Opinion ID: 2261551
Heading Depth: 1
Heading Rank: 7

Heading: policy justifications for the present r. 1:20a scheme

Text: Petitioner and the Association isolate two aspects of the present R. 1:20A arbitration scheme which they find particularly objectionable. [25] First, they maintain that the compulsory nature of this scheme for lawyers is both unnecessary and unwise. On this we wholly disagree. Second, they contend that even if a right to appeal from the Committees is not constitutionally mandated, some right to appeal should be provided as a matter of good public policy. Although we decline to permit any appeals from determinations by the Committees on the merits of particular cases, we do recognize the desirability of providing a limited right to appeal on procedural grounds.
The Association maintains that it is unnecessary for R. 1:20A arbitration to be compulsory for attorneys because the courts, particularly the equity courts, provide clients with an adequate forum in which to settle their grievances over attorney fees. We disagree. We concur fully with the findings of a 1974 Report by the American Bar Association that forcing clients to go to court to resolve attorney fee disputes places a heavy burden on the clients. ABA, Report of the Special Committee on Resolution of Fee Disputes 2-4 (1974) (Report). Clients, especially those of limited income, often find it very difficult to procure another attorney to represent them in fee disputes. Also, if a client were forced to give the attorney a retainer that eventually proved to have been unreasonably high, the client might not be able to afford the delay of another trial before being reimbursed. As the ABA Report concluded, imposing these burdens on clients causes immeasurable harm to the relationship between the Bar and the public. Id. at 3. The Association also contends that even if some form of arbitration is necessary for fee disputes, it need not be compulsory because attorneys will usually consent to participation in a fair arbitration process. The record wholly disproves this contention. According to the Report, national surveys demonstrate that a significant and growing number of attorneys refuse to arbitrate their fee disputes. Id. at 4. Some refuse because without arbitration the client is at a serious disadvantage. Referring to the problems mentioned above which clients face in fee disputes, the Report notes: In view of these tremendous practical obstacles facing the dissatisfied client, it is hardly surprising that the less conscientious lawyer usually refuses to consent to binding arbitration. By the simple act of declining to submit to arbitration, this attorney can thwart the organized Bar's jurisdiction to consider the dispute and to implement a fair resolution. Id. at 2-3. Finally, the Association contends that compulsory arbitration has disadvantages which outweigh any gains to be had from it in protecting clients. It relies upon the conclusion of the ABA Report that although some form of fee arbitration is desirable, compulsory arbitration is not a good idea. Id. at 4. We find the Report's reasons for rejecting compulsory arbitration unpersuasive. The ABA Report cites two principal problems with a compulsory arbitration scheme: that it would be too controversial to ever be enacted, and that it would in essence be treating lawyers as second class citizens. Id. The first problem is, of course, moot in New Jersey after our promulgation of R. 1:20A. We see little merit in the ABA's second objection to compulsory arbitration. Lawyers have many rights and privileges as members of the New Jersey Bar and we find no difficulty in imposing a concomitant responsibility upon them to submit to arbitration of fee disputes when such arbitration is necessary to maintain public confidence in the Bar as a whole. Further, as discussed infra, we find the R. 1:20A arbitration scheme to be fair to both clients and lawyers. We conclude, therefore, that the ABA Report's strong arguments for having attorney-client disputes arbitrated support the establishment of a compulsory arbitration scheme despite the ABA's own reservations about such a scheme. [26] Our commitment to the Committees as presently constituted is buttressed by the fact that the agencies are effectively fulfilling their function. We note first that there is no evidence that the compulsory arbitration scheme in practice is causing significant problems for lawyers. [27] Further, and more importantly, we find that the Committees have fairly and expeditiously adjudicated attorney-client fee disputes which would otherwise have either resulted in protracted litigation or in disgruntled clients giving up their claims. [28] Thus, we enthusiastically reaffirm our commitment to the compulsory arbitration scheme established by R. 1:20A.
Petitioner and the Association maintain that it is both unfair to lawyers and bad judicial policy for there to be no appeals permitted from Committee determinations. Some right to appeal, it is argued, is necessary in order to assure lawyers that compulsory arbitration under R. 1:20A will always be fair. At least with regard to appeals from Committee determinations on the merits, we find petitioner's concerns far outweighed by the advantages of having fee disputes settled expeditiously and finally at the Committee level. We do, however, recognize the desirability of providing a limited right to appeal if certain fundamental procedural protections are not afforded by a Committee. The wisdom of denying appeals on the merits from Committee decisions necessarily must depend on one's view of the importance of public confidence in the lawyer-client relationship. If it is true  and we believe it is  that public confidence in the judicial system is as important as the excellence of the system itself, and if it is also true  as we believe it is  that a substantial factor that erodes public confidence is fee disputes, then any equitable method of resolving those in a way that is clearly fair to the client should be adopted. The client's position in fee disputes is one of vulnerability from the beginning to the end: the lawyer has superior knowledge, usually superior bargaining power in arriving at the initial fee agreement, and, in any event, the ability to refuse the representation if not satisfied with its terms. If and when a dispute develops, a system that requires a client to hire another lawyer for trial and perhaps appeal on the fee dispute increases the client's initial vulnerability by significantly weakening his negotiating power to resolve the fee dispute. The client perceives, correctly, that the lawyer is part of the system, and when added to his dissatisfaction with his experience with that lawyer, the system offers him a remedy that, to him, promises not to solve his problem but only to compound it, dissatisfaction turns into despair and resentment. The least we owe to the public is a swift, fair and inexpensive method of resolving fee disputes. This may not end the dissatisfaction of some with the Bar and with the judicial system, but, at the very least, it will minimize the extent of such dissatisfaction. Further, it is important to assure the public that this Court, which has the ultimate power over the practice of law, will take an active role in making certain that clients are treated fairly in attorney-client disputes. Besides helping to sustain public confidence in the Bar, the finality of Committee determinations also protects clients who can ill afford the time and expense of defending a Committee judgment on appeal. As we noted in section IIIA, supra, one of our primary concerns in promulgating R. 1:20A was that clients should not be forced to incur such expenses in fee disputes. Finally, we find unpersuasive the position of petitioner and the Association that the unappealability of Committee determinations is unfair to lawyers. If that is unfair, it is at least equally unfair, for the client similarly has no appellate right. Further, when it is noted that Committee arbitration panels must consist of a majority of lawyers, it is difficult to see how such a system can be unfair to lawyers. Upon analysis, the claim that lawyers are treated as second class citizens is really not being seriously pursued, but rather the underlying claim is that lack of an appellate review renders the system less certain, in the aggregate, to yield just results. With that proposition taken in the abstract we have no argument, for appellate review is almost as essential a part of our notion of justice as is the trial itself. But just as in conventional arbitration proceedings, so here, appellate review may sometimes give way either in part or in whole to other social goals. It is our judgment that the advantages of swift, inexpensive proceedings outweigh by far any greater likelihood of just results achieved by allowing appellate proceedings. The loss of public confidence in the judicial system is too high a price to pay for some indeterminate improvement in the quality of fee arbitration determinations. We reaffirm, therefore, that appeals on the merits from Committee decisions will not be allowed. In barring appeals on the merits, however, we do recognize that both lawyers and clients may need a limited right of appeal in order to protect them from any egregious procedural deprivation before a Committee. We are, therefore, requesting the Civil Practice Committee, after soliciting the views of all interested parties, to recommend an amendment granting a limited right of appeal to the Disciplinary Review Board (DRB). That right should be limited to the following or similar grounds: that a Committee member failed to disqualify himself or herself in a case where he or she would appear evidently partial toward one of the parties; [29] that the Committee failed substantially to comply with the procedural requirements of R. 1:20A, e.g., by denying a party the right to subpoena witnesses; or that there was actual fraud on the part of one or more Committee members. Such limited appellate right will not create the problems outlined above for the following reasons. First, the extremely small number of complaints that have been lodged about Committee proceedings in the past, see note 28, supra, indicates that the Committees are run fairly and that consequently procedural appeals will be very rare. Second, we fully expect the DRB to handle any such appeals which may arise under R. 1:20A after it is amended with the understanding that speedy resolution of fee disputes is an important goal of our judicial system. Third, and most important, appeals of this kind to the DRB will ordinarily not require clients to find a new lawyer or incur any of the other expenses which would have to be incurred in court.