree to the voluntary program, it also requires the amount in dispute be at least $750.

State bar staff liaison Melanie Zoeller said cases initially will be referred to her, and once parties agree to use the program to settle a fee dispute, they will provide copies of bills and supporting documentation.

Fehrenbach Taylor

The program divides the state into six geographic districts, and cases will be referred to panels of three attorneys in the appropriate district who will hear and arbitrate the dispute. The fee dispute resolution committee will appoint a lead arbitrator for each panel.

“The premise there is lawyers in the district are going to know what’s reasonable in that district,” said Lafayette attorney Jennifer M. Fehrenbach Taylor, who serves on the AFDR committee.

An aim of the program is to resolve matters promptly: Cases will be referred to panels within 30 days of parties executing agreements to arbitrate, and panel chairs will set hearings within 30 days after their appointment, according to the rules.

Since the rules were adopted this summer, “We’ve gotten a lot more calls and inquiries about it from both attorneys and their clients,” Zoeller said.

She said the first case has already had an agreement to arbitrate signed by the parties, and the AFDR committee chair has sent notices to attorneys seeking panel participants to arbitrate the matter.

“It’s a great resource for attorneys and their clients if they have a disagreement,” Zoeller said.

Disciplinary referrals

The AFDR program also provides an avenue to dispose of fee grievances against attorneys that are filed with the Indiana Supreme Court Disciplinary Commission. Indiana Court of Appeals Judge Elaine Brown is a member of the AFDR committee and said the program serves as an outlet for these disputes that otherwise would not rise to the level of a formal disciplinary proceeding against a lawyer.

Brown said the bulk of the referrals to date have come from the disciplinary commission. “I think as the word gets out, more and more people will use it,” she said of the program.

Supreme Court spokeswoman Kathryn Dolan said the disciplinary commission doesn’t track the number of grievances it receives involving fee disputes, but a review of recent months finds on average about 12 such grievances are filed each month. Zoeller said the complaints received so far range from about $1,000 to several thousand dollars.

“It really was created to address higher dollar amounts,” Cate said. Fee disputes must be within the statute of limitations, and he noted the committee rejected one dispute it received over fees paid more than eight years ago.

The ISBA program will not duplicate the work of local bar groups that have their own fee dispute resolution programs, Cate said. Committee members said they hope to work with those groups. “If a local bar has their own system for fee disputes, we refer to them,” Fehrenbach Taylor said.

Side benefits

Committee members believe the program, which also allows lawyers to try to resolve fee disputes with clients, can do more than just settle squabbles, keep cases out of court and improve relations and communication between lawyers and clients. It also might help lawyers improve their practices.

Cate said he’s written off amounts in the hundreds of dollars in the past simply as a matter of good will when clients questioned fees. Brown said she did too when she was in private practice.

“More so the tendency was to do that than to initiate litigation,” Brown said. “It doesn’t look good for your practice, in my opinion.”

Brown

But there also are practical reasons an attorney may not want to sue a client over an unpaid bill. “I think the fear was that if a suit was filed, it might prompt a counterclaim” for legal malpractice, Brown said. That could expose an attorney to any number of allegations of what she did or didn’t do for a client.

Fehrenbach Taylor said a common thread in many fee disputes is the attorney and client didn’t sign an upfront agreement outlining the cost and scope of representation.

She said the committee also aims to take steps in the future that could ameliorate those problems. The committee is working on developing standard fee agreements that meet ethical requirements and would allow lawyers to clearly communicate and establish fee arrangements with clients, whether on a flat-fee, hourly, contingency or combination basis.•