Opinion ID: 2170274
Heading Depth: 1
Heading Rank: 1

Heading: Fee Dispute

Text: Pearson represented a client in a marriage dissolution between 1976 and 1978. The client paid Pearson attorney fees and costs totalling $7,972.35. Subsequently, she retained attorney Lester Mikeworth, who commenced an action in Ramsey County District Court seeking a refund of excessive fees. The parties agreed to submit the fee dispute to the Hennepin County Fee Arbitration Board (board), and agreed to be bound by the decision of the arbitrators. The board ordered Pearson to refund $4,472.35, finding that the fee charged was clearly excessive, in violation of DR 2-106(A), Minnesota Code of Professional Responsibility (MCPR). On advice of counsel, Pearson moved the Hennepin County District Court to set aside the arbitration award. The district court denied Pearson's motion and ordered that judgment be entered against Pearson for $4,472.35, plus 8% interest, and ordered Pearson to pay the client attorney fees of $220 and costs. On appeal, this court affirmed and awarded attorney fees of $400. On April 3, 1981, Mikeworth demanded payment of the arbitration award. On April 8, Pearson issued a check for $1,000 to Mikeworth. The check was returned for insufficient funds. Evidence was introduced that there were insufficient funds to cover the check on the day it was issued. On April 28, 1981, Mikeworth filed an ethics complaint with the LPRB concerning Pearson's failure to comply with the arbitration award. Two weeks later, Pearson sent the attorney another $1,000 check, promising to pay the balance the following week. The check was returned for insufficient funds. Pearson explained that there were insufficient funds because one month earlier a $2,500 deposit was reversed because the deposited check was invalid. The only valid payment Pearson made to the client was $1,000 in June 1981. The ethics complaint was assigned to attorney David Davenport for investigation. In a letter dated June 12, 1981, Davenport requested Pearson's response to the complaint. Pearson replied incorrectly, stating that he had paid $3,000 toward the arbitration award. Pearson testified that when he wrote his response he was not aware that two of the checks had been returned 2 months earlier. Davenport attempted to obtain additional information by several letters and telephone calls. His letters and telephone calls went unanswered, except for one letter from Pearson written over a month after Davenport's request. Pearson has failed to make further payments to his client and has failed to contact Mikeworth to work out a payment plan despite his promises to do so at a February 1982 panel hearing of the LPRB. Fee arbitration boards have been established throughout Minnesota to provide an economical and effective resolution of fee disputes between lawyers and their clients. The fee arbitration procedure provides a speedy, procedurally informal method of resolving disputes to the benefit of the client and the lawyer. Participation in the program is voluntary, but a participant agrees to be bound by the decision of the board. Appeal from a binding arbitration decision is limited to the narrow grounds delineated in Minn.Stat. § 572.19, subd. 1 (1982). Minnesota attorneys should be hesitant to appeal a fee arbitration decision, thereby embroiling a client in further litigation, unless there is a genuine argument for vacation of the decision based on the statutory grounds for appeal. [2] If there is no clear basis for appeal and the board's decision is final and binding, or if an appeal is taken and the arbitration award is affirmed (making it final and binding as occurred in this case), failure to abide by and carry out the decision constitutes professional misconduct warranting discipline. Here the arbitration award has been final and binding for a period of over 3 years. During that time, Pearson has made only one valid $1,000 payment and has failed to make further payments or make arrangements for payment. Pearson's failure to honor and carry out the final decision of the board constitutes professional misconduct warranting discipline. We hold that Pearson's refusal to honor the fee arbitration award violated Opinion No. 5 of the LPRB and DR 1-102(A)(4)-(6), MCPR. Opinion No. 5 provides: It is professional misconduct for an attorney who has signed an agreement to arbitrate a fee dispute to refuse to honor and carry out the final decision reached in such proceedings. In addition, we hold that Pearson's failure to reply to Davenport constituted noncooperation with a disciplinary investigation in violation of DR 1-102(A)(5)-(6), MCPR and our decision in In re Cartwright, 282 N.W.2d 548 (Minn.1979). [3]