1

Filed 6/1/22 Ponist Law Group v. Nationwide Biweekly Admin. CA1/4

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not 

certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not 

been certified for publication or ordered published for purposes of rule 8.1115. 

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION FOUR

PONIST LAW GROUP, P.C.,

et al.,

Plaintiffs and 

 Respondents,

v.

NATIONWIDE BIWEEKLY 

ADMINISTRATION, INC., et 

al.,

Defendants and 

 Appellants.

 A160798

 (San Francisco County

Super. Ct. No. CPF 18-

516384)

Nationwide Biweekly Administration, Inc. (NBA); Loan 

Payment Administration LLC (LPA; together with NBA, 

“Nationwide”); and Daniel S. Lipsky appeal from a trial court 

order denying their petition to vacate an arbitration award and 

the trial court’s judgment confirming that award. The 

arbitration resolved a claim for unpaid legal fees by Ponist Law 

Group, P.C. and Sean E. Ponist (together, Ponist), who were 

formerly counsel to Nationwide and Lipsky. Nationwide and 

Lipsky contend the trial court erred in ruling that they were 

properly served with Ponist’s petition to appoint the arbitrator. 

Lipsky also argues the trial court erred in failing to vacate the 
2

award against him because Ponist’s fee agreement with him was 

void for violating public policy. We conclude the trial court 

properly denied Nationwide and Lipsky’s petition to vacate the 

award and will affirm the judgment.

BACKGROUND1

In 2014, NBA hired Ponist, a two-person law firm, to 

represent it in connection with certain government suits against 

it. (See, e.g., Nationwide Biweekly Administration, Inc. v. 

Superior Court (2020) 9 Cal.5th 279, 294.) Lipsky, who was 

NBA’s founder, president, sole officer, and sole shareholder, 

signed Ponist’s fee agreement for NBA. (Nationwide Biweekly 

Administration, Inc. v. Owen (9th Cir. 2017) 873 F.3d 716, 721, 

fn. 1; Consumer Financial Protection Bureau v. Nationwide 

Biweekly Administration, Inc. (N.D.Cal., Sept. 8, 2017, No. 15-cv02106-RS) 2017 U.S. Dist. LEXIS 145923, at *1.) The fee 

agreement includes an arbitration clause that states, “The 

parties shall arbitrate any dispute using American Arbitration 

Association and the arbitration shall be conducted pursuant to 

the provider’s rules. If the parties cannot agree on an arbitrator, 

then the Superior Court of the County of San Francisco shall 

1 We draw the facts in this matter from the award of the 

arbitrator that is at issue, as well as additional evidence the 

parties submitted to the trial court in connection with 

Nationwide’s petition to vacate the award. (Lindenstadt v. Staff 

Builders, Inc. (1997) 55 Cal.App.4th 882, 893, fn. 8 

(Lindenstadt).) We grant Ponist’s request for judicial notice of 

the commercial arbitration rules of the American Arbitration 

Association (AAA). (Boghos v. Certain Underwriters at Lloyd’s of 

London (2005) 36 Cal.4th 495, 505, fn. 6 [noticing AAA’s 

commercial arbitration rules].)
3

choose an impartial arbitrator whose decision shall be final and 

conclusive on all parties.” 

Ponist later broadened its representation to include Lipsky, 

an Ohio resident, and LPA, which was a wholly-owned subsidiary 

of NBA. (Consumer Financial Protection Bureau v. Nationwide 

Biweekly Administration, Inc., supra, 2017 U.S. Dist. LEXIS 

145923, at *1.) In December 2015, Ponist therefore asked NBA, 

LPA, and Lipsky to sign a first addendum to the fee agreement. 

Ponist emailed the first addendum to two attorneys for NBA, 

telling them that it memorialized the existing representation, 

provided a required conflict of interest advisement, and clarified 

the scope of services Ponist would provide. Lipsky signed the 

first addendum for NBA, LPA, and himself personally. 

The first addendum is four pages and includes an 

acknowledgement and waiver of conflicts of interest arising from 

Ponist’s joint representation of Nationwide and Lipsky. It also 

includes the text of former rule 3-310 of the Rules of Professional 

Conduct, which at the time governed conflicts of interest in legal 

representation.2 The last page of the first addendum consists of a 

four-line paragraph of text and then the signature lines. That 

paragraph states, “CLIENT HAS READ AND UNDERSTOOD 

THE FOREGOING TERMS AND AGREES TO THEM AS OF 

THE DATE ATTORNEY FIRST PROVIDED SERVICES. IF 

2 Comprehensive amendments to the Rules of Professional 

Conduct, which included renumbering of the rules, took effect in 

November 2018. (Sheppard, Mullin, Richter & Hampton, LLP v. 

J-M Manufacturing Co., Inc. (2018) 6 Cal.5th 59, 85, fn. 7 

(Sheppard Mullin).)
4

MORE THAN ONE CLIENT SIGNS BELOW, EACH AGREES 

TO BE LIABLE, JOINTLY AND SEVERALLY, FOR ALL 

OBLIGATIONS UNDER THIS AGREEMENT.” Ponist copied 

this paragraph from a State Bar model fee agreement. 

Nationwide suspended operations shortly before Lipsky 

signed the first addendum, and its outside counsel withdrew from 

representing it due to non-payment of fees. Ponist therefore 

asked Nationwide and Lipsky to sign a second addendum 

intended to ensure they would pay Ponist’s fees. Like the first 

addendum, the second addendum includes a paragraph attesting 

that Nationwide and Lipsky agreed to the terms and further 

agreed that they would be jointly and severally liable for all of 

the fee agreement’s obligations. 

Ponist later claimed that Nationwide and Lipsky failed to 

pay about $200,000 in fees. In June 2018, Ponist filed a demand 

for arbitration with AAA. The parties could not agree on an 

arbitrator. In October 2018, Ponist filed a petition in San 

Francisco Superior Court to have the court appoint an arbitrator. 

Ponist served this petition by mailing it and emailing it to Lipsky 

and three different attorneys for Nationwide and Lipsky. A few 

days later, Ponist transmitted another copy by overnight delivery 

to one of the attorneys for Nationwide and Lipsky and emailed 

copies to two of their attorneys. Ponist also had the petition 

personally served on Nationwide’s counsel in California and Ohio. 

Ponist relied on rule R-43 of AAA’s Commercial Arbitration 

Rules, which permits service on a party by mail, personal service, 
5

or overnight delivery to the party or its representative, so long as 

the party receives a reasonable opportunity to be heard. 

Nationwide and Lipsky objected that they had not been 

served with the petition by registered or certified mail and that 

LPA and Lipsky had not received any notice of the petition. The 

trial court ultimately overruled their objections to service and in 

January 2019 appointed an arbitrator and two backups. 

Nationwide and Lipsky filed a petition for writ of mandate 

challenging this order, and we summarily denied it. (Nationwide 

Biweekly Administration, Inc. v. Superior Court (Feb. 15, 2019, 

A156451) [nonpub. opn.].) 

The arbitration was heard in September 2019. Among 

other arguments, Lipsky contended he was not personally liable 

for Ponist’s fees because the provision making him liable was 

slipped into the agreement and he did not know what he was 

signing. In January 2020, the arbitrator rejected this and other 

arguments, found in Ponist’s favor, and awarded Ponist about 

$200,000 in fees and interest. 

Nationwide and Lipsky filed a petition to vacate the award 

based on improper service of Ponist’s petition to appoint the 

arbitrator. Lipsky also argued the award against him was void 

because the first addendum violated public policy. More 

specifically, Lipsky argued Ponist violated the Rules of 

Professional Conduct by failing to disclose the joint and several 

liability clause in the first addendum and the conflict of interest 

that clause created, and not advising Lipsky of the need to have 

independent counsel review the agreement. The trial court 
6

denied Nationwide and Lipsky’s petition and entered judgment 

confirming the award. 

DISCUSSION

The California Arbitration Act (CAA) “is ‘a comprehensive 

statutory scheme regulating private arbitration in this state.’ 

[Citation.] ‘Through this detailed statutory scheme, the 

Legislature has expressed a “strong public policy in favor of 

arbitration as a speedy and relatively inexpensive means of 

dispute resolution.” ’ [Citation.] To effectuate that policy, the 

CAA provides that ‘[a] written agreement to submit to arbitration 

an existing controversy or a controversy thereafter arising is 

valid, enforceable and irrevocable, save upon such grounds as 

exist for the revocation of any contract.’ [Citation.] Where, as 

here, an arbitrator has issued an award, the decision is ordinarily 

final and thus ‘is not ordinarily reviewable for error by either the 

trial or appellate courts.’ [Citation.] The exceptions to this rule 

of finality are specified by statute. As relevant here, the CAA 

provides that a court may vacate an arbitration award when 

‘[t]he arbitrators exceeded their powers and the award cannot be 

corrected without affecting the merits of the decision upon the 

controversy submitted.’ ” (Sheppard Mullin, supra, 6 Cal.5th at 

p. 72.)

I. Service of petition to appoint an arbitrator

Nationwide and Lipsky first contend that the trial court 

erred by rejecting their argument that Ponist failed to properly 

serve Nationwide and Lipsky with the petition to appoint an 

arbitrator. Nationwide and Lipsky do not base this argument 
7

upon a specific statutory exemption to the finality of the 

arbitrator’s award, but we construe it as a contention that the 

arbitrator exceeded her powers because she was not properly 

appointed to begin with.

Nationwide and Lipsky’s service argument turns on the 

terms of the fee agreement and sections 1290 and 1290.4 of the 

Code of Civil Procedure3. Section 1290 states that “[a] proceeding 

under [the CAA] in the courts of this State is commenced by filing 

a petition.” Section 1290.4, subdivision (a) provides, “A copy of 

the petition and a written notice of the time and place of the 

hearing thereof and any other papers upon which the petition is 

based shall be served in the manner provided in the arbitration 

agreement for the service of such petition and notice.” 

Subdivision (b)(2) of the same section further states, “If the 

arbitration agreement does not provide the manner in which such 

service shall be made and the person upon whom service is to be 

made has not previously appeared in the proceeding and has not 

previously been served in accordance with this subdivision: 

[¶] . . . [¶] Service outside this State shall be made by mailing the 

copy of the petition and notice and other papers by registered or 

certified mail. Personal service is the equivalent of such service 

by mail. Proof of service by mail shall be made by affidavit 

showing such mailing together with the return receipt of the 

United States Post Office bearing the signature of the person on 

whom service was made. Notwithstanding any other provision of 

3 Subsequent undesignated statutory citations are to the 

Code of Civil Procedure.
8

this title, if service is made in the manner provided in this 

paragraph, the petition may not be heard until at least 30 days 

after the date of such service.”

The trial court ruled that Ponist properly served 

Nationwide and Lipsky by mailing the petition because section 

1290.4, subdivision (a) permits service “in the manner provided 

in the arbitration agreement,” the fee agreement states that “the 

arbitration shall be conducted pursuant to” AAA’s rules, and rule 

R-43 of AAA’s rules permits service by mail or personal service on 

a party or its representatives for “any court action in connection” 

with an arbitration. We agree with this straightforward 

application of the relevant authorities.

Nationwide and Lipsky’s argument against the trial court’s 

ruling is more intricate. They begin by noting that while the fee 

agreement specifies that AAA’s rules govern the arbitration 

process, it requires the trial court to appoint an arbitrator if the 

parties cannot agree. They point out that AAA rule R-12(b) 

states that if the parties cannot agree on an arbitrator, AAA can 

appoint an arbitrator. Nationwide and Lipsky argue that by 

requiring the trial court to appoint an arbitrator, the fee 

agreement imposes a specific provision that conflicts with and 

controls over the more general provision in the agreement 

requiring the parties to follow AAA’s rules, including rule R-12(b) 

for appointing an arbitrator. Nationwide and Lipsky further 

argue that the fee agreement provision requiring a trial court to 

appoint an arbitrator likewise controls over other general rules 

applicable to the same subject of arbitrator appointment, such as 
9

rule R-43’s provision for service of process as it relates to a 

petition to appoint an arbitrator. 

This argument is not persuasive. At the outset, the fee 

agreement’s provision requiring the trial court to appoint an 

arbitrator when the parties cannot agree on one is consistent 

with and does not contradict AAA’s rules. Nationwide and 

Lipsky ignore the first sentence of rule R-12, which states that 

AAA will appoint an arbitrator when the parties cannot agree on 

one only if the parties “have not provided any other method of 

appointment.” The fee agreement’s provision requiring a court to 

appoint an arbitrator provides another method and is therefore 

consistent with AAA’s rules. Contrary to Nationwide and 

Lipsky’s argument, it is not a more specific provision that 

conflicts with AAA’s general rules.

In addition, while Nationwide and Lipsky are correct that a 

specific provision in a contract will control over a general one 

(§ 1859), AAA’s rules are more specific in this instance. Rule R43 states that its provisions governing service of process apply to 

“[a]ny papers, notices, or process necessary or proper for the 

initiation or continuation of an arbitration under these rules, for 

any court action in connection therewith, or for the entry of 

judgment on any award made under these rules.” (Italics added.) 

The question here concerns service of a document in a court 

action connected with an arbitration, so rule R-43 directly 

controls. There is no basis for reading the fee agreement’s 

appointment provision as impliedly extending to service of 
10

process when AAA’s rules, which the fee agreement makes 

applicable, already address the issue. 

Citing Cable Connection, Inc. v. DIRECTV, Inc. (2008) 

44 Cal.4th 1334, 1350, fn. 12, Nationwide and Lipsky argue that 

our Supreme Court has prohibited arbitration agreements from 

imposing on court proceedings outside of the arbitration those 

conditions that were agreed upon within the arbitration.

Nationwide and Lipsky misread the case on which they rely. 

Cable Connection Inc. expressly declined to consider whether a 

contract could require judicial review of an arbitration award to 

be governed by the Federal Arbitration Act rather than the CAA, 

holding that the appellant there failed to raise the argument in 

the trial court. (Ibid.)

Nationwide and Lipsky also raise several subsidiary 

arguments related to service, but none requires much discussion. 

They argue they did not knowingly waive their rights under 

section 1290.4, subdivision (b)(2) to service of process by certified 

or registered mail and 30 days’ time to respond. But they signed 

the fee agreement, which incorporated by reference AAA’s rules 

for service, so they did waive their rights under the statute. 

Relatedly, they argue that Mercuri v. Ligar (1964) 

225 Cal.App.2d 240, 241 requires a fee agreement to “expressly” 

identify the manner of service rather than incorporate rule R43(a)’s definition of service. Mercuri stated only that the contract 

there did not address service, so the statutory rules for service 

controlled. (Ibid.) Mercuri gave no indication that the contract 

incorporated by reference an arbitrator’s rules for service, so the 
11

court could not have held such incorporation was insufficient. 

(Ibid.)

Nationwide and Lipsky contend the trial court improperly 

required them to prove the absence of a waiver rather than 

requiring Ponist to prove a waiver. The trial court noted that 

Nationwide and Lipsky had failed to point to any rules that 

might apply other than rule R-43, but it did so only after Ponist 

had argued that rule R-43 applied and the trial court had given 

Nationwide and Lipsky an opportunity to respond. The trial 

court did not improperly shift the burden.

Finally, Nationwide and Lipsky argue the improper service 

of process means the trial court did not have personal jurisdiction 

over them. Aside from the fact that service was proper, service 

was not necessary to establish personal jurisdiction here. “When 

parties agree to California arbitration, they consent to submit to 

the personal jurisdiction of California courts to enforce the 

agreement and any judgment under section 1293.” (Rockefeller 

Technology Investments (Asia) VII v. Changzhou SinoType 

Technology Co., Ltd. (2020) 9 Cal.5th 125, 144.) Personal 

jurisdiction is therefore not at issue here.4

4 In its reply brief, Nationwide and Lipsky argue for the 

first time that even if rule R-43(a) governs here, service was 

improper because that rule only allows service by mail on the 

party or its representative if the recipient has a “reasonable 

opportunity to be heard.” They assert that the 10 days they 

received to respond to Ponist’s petition to appoint an arbitrator 

was unreasonable because it is less than the 30 days set in 

section 1290.4, subdivision (b)(2). They forfeited this argument 

by failing to raise it in their opening brief, and we will not 
12

II. Lipsky’s personal liability for fees

Lipsky argues the award against him personally must be 

vacated because his fee agreement with Ponist violated the Rules 

of Professional Conduct and is therefore voidable. He also argues 

the trial court erred when it considered the agreement’s legality 

by deferring to the arbitrator’s factual findings instead of 

independently examining the evidence. 

As noted ante, the exceptions to the finality of an 

arbitration award that permit the vacation of the award are set 

by statute and include the situation when “[t]he arbitrators 

exceeded their powers and the award cannot be corrected without 

affecting the merits of the decision upon the controversy 

submitted.” (§ 1286.2, subd. (a)(4); Sheppard Mullin, supra, 

6 Cal.5th at p. 72.) “[T]he excess-of-authority exception applies, 

and an arbitral award must be vacated, when a court determines 

that the arbitration has been undertaken to enforce a contract 

that is ‘illegal and against the public policy of the state.’ ” 

(Sheppard Mullin, at p. 73.) Public policy for these purposes 

includes the Rules of Professional Conduct that govern attorney 

fee agreements, so a “violation of a Rule of Professional Conduct 

in the formation of a contract can render the contract 

unenforceable as against public policy.” (Id. at pp. 73–74, 87.) 

However, “the case law does not establish” and the Supreme 

Court has not held “that an attorney-services contract may be 

declared illegal in its entirety simply because it contains a 

address it. (Dameron Hospital Assn. v. AAA Northern California, 

Nevada & Utah Ins. Exchange (2022) 77 Cal.App.5th 971, 982.)
13

provision that conflicts with an attorney’s obligations under the 

Rules of Professional Conduct.” (Id. at p. 79.) “It is only when 

‘the illegality taints the entire contract’ that courts may declare 

‘the entire transaction is illegal and unenforceable.’ ” (Id. at 

p. 80.)

A trial court must independently review a claim that an 

arbitration award based on a contract should be vacated because 

the entire contract is illegal and unenforceable. (Lindenstadt, 

supra, 55 Cal.App.4th at pp. 888–889, 893.) The trial court 

“should consider all of the admissible evidence submitted to it 

regardless of whether that evidence was before the arbitrator,” as 

well as “the arbitration award itself, including the testimony and 

other evidence described therein.” (Id. at p. 893, fn. 8.) An 

appellate court independently reviews a trial court’s ruling on 

illegality of the contract but applies the substantial evidence test 

to any rulings on disputes of fact the trial court may have made. 

(Id. at p. 892, fn. 7.)

Lipsky contends the trial court improperly deferred to the 

arbitrator’s factual findings that he signed the fee agreement and 

that Ponist sent the agreement to Nationwide’s counsel to review. 

Lipsky is correct that the trial court should have conducted an 

independent review of the evidence regarding illegality, rather 

than deferring to the arbitrator’s factual rulings as it appears to 

have done. (Lindenstadt, supra, 55 Cal.App.4th at pp. 888–889.) 

But the trial court’s improper deference to the arbitrator did not 

affect the result in this case. The record shows that Ponist sent 

the first and second addenda to Nationwide’s counsel for review
14

and Lipsky signed them. Lipsky never argues that the 

arbitrator’s findings were incorrect or cites any evidence to 

contradict them. Moreover, even if we accept Lipsky’s argument 

that the inclusion of the joint and several liability provision in 

the fee agreement violated the Rules of Professional Conduct, 

Lipsky has not shown that the inclusion of the provision would 

make the fee agreement unenforceable in its entirety.5

Lipsky contends the provisions in the first and second 

addenda making Nationwide and Lipsky jointly and severally 

liable for Ponist’s fees violated former rule 3-310 of the Rules of 

Professional Conduct. That rule governed conflicts of interest 

and prohibited an attorney from accepting or continuing 

representation of more than one client in which the interests of 

the clients potentially or actually conflicted without obtaining the 

clients’ informed consent. Lipsky also cites former rule 3-500, 

which required an attorney to keep a client reasonably informed 

about significant developments relating to the representation. 

He argues that Ponist violated these provisions by 

5 The trial court denied Lipsky’s petition to vacate the 

arbitration award because the award did not violate Lipsky’s 

unwaivable statutory rights. Lipsky argues the trial court should 

have found the fee agreement was unenforceable for violating 

public policy in the form of the Rules of Professional Conduct. 

These appear to be separate exceptions to the finality of 

arbitration awards. (Sheppard Mullin, supra, 6 Cal.5th at 

pp. 77–78 [describing the statutory rights exception as a 

“different subject” from the public policy exception]; but see 

Cotchett, Pitre & McCarthy v. Universal Paragon Corp. (2010) 

187 Cal.App.4th 1405, 1417, fn. 1 [seeing “some overlap” between 

the exceptions].) Because Lipsky limits his argument here to the 

public policy exception, so do we. 
15

misrepresenting the first addendum as addressing only conflicts 

of interest and the second as modifying retainer deposits and an 

attorney’s hourly rate, without disclosing that both made the 

clients jointly and severally liable for all fees, including those predating the execution of the addenda. Lipsky contends the joint 

and several liability provision created an actual, undisclosed 

conflict of interest between Nationwide and Lipsky, as well as 

between Ponist and the clients, and deprived Lipsky of 

unspecified “disclosure[s] about his corporate indemnity rights.” 

Lipsky also faults Ponist for not explaining any of this to him. 

We will assume for the sake of argument that Lipsky is 

correct that Ponist violated the former Rules of Professional 

Conduct by including the joint and several liability provision in 

the fee agreement. But, as noted previously, our Supreme Court 

has made clear that a violation of the Rules of Professional 

Conduct is not always grounds to declare an entire contract 

unenforceable. (Sheppard Mullin, supra, 6 Cal.5th at pp. 79–80.) 

Rather, “[i]t is only when ‘the illegality taints the entire contract’ 

that courts may declare ‘the entire transaction is illegal and 

unenforceable.’ ” (Id. at p. 80.) The violation of the former Rules 

of Professional Conduct identified by Lipsky does not render the 

entire fee agreement illegal.

Sheppard Mullin held that a law firm’s failure to disclose 

and obtain consent to an actual conflict of interest between 

current clients made the firm’s fee agreement unenforceable in 

its entirety because the “transaction . . . undermined an ethical 

rule designed for the protection of the client as well as for the 
16

preservation of public confidence in the legal profession.” 

(Sheppard Mullin, supra, 6 Cal.5th at p. 87.) The court cited two 

cases in which courts refused to enforce fee-sharing agreements 

between lawyers because the purpose of the agreements violated 

Rules of Professional Conduct requiring the client’s informed 

consent. (Ibid., citing Chambers v. Kay (2002) 29 Cal.4th 142, 

159 and Altschul v. Sayble (1978) 83 Cal.App.3d 153, 164.)

By contrast, Sheppard Mullin cited several cases in which 

the Supreme Court had held that violations of the Rules of 

Professional Conduct did not preclude enforcement of a contract 

as a whole. (Sheppard Mullin, supra, 6 Cal.5th at pp. 79–80.) 

Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 30, 32–33 

(Moncharsh) held that a fee-splitting provision in an employment 

agreement between a lawyer and law firm did not make the 

entire contract unenforceable so as to defeat an arbitration award 

based on the contract. Birbrower, Montalbano, Condon & Frank 

v. Superior Court (1998) 17 Cal.4th 119, 137–139 (Birbrower)

held that a law firm could enforce its fee agreement for services 

performed in New York, even though it could not obtain fees 

under the agreement for work performed in California in 

violation of the statutory bar on the unauthorized practice of law. 

Calvert v. Stoner (1948) 33 Cal.2d 97, 103–105 (Calvert) held that 

a provision in a fee agreement preventing the client from settling 

without the lawyer’s consent did not prevent the lawyer from 

enforcing the rest of the fee agreement. 

The joint and several liability provision at issue here is 

more similar to the violations found not to invalidate entire 
17

contracts in Moncharsh, Birbrower, and Calvert than the actual 

conflict of interest between the firm’s two current clients that 

resulted in the invalidation of the entire agreement in Sheppard 

Mullin. The provision did not create an actual conflict of interest 

between Nationwide and Lipsky like the clients in Sheppard 

Mullin because there is no evidence that the provision made 

either Lipsky or Nationwide liable for fees they would not 

otherwise have owed. It appears Nationwide paid all of Ponist’s 

fees until the end of the representation in 2017, so there was no 

retroactive liability. Ponist’s work for Nationwide also appears to 

have overlapped completely with its work for Lipsky. Lipsky was 

the founder, president, sole officer, and sole shareholder of NBA. 

(Nationwide Biweekly Administration, Inc. v. Owen, supra, 

873 F.3d at p. 721, fn. 1; Consumer Financial Protection Bureau 

v. Nationwide Biweekly Administration, Inc., supra, 2017 U.S. 

Dist. LEXIS 145923, at *1.) LPA is a wholly-owned subsidiary of 

NBA, and Lipsky served as LPA’s managing member. (Ibid.) 

Lipsky was named personally in at least two of the lawsuits 

against Nationwide. (Ibid.; Nationwide Biweekly Administration, 

Inc. v. Superior Court of Alameda County, supra, 9 Cal.5th at 

p. 294.) Lipsky was alleged in at least one suit to be Nationwide’s 

alter ego, making those claims against Nationwide equivalent to 

claims against him. (Nationwide Biweekly Administration, Inc. v. 

Superior Court of Alameda County, supra, 9 Cal.5th at p. 294.) 

Given the commonality of interest between Lipsky and 

Nationwide and their roles in the litigation, it is logical to assume 

that Ponist’s work applied equally to all three clients. Lipsky 
18

certainly has not offered any evidence that Ponist’s work for 

Nationwide was separate from its work for him, despite Ponist 

raising this issue in its respondent’s brief. 

The joint and several liability provision may have 

advantaged Ponist relative to Lipsky to the extent that it 

prevented Lipsky from using Nationwide’s insolvency to avoid 

liability for Ponist’s fees. But unlike in Chambers v. Kay and 

Altschul v. Sayble, where the entire object of the agreements 

between attorneys to split fees was illegal, the joint and several 

liability provision did not make the entire object of Ponist’s fee 

agreement illegal. As with the fee-splitting provision in 

Moncharsh and the consent to settlement provision in Calvert v. 

Stoner, Ponist’s ability to invoke the provision in a potential 

insolvency scenario did not affect the substance of Ponist’s work 

on a day-to-day level while its representation of Nationwide and 

Lipsky continued. The provision did not affect Ponist’s loyalty to 

Lipsky and Nationwide relative to each other or any third 

parties, nor did it call into question the value of the services 

Ponist provided. The provision also does not appear to have been 

inserted in bad faith, notwithstanding Lipsky’s allegation that 

Ponist did not raise it to his attention, since model fee 

agreements published by the State Bar contained an identical 

provision. The joint and several liability provision is mentioned 

in neither the instructions for the model fee agreement nor the 

related model disclosure for conflicts of interest arising from joint 

representation. 
19

Lipsky cites several cases that he claims support the 

proposition that a violation of an attorney’s disclosure obligations 

under the Rules of Professional Conduct renders a fee agreement 

voidable at the client’s election, but his reliance on these cases is 

misplaced. Pringle v. La Chapelle (1999) 73 Cal.App.4th 1000, 

1005–1006, held, consistent with the Supreme Court’s later 

holding in Sheppard Mullin, that a violation of the Rules of 

Professional Conduct does not automatically make a fee 

agreement voidable. Pringle further construed Supreme Court 

precedent as suggesting that “there must be a serious violation of 

the attorney’s responsibilities before an attorney who violates an 

ethical rule is required to forfeit fees.” (Id. at p. 1006.) Pringle

declined to hold the fee agreement there entirely unenforceable 

because the client had not provided a sufficient record to 

demonstrate whether the attorney’s violation was serious. (Ibid.) 

Pringle is consistent with our conclusion that Lipsky has not 

shown that Ponist’s alleged violation of the Rules of Professional 

Conduct was serious enough to invalidate the entire fee 

agreement. 

Fair v. Bakhtiari (2011) 195 Cal.App.4th 1135, 1142–1144

is factually distinguishable, as the attorney’s conduct there was 

“fundamentally at war” with the rules prohibiting attorneys from 

entering into business dealings with their clients without 

disclosure and consent. (Id. at p. 1169.) BGJ Associates v. 

Wilson (2003) 113 Cal.App.4th 1217, 1226 is similarly inapposite. 

The attorney in that case violated the Rules of Professional 

Conduct by forming a joint venture with a client to buy a 
20

property, and the joint venture was “inextricably intertwined” 

with the attorney’s representation of the client in a suit to obtain 

a prescriptive easement on the same property. (Ibid.) In both of 

these cases, the attorneys’ conduct amounted to undue influence 

over their clients. (Fair, at pp. 1155–1156; BGJ, at p. 1228.) By 

comparison, the joint and several liability provision did not affect 

Ponist’s entire relationship with Lipsky or Nationwide, nor did it 

constitute undue influence. It merely created the potential for a 

conflict over who would pay Ponist’s fees if Nationwide were 

unable or if Ponist performed some work that was not equally for 

the benefit of all the clients (only the former of which came to 

pass).

Because Ponist’s asserted violation of the Rules of 

Professional Conduct with respect to the joint and several 

liability provision did not infect the entire fee agreement between 

Ponist and Lipsky, the fee agreement as a whole is not invalid. It 

therefore follows that the trial court correctly denied Lipsky’s 

motion to vacate the arbitration award against Lipsky based on 

the fee agreement. This is so even though the arbitrator enforced 

the agreement against Lipsky personally, thereby perhaps 

enforcing the same provision Lipsky contends is in violation of 

the Rules of Professional Conduct.6 If a contract as a whole is 

6 We say “perhaps” because Lipsky has not shown that the 

joint and several liability provision was necessarily the basis for 

the arbitrator’s joint and several award against him and 

Nationwide. Because Ponist’s work appears to have been equally 

for the benefit of Lipsky and Nationwide, Lipsky may have been 

liable for all of Ponist’s fees even in the absence of the joint and 

several liability clause.
21

valid, then judicial review of an arbitrator’s resolution of an 

argument that a clause of the contract is illegal is unavailable, 

even if an arbitrator makes errors of fact or law that cause 

substantial injustice to the parties. (Moncharsh, supra, 3 Cal.4th 

at pp. 6, 32–33; Cotchett, Pitre & McCarthy v. Universal Paragon 

Corp., supra, 187 Cal.App.4th at pp. 1417, fn. 1, 1418 [refusing to 

review arbitrator’s award of an allegedly unconscionable fee 

under fee agreement].)

DISPOSITION

The judgment is affirmed.

BROWN, J.

WE CONCUR:

STREETER, ACTING P. J.

NADLER, J.

Ponist Law Group, P.C., et al. v. Nationwide Biweekly Administration, Inc., et al.

(A160798)

 Judge of the Superior Court of California, County of 

Sonoma, assigned by the Chief Justice pursuant to article VI, 

section 6 of the California Constitution.