Confidential
Settlement – $31,809Facts
The plaintiff was represented in California in a proceeding to modify spousal support by the defendant attorney and her professional corporation and the defendant accountant and his accounting firm. The plaintiff had been married for 22 years and was divorced in San Francisco in 1983. At that time, he was ordered to pay spousal support of $2,800 per month. In the 10 years that followed, the financial circumstances of the plaintiff and his former spouse changed, as the plaintiff's salary allegedly increased approximately $600,000 annually with his ex-wife inheriting approximately $1 million during the same time period. In 1993, the plaintiff consulted the defendant attorney for advice about his continuing obligation to pay spousal support. Based upon the attorney's advice and with her as his attorney, on Jan. 3, 1994, the plaintiff filed a motion for termination/modification of spousal support. His ex-wife responded with a motion for an increase in support which was filed on March 24, 1994. The matter was tried before Justice King on July 6 and 7, 1994. The plaintiff's motion to terminate support was denied, as was his motion for a decrease in support. The ex-wife's motion for an increase in support was granted, resulting in the plaintiff having to pay an additional amount of $1,100 per month. He was ordered to pay $50,000 in attorney's fees and costs incurred by his former spouse (on a total bill of $63,000, including both attorney's fees and accountant fees). In addition, he was billed $110,000 by the defendant's law office and over $40,000 by the defendant accountant for their services. The plaintiff's contracts with his attorney and accountant contained conflicting arbitration clauses. He sued both claiming negligence, breach of fiduciary duty, and charging unconscionable fees. He simultaneously filed a petition to compel a consolidated arbitration of both claims before a single arbitrator. As a result, the parties stipulated to binding arbitration at JAMS/Endispute.
Settlement Discussions
Per the plaintiff, the plaintiff made an offer to settle for mutual releases and the defendants' lowest demand was $60,000 in additonal fees.
Damages
The plaintiff claimed that the $150,000 he had been charged in legal and accounting fees were unconscionable. He refused to pay the outstanding bills and demanded a refund. He also claimed that the defendants were responsible for him being ordered to pay increased support to his spouse and the order that he pay her $63,000 in costs and attorney's fees.
Other Information
The award was reached approximately one year after the case was filed. The parties stipulated to binding arbitration. The arbitrator ruled that the defendants had not committed any malpractice, that the representation of the plaintiff did not fall below the standard of care and that the fees charged were unconscionable and the defendant attorney should not recover the unpaid balance of her fees and should, in fact, refund the plaintiff $8,298.32 in fees paid to the defendant accountant.
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