Public policy should disfavor lawyer-layperson arbitrations

Last year, Facebook and Google announced they would no longer force employees to arbitration of employment grievances. Most commenters lauded this policy announcement as the right thing to do. These two corporate behemoths joined Microsoft, Uber and Lyft, all of which ended forced arbitration last year. There appears to be a newfound appreciation that mandatory arbitration clauses are systemically bad, particularly when contrasted with vetting these kinds of personal grievances in court where due process and public participation are assured.

According to the WSJ, the impetus for ending forced arbitrations at these companies was that, in cases of sexual harassment, forced arbitration, "helped keep the allegations quiet and allowed offenders to stay in their jobs or leave with big payouts." Elizabeth Winkler, "Facebook and Google Are Right to End Forced Arbitration," WSJ (Nov. 11, 2018). The other negative of forced arbitrations described by the WSJ is they, "kept investors in the dark about major flaws in corporate culture and in protections for workers." The WSJ noted that investors pushing all companies, large and small, to eliminate forced arbitrations would avoid ugly scandals and force companies to create cultures that attract and retain the highest quality employees.

I believe the State Bar of California should follow suit, and adopt a policy that arbitration clauses between California-licensed attorneys and their clients are disfavored and should not be enforceable. The negative consequences of allowing forced arbitrations in the corporate context apply equally, if not more so, in the legal marketplace.

It does not behoove leaders in the legal profession to keep the public in the dark about lawyers who take advantage of clients. We want to avoid unjust results in dispute resolution processes between lawyers and their clients, and we want to create a culture that "attracts and retains the highest quality employees" (i.e., legal service providers). We, as a profession, also do not want to allow offenders to "stay in their jobs or leave with big payouts" and possibly victimize others.

As with sexual harassment in the workplace, lawyers can take advantage of clients in complex and nuanced ways. It makes no sense to create an avenue of escape that can be exploited by the small minority of lawyers who would think to exploit it. By their nature, these disputes often turn out to be cases of "he said, she said." Limits on discovery and witness participation pit a lawyer versed in law and billing practices against clients who lack experience with such matters. When clients cry "foul," it may be hard for arbitrators sitting as triers of fact to place credence in alleged behaviors that depart from ethical and professional practices that they, as experienced and successful practitioners, generally take for granted. Why must clients who fall victim to sharp practices by unscrupulous lawyers labor against an illusion of uniformly ethical and loyal legal professionals?

Business and Professions Code Section 6200 et seq. sets forth a statutory construct for fee disputes administered statewide by over 30 local bar associations. Certain features of this statutory scheme are not well known to laypersons, principally the option of either party to make it non-binding and the absence of the availability of affirmative relief to the client (for malpractice or other claims for relief). Perhaps lawyers should be required to disclose these features and have clients agree in writing before a lawyer can make a Section 6200 arbitration mandatory. Even without this proviso under the current construct, these fee arbitrations seem to provide a (relatively) quick and approachable tool for resolving the most common disputes between lawyers and their clients.

A problem arises, however, when either the lawyer or the client rejects the award. This requires that within 30 days of notice of the award a party file with the superior court a, "Rejection of Award and Request for Trial after Attorney-Client Fee Arbitration." The client may contemplate "full" adjudication of his or her dispute (now to include affirmative claims) since descriptions of the programs all generally mention trial can follow if the dispute cannot be resolved through the fee arbitration process. Unfortunately, despite the program descriptions and title of the form, a client's "request for trial" is easily defeated by a petition to compel arbitration if there is an arbitration clause in the attorney's retainer agreement. An increasingly disillusioned client is now facing a second arbitration (with potential costs far exceeding a filing fee for a lawsuit) when what the client may want and deserve is a jury trial.

Attorneys mandating private arbitration of disputes between themselves and their clients simply should not be allowed. Fee arbitration programs already provide an ample opportunity for lawyers faced with dissatisfied clients to resolve disputes. Placing a second, nonpublic and less protective arbitration forum at lawyers' disposal goes beyond the pale because it will appeal to bad actors far more than anyone else. It is also apt to erode consumer confidence in the legal profession's commitment to providing ample opportunity for fair and reasonable due process for claims involving lawyer misconduct and policing its own. Laypersons forced into arbitrations going against lawyers, who certainly have a better understanding of the legal ramifications and process involved in fee arbs and/or private arbitration, raises issues of unconscionability and is likely to be systemically destructive in the long run.