IN THE SUPREME COURT OF THE STATE OF MONTANA 

AF 08-0323 

_________________ 

IN THE MATTER OF THE REVISION OF RULES 

ON ARBITRATION OF FEE DISPUTES O R D E R 

_________________ 

On July 10, 2008, the Trustees of the State Bar of Montana and the Fee Arbitration 

Committee (Petitioners) filed a Petition to Revise and Amend the Rules on Arbitration of 

Fee Disputes (Rules). Proposed amendments to the Rules were circulated for a 45-day 

comment period to the members of the State Bar of Montana on August 19, 2008. 

Subsequently, on October 28, 2008, the matter of the Rule revisions came before this 

Court at a duly noticed public meeting. Following the public meeting, Justices Cotter and 

Rice met on two occasions with a committee of the Petitioners in an effort to reach 

accord on the amendments. The Court and the Petitioners have now agreed upon the 

revisions to the Rules, and the Court deems it appropriate to adopt the revised Rules on 

Arbitration of Fee Disputes. Accordingly, 

IT IS HEREBY ORDERED that the attached revised Rules on Arbitration of Fee 

Disputes, together with accompanying forms, are unanimously adopted by this Court this 

day, to be effective May 1, 2009. 

IT IS FURTHER ORDERED that this Order be sent by the office of the Clerk of 

this Court to the State Bar of Montana, and to Jim Lewis, as Chair of the Fee Arbitration 

Committee. In addition, a copy of this Order shall be electronically published on the 

website of the judicial branch, http://www.courts/mt.gov, and on the website of the State 

Bar of Montana. 

1 
DATED this 28th day of April, 2009. 

/S/ MIKE McGRATH 

/S/ PATRICIA COTTER 

/S/ JAMES C. NELSON 

/S/ JIM RICE 

/S/ BRIAN MORRIS 

/S/ W. WILLIAM LEAPHART 

/S/ JOHN WARNER 

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STATE BAR OF MONTANA 

RULES ON ARBITRATION OF FEE DISPUTES 

Effective May 1, 2009 

I. PURPOSE

 1.1 It is the policy of the Supreme Court of Montana to encourage the informal 

resolution of fee disputes between attorneys who practice law in Montana and their clients. In 

the event such informal resolution cannot be achieved, the Supreme Court of Montana hereby 

establishes through adoption of these rules, a program and procedures for the arbitration of 

disputes concerning any and all fees and/or costs paid, charged, or claimed for professional 

services by attorneys. These rules do not apply to disputes between attorneys with respect to 

sharing of fees. 

 1.2 In lieu of these remedies for arbitration of fee disputes, the parties may wish to 

pursue binding arbitration under the provisions of the Uniform Arbitration Act, Sections 27-5-

111 through 27-5-324, MCA. To do so, the parties must enter into a binding arbitration 

agreement as required under applicable state or federal law. 

 

 1.3 The following disputes are exempt from the operation of these rules: 

 (a) disputes which are subject to a valid arbitration agreement under applicable state 

or federal law; and 

 (b) disputes which are the subject of litigation filed prior to actual receipt of the 

Petition by the State Bar of Montana. An attorney’s lien shall not exempt the dispute from 

these rules. 

 (c) disputes regarding fees established by law, a court or administrative panel, 

including but not limited to bankruptcy cases and worker’s compensation cases. 

 1.4 Nothing in these rules is intended to interfere with or supersede the powers and 

authority of the Commission on Practice or applicable statutes of limitation. 

 1.5 Once a Petition for Arbitration is filed with the State Bar, a lawsuit cannot be 

commenced by any party, until this process has been completed by the issuance of a written 

decision under Rule 8.2, dismissal under Rule 5.6, or withdrawal by mutual agreement of the 

parties under Rule 5.8. 

I. DEFINITIONS

 “Attorney” means a person admitted to the practice of law in Montana, or any other 

person who appears, participates or otherwise engages in the practice of law in Montana, 

regardless of the status of his or her license. In these rules, the term “Attorney” includes an 

attorney’s assignee. 

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 “Board” means the three (3) persons chosen from a judicial district panel or statewide 

panel to act as arbitrators in a particular dispute and will consist of at least one attorney and one 

lay member. 

 “Client” means a person or entity who directly or through an authorized representative 

consults, retains or secures legal service or advice from an attorney in the attorney’s 

professional capacity 

 “Panel” means the entire list of attorneys and lay persons who make up the fee arbitration 

“panel” for each judicial district. 

 “Statewide Panel” means all attorneys and lay persons currently serving on each judicial 

district panel who have actually acted as an arbitrator under these rules or the preceding “Rules 

on Voluntary Arbitration of Fee Disputes”. 

III. ADMINISTRATIVE MATTERS - SETTING UP PANELS

 3.1 The State Bar shall administer this program through its Executive Director. The State 

Bar will appoint members to the arbitration panel in various judicial districts, composed of an 

equal number of attorneys and lay persons who reside in the district. The initial term of 

appointment shall be three (3) years and such appointment may be renewed for a successive 

term or terms. In cases where there are an insufficient number of attorneys and/or lay persons 

for a panel, the matter will be reviewed by a panel in a judicial district chosen by the State Bar, 

based on availability of panelists. In such cases, either party may participate by telephone 

conference call at their own expense if requested if the location of the hearing requires them to 

travel 100 miles or more. 

 3.2 The term of any board member which ends for any reason while an arbitration is 

pending shall be extended until such arbitration is concluded, but such extension shall not 

interfere with the State Bar’s power to appoint a successor to the judicial district panel. 

 3.3 The panel members in each judicial district shall be appointed from as broad a 

spectrum of the practicing Bar and general public as possible. 

 3.4 Each person appointed to a panel as provided in 3.1 shall also be a member of the 

statewide fee arbitration panel once that person has actually served as an arbitrator on a local 

board. Such statewide appointment shall be for the duration of their term on the local panel. 

Members of the statewide panel may be called upon in the event panelists are not available in a 

certain judicial district. 

IV. AMOUNTS IN DISPUTE WHICH MAY BE ARBITRATED UNDER THESE 

 RULES

 Any disputed amount of $500.00 or more may be arbitrated. The disputed amount may 

include fees and costs paid, charged, or claimed for professional services by attorneys. If only a 

portion of a fee and/or costs is disputed, that portion must be at least $500.00. 

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V. INITIATION OF PROCEEDINGS 

 5.1 The forms required to initiate arbitration may be obtained from the State Bar of 

Montana, P.O. Box 577, Helena, MT 59624, (406) 442-7660, or from the Bar’s website: 

www.montanabar.org. The petitioner shall complete the Petition and sign two (2) Arbitration 

Agreements and file those documents with the State Bar. All documents may be filed 

electronically, by fax (406)442-7763, or by U.S. Postal Service. Supporting documents are not to 

be filed with the Petition, but will be required prior to any hearing or review. However, the 

parties will bear the burden of copying and mailing supporting documents to the arbitrators 

and opposing party. 

 5.2 Upon receipt of the duly executed documents from Petitioner, the State Bar shall 

promptly forward, by certified mail, a copy of the Petition and an original and one copy of the 

Arbitration Agreement to the opposing party(ies) named in the Petition. 

 5.3 Upon receipt of a copy of the signed Petition and the proposed Arbitration 

Agreement, the Respondent has the following Options: 

(a) participate in binding arbitration; 

(b) participate in non-binding arbitration, or 

(c) not participate in the arbitration. 

 5.4 If Options (a) or (b) are chosen, the Respondent shall sign the Arbitration Agreement 

and return it to the State Bar within twenty (20) days of receipt thereof. 

 5.5 If the Respondent is the attorney and chooses Option (c) or fails to return the signed 

agreement within the time specified above, the client will be notified that arbitration will take 

place without the attorney’s participation. If the attorney chooses not to participate, the 

attorney will be sent a copy of the written arbitration decision when it is rendered. The decision 

will become binding unless a lawsuit is filed on the original fee dispute, pursuant to Rule 8.5 

herein.

 5.6 If the Respondent is the client and chooses Option (c), or the client fails to return the 

signed agreement within the time specified above, the State Bar will notify the attorney of 

client’s choice not to participate and the matter will be deemed closed for purposes of 

arbitration, pursuant to these Rules.

 5.7 Both parties must sign under Option (a) in order for binding arbitration to take 

place. If one party signs under Option (a) and the other signs under Option (b), the arbitration 

will be nonbinding. However, even if the parties undertake non-binding arbitration, the 

decision will become binding 30 days from the date the decision is mailed to the parties, unless 

a lawsuit is filed by either party, per Rule 8.5. 

 5.8 No party may withdraw from these arbitration proceedings, including non-binding 

arbitration, without written consent of the opposing party once the Arbitration Agreement has 

been signed by both parties and returned to the State Bar. 

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VI. SELECTION OF ARBITRATORS

 6.1 The panel having jurisdiction over a dispute shall be the panel appointed for the 

judicial district in which the attorney to the dispute maintains his or her primary law office, 

unless: 

 (a) the parties agree that the matter should be referred to a statewide panel or, 

 (b) the State Bar determines there are an insufficient number of qualified 

arbitrators available in the appropriate judicial district, in which case the State Bar may 

appoint such additional arbitrators as may be required from an adjacent judicial district or 

from the statewide panel, or 

 (c) the attorney does not maintain an office in Montana, in which case, the 

jurisdiction shall be the one in which the Client resides or has its primary office, or 

 (d) if none of the above apply, the State Bar will determine which jurisdiction(s) 

the arbitrators will come from, taking into account availability of arbitrators and other 

considerations. 

 6.2 The State Bar shall mail to each party a numbered list of eligible arbitrators. The list 

will also contain two choices: “Hearing Requested” or “Hearing Waived” (see paragraphs 7.1 

and 7.2). 

 6.3 Each party may eliminate one attorney and one lay person from the list and may 

request a hearing. Eliminations and requests for a hearing must be made in writing and filed 

with the State Bar electronically, by fax or by regular mail, within ten (10) days of receipt of the 

list. If either party wishes to eliminate more than two (2) persons from the list, they must send a 

written request within ten (10) days of receipt of the list, stating the reasons for the request. The 

State Bar will rule on such request. No party may disqualify more than three (3) arbitrators in 

any single dispute. The arbitration Board shall consist of the remaining three members having 

the lowest assigned numbers. Notice of the names of the Board members thus selected shall be 

given by the State Bar to the parties and to the selected arbitrators. 

 6.4 The State Bar will appoint a Chair. 

 6.5 A Board member may decline to act as an arbitrator in a particular dispute for good 

cause shown. 

 6.6 If a disqualified arbitrator is an attorney, the alternate arbitrator shall be the attorney 

on the list sent to the parties with the next lowest number. If the arbitrator disqualified is a lay 

person, the alternate shall be the lay person on the list sent to the parties with the next lowest 

number. The State Bar shall immediately advise the parties of the name of the alternate 

arbitrator to replace the disqualified arbitrator. If there are no alternates available from the 

initial list of proposed arbitrators submitted to the parties, the State Bar will submit a new 

numbered list of three (3) names of either all attorneys or all lay persons, whichever is to be 

4 
replaced. Within ten (10) days of receipt of the list, each party will cross off the name of one 

person and return the list to the State Bar. The alternate will be the person remaining on the list 

with the lowest number. 

VII. ARBITRATION HEARING

 7.1 If both parties agree to waive a hearing, the arbitrators shall decide the dispute upon 

written statements of position, signed under oath or affirmation and notarized, along with any 

supporting documents submitted by each party, without personal attendance at an arbitration 

hearing. 

 7.2 If a hearing is requested by either party, it shall be held in the judicial district from 

which the board is chosen, within ninety (90) days after the final arbitration Board has been 

selected, subject to postponement or continuance as provided in 7.5. The Chair shall determine 

a convenient time and place for the hearing and cause written notice to be mailed to the parties 

and other arbitrators not less than twenty (20) days before the hearing. Appearance by a party 

at a scheduled hearing shall constitute waiver by said party of any deficiency with respect to the 

notice of hearing. Either party or an arbitrator may appear by telephone, for good cause shown, 

at the discretion of the State Bar. 

 7.3 The parties shall submit copies of all documents to be reviewed, along with a list of 

witnesses, to each arbitrator, and to the opposing party no less than ten (10) days before the 

date of the hearing. Documents not timely submitted shall be excluded absent a showing of 

good cause as determined by the Chair. 

 7.4 The Chair shall preside at the hearing. The chair shall be the judge of the relevance 

of the evidence offered and shall rule on questions of procedure. The Chair shall exercise all 

powers relating to the conduct of the hearing, and conformity to Federal or Montana Rules of 

Evidence shall not be required. 

 7.5 The hearing may be postponed or continued from time to time by the Chair. 

 7.6 The parties to the arbitration are entitled to be heard, present evidence and crossexamine the other party or witnesses appearing at the hearing. Any party to an arbitration has 

the right to be represented by an attorney, at the party’s own expense, during all stages of the 

arbitration. 

 7.7 The testimony of witnesses may be given under oath or affirmation. The chair shall 

administer such oaths. 

 7.8 If any party to an arbitration who has been duly notified fails to appear at the 

hearing, the Chair may either proceed with the hearing and determine the controversy upon the 

evidence produced or reschedule the hearing for a later date. 

 7.9 Either party may, at their expense, have the entire proceeding recorded by a court 

reporter or by mechanical means. In such event, the other party shall be entitled to a copy of 

the transcript or recording at their own expense. 

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VIII. ARBITRATION DECISION

 8.1 The arbitrators shall consider the following factors, taken from the Rules of 

Professional Conduct, in determining whether the fees are justified: 

Rule 1.5 – Fees 

(a) A lawyer shall not make an agreement for, charge or collect an unreasonable 

fee or an unreasonable amount for expenses. The factors to be considered in 

determining the reasonableness of a fee include the following: 

 (1) the time and labor required, the novelty and difficulty of the questions 

involved and the skill requisite to perform the legal service properly; 

 (2) the likelihood, if apparent to the client, that the acceptance of the 

particular employment will preclude other employment by the lawyer; 

 (3) the fee customarily charged in the locality for similar legal services; 

 (4) the amount involved and the results obtained; 

 (5) the time limitations imposed by the client or by the circumstances; 

 (6) the nature and length of the professional relationship with the client; 

 (7) the experience, reputation and ability of the lawyer or lawyers 

performing the services; and 

 (8) whether the fee is fixed or contingent. 

(b) The scope of the representation and the basis or rate of the fee and expenses for 

which the client will be responsible shall be communicated to the client in writing, 

before or within a reasonable time after commencing the representation, except 

when the lawyer will charge a regularly represented client on the same basis or rate. 

Any changes in the basis or rate of the fee or expenses shall also be communicated in 

writing. This paragraph does not apply in any matter in which it is reasonably 

foreseeable that total cost to a client, including attorney fees, will be $500 or less. 

(c) A fee may be contingent on the outcome of the matter for which the service is 

rendered, except in a matter in which a contingent fee is prohibited by paragraph (d) 

or other law. A contingent fee agreement shall be in a writing signed by the client 

and shall state the method by which the fee is to be determined, including the 

percentage or percentages that shall accrue to the lawyer in the event of settlement, 

trial or appeal; litigation and other expenses to be deducted from the recovery; and 

whether such expenses are to be deducted before or after the contingent fee is 

calculated. The agreement must clearly notify the client of any expenses for which 

the client will be liable whether or not the client is the prevailing party. Upon 

conclusion of a contingent fee matter, the lawyer shall provide the client with a 

written statement stating the outcome of the matter and, if there is a recovery, 

showing the remittance to the client and the method of its determination. 

(d) A lawyer shall not enter into an arrangement for, charge or collect: 

 (1) any fee in a domestic relations matter, the payment or amount of which is 

contingent upon the securing of a divorce or upon the amount of maintenance or 

support or property settlement in lieu thereof; or 

 (2) a contingent fee for representing a defendant in a criminal case. 

(e) A division of a fee between lawyers who are not in the same firm may be made 

only if: 

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 (1) the division is in proportion to the services performed by each lawyer or 

each lawyer assumes joint responsibility for the representation; 

 (2) the client agrees to the arrangement, including the share each lawyer will 

receive, and the agreement is confirmed in writing; and 

 (3) the total fee is reasonable. 

 8.2 A written decision of the arbitrators shall be rendered after the matter has been 

submitted for decision. In the case of a non-binding decision, the written decision must clearly 

state in its first and last sentences that it will become binding within 30 days of the date it is 

mailed to the parties by the State Bar office, unless a lawsuit is filed by either party to have the 

fee dispute settled in a court of law. To enhance the efficiency of this process, the arbitrators 

shall attempt to issue their ruling within twenty (20) days of the hearing. The arbitration 

decision shall be made and signed by at least two (2) of the arbitrators. It shall state the amount 

of fees and costs awarded, if any, the terms of payment, if applicable, and to whom any 

payment shall be made. 

 8.3 The Chair shall forward the decision to the State Bar of Montana, which shall mail a 

copy of the decision to each party to the arbitration. 

 8.4 If at least two (2) of the arbitrators cannot agree on a decision, the matter shall be 

submitted to a new arbitration board within thirty (30) days of the failure of at least two (2) of 

the arbitrators to agree. 

 8.5 The parties may agree to be bound by the decision of the arbitration board by 

signing under Rule 5.3, Option (a) in the Arbitration Agreement. Absent an Arbitration 

Agreement signed by both parties, the arbitration decision shall become binding upon a nonparticipating attorney thirty (30) days from the date it is mailed to the parties, unless a lawsuit 

is filed in a court of law to settle the dispute. 

IX. CONFIDENTIALITY AND IMMUNITY

 9.1 All records, documents, files, proceedings and hearings pertaining to the arbitration 

of any dispute under these rules shall be confidential, except as necessary to enforce these 

Rules, or coordinate efforts with the Montana Supreme Court’s Office of Disciplinary Counsel, 

and will be closed to the public. 

 9.2 Parties and witnesses shall have such immunity as is applicable in a civil lawsuit in 

the jurisdiction. Committee members, arbitrators, panels and staff shall be immune from a 

lawsuit for any conduct in the course and scope of their official duties.

X. ENFORCEMENT 

10.1 If, within sixty 60 days of the mailing of the Board's decision, an attorney against 

whom an arbitration decision is rendered has not filed a lawsuit in accordance with Rule 8.5 

and has failed to comply with the Board's decision, the Supreme Court shall issue an order to 

show cause why the attorney should not be suspended from the practice of law. If good cause 

is not shown, the Supreme Court shall suspend the attorney from the practice of law. 

7 
10.2 Nothing in this Rule allows parties who have both agreed to binding arbitration to 

bring a lawsuit in a court of law. An arbitration award to which both parties initially agreed to 

be bound, may only be challenged pursuant to the Uniform Arbitration Act. 

10.3 Upon compliance with the Board's decision, an attorney suspended under this rule 

shall provide proof of compliance to the Supreme Court. The Supreme Court may then issue an 

order of reinstatement to the attorney. 

XI. DECISION ENTERED AS AN ORDER OF COURT

 If no lawsuit is filed in a court of law within thirty (30) days as referred to in Rule 8.5 

above, the arbitration decision may be entered and filed as an order of court pursuant to the 

Uniform Arbitration Act, MCA 27-5-311, (1993). 

8 
State Bar of Montana - P.O. Box 577, Helena, MT 59624 - 406-447-2206 

 

 ,

 PETITIONER(S) 

PETITION FOR ARBITRATION 

 vs. OF FEE DISPUTE 

 No. 

 , 

 RESPONDENT(S) 

TO: THE STATE BAR OF MONTANA: 

PETITIONER(S) address and phone number: 

 

(Street or P.O. Box) (City, State and Zip) (Daytime Phone No.) 

RESPONDENT(S) address and phone number: 

 

(Street or P.O. Box) (City, State and Zip) (Daytime Phone No.) 

 Petitioner(s) hereby request(s) arbitration of the fee dispute between myself/ourselves and the 

above-named Respondent(s). 

 The amount of the fee and/or costs in dispute is: $ . 

I/we certify the fee is not the subject of pending litigation and is not a fee which a court or 

administrative agency, i.e. Workers' Compensation Court or Social Security Disability matter, has 

statutory authority to determine. I/we understand this is not the forum for claims of professional or 

ethical misconduct or malpractice and that those issues are reviewed by the Office of Disciplinary Counsel 

(406)841-2980, or by a court of law. I/we further understand that by filing this Petition, I/we

may not withdraw from this process once the opposing party has signed the Arbitration 

Agreement, unless the opposing party agrees to the withdrawal. I/we also understand that 

even if non-binding arbitration is selected, the award entered at the conclusion of the process 

may become binding under certain provisions of these rules.

A brief statement of the facts giving rise to the dispute is as follows: (Attach separate sheet if necessary) 

 

 

1 
DATED THIS day of , 20 . 

 

Petitioner Co-Petitioner (If applicable) 

2 
State Bar of Montana - PO Box 577, Helena, MT 59624 - 406-447-2206

_______________________________________

_______________________________________

 PETITIONER(S) ARBITRATION 

 AGREEMENT 

 -vs- 

 No. ________ 

_______________________________________

_______________________________________

 RESPONDENT(S)

1) Petitioner(s) affirm(s) that they have previously attempted to settle this dispute with the 

other party through a meeting, telephone call or written communication and that not withstanding 

those efforts, the assistance of arbitrators is requested to resolve this dispute. 

 2) Each party affirms that they have received and read the State Bar of Montana’s “Rules 

on Arbitration of Fee Disputes” and agrees to abide by those rules. 

3) The parties agree that this dispute is not subject to a valid arbitration agreement under 

applicable state or federal law. 

 4) The parties agree that this dispute is not the subject of litigation filed prior to receipt of 

the Petition by the State Bar of Montana. 

5) In addition to paragraphs 1 through 4 above, the parties further agree: (choose and sign 

ONE of the following options) 

OPTION A: To participate in "binding" arbitration and to immediately be bound by the decision of 

the arbitrators. (If both parties sign under Option A, the arbitrators' decision is final and cannot be 

reversed unless there is a showing of fraud or conflict of interest under the Uniform 

Arbitration Act.) 

 

Petitioner(s) Date Respondent(s) Date 

OPTION B: To participate in "non-binding" arbitration, with the arbitrators’ decision to become 

binding thirty (30) days after the date of the decision, unless Petitioner or Respondent files an action

a lawsuit in the appropriate a court of law, within 30 days of the date of the arbitrators' 

decision, to settle this dispute. (If either party chooses Option B, there is a 30-day grace period 

from the date the decision is mailed to the parties, allowing either party to file a lawsuit if they 

disagree with the arbitrators' decision). 

 

Petitioner(s) Date Respondent(s) Date 

 OPTION C – See next page................................. 

1 
OPTION C (for Respondent only)

I elect not to participate in the arbitration and understand that, depending upon my 

status as either attorney or client, Rules 5.5 and 5.6 respectively will thereafter 

govern.

______________________________ 

Respondent(s) Date 

2