Matrimonial Fee Dispute Arbitration

In last month's issue, we began to look at attorney fee arbitration, which is often a better alternative to a lawsuit when fees have gone unpaid (and sometimes a condition precedent to such suit). However, perhaps because they are unfamiliar with the system, many attorneys forego the arbitration option, choosing instead to just let their fees go unpaid. To help attorneys with recalcitrant clients to recover the fees they have earned, we now continue our discussion.

The Hearing

First, know that once the arbitration is scheduled, it is very rarely adjourned. When the scheduled date arrives, do not fail to attend. It will be reported back to the Office of Court Administration (OCA) and you do not want that to happen. 22 NYCRR ' 137.11

Upon arriving at the hearing, first try and settle with the client. Some attorneys, as part of the settlement, also try to have reciprocal General Releases signed. This will, of course, preclude the client from filing any other claims that may not be covered under the auspices of a Part 137 arbitration, such as malpractice. (The author offers no comment on this practice other than to state that it does occur and that it could very well raise an issue of overreaching.) Make sure, going in, that you know the underlying file and the claims in dispute, and that you review all of the pertinent documents and billing records. Both sides have a right to have counsel present and to call witnesses. 22 NYCRR ' 137.7(c) and (d).

Have the attorney who worked the file present. If you are a partner and didn't do much on the case, or if another attorney in the office has done some of the work at issue, make sure that the attorneys involved in the work are there to testify. Bring the file, if possible, so that the arbitrators can actually see with their own eyes, the amount of work that was done, especially when the client is claiming you billed him for doing little, no, or insufficient work. If no settlement occurs, both parties, and ultimately any witnesses, are sworn in.

When sitting as an arbitrator, I do not participate in settlement discussions because I am hearing the case ' nor do I speak with the parties on an ex parte basis. Only a short time is given for the parties to have settlement discussions.

Normally, if the matter cannot be settled in 15 minutes, the arbitration will commence. Once started, the arbitration will not be interrupted, unless it appears that there are complicated legal issues at the crux of the matter that are outside the scope of the process. Usually, however, such cases have been previously weeded out well before they are ever sent to hearing. Remember, during the course of the hearing, don't act like a “client” ' just put on your case.

The Basics

The attorney has the burden of proof to show the reasonable value of his or her services by a preponderance of the evidence. 22 NYCRR ' 137.7(d). The attorney must testify first. Each party has the right of direct and cross-examination. Listen to the arbitrators. We will also ask a lot of questions to narrow the issues.

Following are the basic documents to present in evidence:

• The client's rights statement;
• The retainer agreement;
• Bills/invoices;
• E-mails and other correspondence;
• Transcripts of allocution;
• Court orders as to fees;
• Client affidavits; and
• The file.

And here are some basic tips concerning what testimony should be presented, and how:

• Keep it short and sweet. Most lawyers don't know when to stop talking.
• Provide a basic overview. What did you do? What is your experience? Is your hourly rate commensurate with your experience and similarly situated attorneys in your locale and field?
• Put in your evidence ' make believe you are in court.
• At the very least, the arbitrator needs the following: Client's Rights Statement; the retainer agreement; and the bills/invoices. It is almost always enough if they meet the requirements of the Matrimonial Rules.
• Claims or allegations sounding in malpractice are not to be heard in this forum.
• Address client complaints or advise of the lack thereof. Were any billing charges/issue raised and resolved during the case?
• Were there any kind words from the client?
• Any problems with the bills you have provided the arbitrators with? If so, let him or her know. Any errors have probably already been observed in the review of the records. Come clean.
• Show the reasonable value of your services. (Use 22 NYCRR Part 1200, Rule 1.5, as a guide to ensure that the fee charged is “not excessive,” therefore, reasonable; See also Willis v. Willis, 149 AD2d 584 (2nd Dept. 1989). If the fees are particularly high, tell the arbitrator what you did (days of depositions, multiple motions, trial, etc.). Point to the five bankers' boxes you brought with you and show them. (You don't need to pull out every document or testify to each item ' they should be reflected in the bills.)
• Were you awarded counsel fees by the court? Did your client testify/submit affidavits as to the great job you did, your compliance with the Matrimonial Rules and that you deserved to get paid from the other spouse?
• If the Client's Rights Statement and Retainer Agreement are compliant (and they should be), the Bills/Invoices are key. Questions to be answered are: Are they true and accurate? How is the billing undertaken in your office? What is the review process? Do you review the bills/slips? Is the client's address correct so we know he/she received them? Were bills sent at least every 60 days? Were there no complaints about them? Were payments made/not made by client? Were the charges/expenses reasonable?
• Don't provide just the slip listings without the bills.
• Don't recite each line item. The arbitrators will already have reviewed the submissions.

The hearing will not last as long as the case. We will probably go for about an hour.

Cross-Examination
Of the Client

The issue again is the “reasonable value of your services.” The panel will not get into issues of alleged malpractice or the client's unhappiness with the result. Stick to the points you need to establish. After the client testifies, cross-examination, if you need it, should be to the point, to get these admissions from the client:

• That the client signed the Retainer and Client's Rights Statement;
• That the client was aware of the hourly rates and the other requirements and terms of the retainer;
• That the client received the bills/the address is correct;
• That the client received the bills at least every 60 days;
• That the client made no complaints during the case, or any complaints were addressed and resolved with credits set forth on the bills;
• That the client signed affidavits and/or testified as to your services and the accuracy of your bills and the work which was performed;
• That the client admits the work was done even if the result was not what they hoped for; and
• That the client did not make payment.

While you are, in effect, the “client” in this proceeding (unless you have retained counsel), keep this in mind: Be civil!

The Decision

In my experience as a fee arbitrator for many years, we always commence deliberations immediately, while the testimony is fresh in our minds. The panel will begin the process as soon as the hearing ends and everyone leaves. Just so you know, we have already reviewed all of the pre-hearing submissions in detail. We have calculators. We take our responsibilities very seriously. The lay arbitrators, though they are not attorneys, tend to have arbitration/mediation backgrounds. They can sometimes be harder on the client than some attorney panel members.

We have 30 days to render our decision. 22 NYCRR ' 137.7(f). We usually, however, do it right after our deliberations, review of evidence, and calculations are completed. We will not tell you what we decided. It gets sent to our contact at the local Office of Court Administration. Both parties will get the decision directly from OCA ' don't call us, we will not give it to you in advance.

If you have demonstrated the reasonable value of your services, including substantial compliance with the Matrimonial Rules, you should get your fee award. If the billing is accurate on top of that, you should get every penny.

More 'Don'ts' and Pitfalls

Know that if you fail to submit a timely, written response to the client's fee dispute application you probably will not be permitted to submit documentary evidence.

When it is your turn to offer direct testimony, don't do too much talking. Get to your points, make your case, and then stop. And make sure that you do not get sucked into offering testimony on potential malpractice issues.

It is important that you know your file, and know of any problems with it. Give extra consideration to settling if the file's flaws are glaring; for example, if you lack a signed Client's Rights Statement.

It is also problematic if there is no retainer agreement with the client, or if that agreement: 1) is unsigned; 2) sets out no termination event, or lists one that you have gone past; 3) does not establish the basis of time charges; or 4) is limited but you have billed out on other, non-covered, matters.

Further, failure to have complete and proper billing records can pose major problems to your case. Did you bill for matters not covered by the retainer? Are the hourly rates different from those quoted in the retainer agreement? Is it difficult to tell from your records just who did the work in question? Are there charges for billing discussions with the client or for time spent on a motion to be relieved? Other red flags are overcharging; double billing; charging for work not performed; failing to credit payments; and getting the dates and/or times wrong.

The Last Few Words

If you are new at this field of law or are dabbling, know the Matrimonial Rules and follow them. If you are not new to matrimonial/family law practice, you should already know and follow the Rules. This is the easiest, best and only way to put yourself in a position to collect your fees, and avoid grievances/malpractice claims relating thereto. A judgment can be filed on confirmation of the arbitration decision under CPLR ' 7510. Many cases settle at arbitration and a judgment may also be filed on consent/confession if the client does not comply with the terms of payment. The process takes a relatively minimal amount of time and is far better than sitting on an account receivable. Presumably, one could wait out the three-year statute of limitations on malpractice claims (see CPLR ' 214(6)) prior to filing for arbitration; however, you still might be faced with a partial malpractice defense even if a counterclaim is time barred. CPLR ' 203(d). If the case can be settled, most such matters simply go away, and you are paid.

On a separate note, if you are not new to matrimonial/family law practice and you are a slavish devotee of the Matrimonial Rules, you might consider volunteering to become a Fee Dispute Arbitrator. It is well worth the effort and is the best way to ensure that experienced practitioners are judging their peers.

Lee Rosenberg, a member of this newsletter's Board of Editors, is a partner at Saltzman Chetkof & Rosenberg LLP in Garden City, NY. He is a fellow of the American Academy of Matrimonial Lawyers.

In last month's issue, we began to look at attorney fee arbitration, which is often a better alternative to a lawsuit when fees have gone unpaid (and sometimes a condition precedent to such suit). However, perhaps because they are unfamiliar with the system, many attorneys forego the arbitration option, choosing instead to just let their fees go unpaid. To help attorneys with recalcitrant clients to recover the fees they have earned, we now continue our discussion.

The Hearing

First, know that once the arbitration is scheduled, it is very rarely adjourned. When the scheduled date arrives, do not fail to attend. It will be reported back to the Office of Court Administration (OCA) and you do not want that to happen. 22 NYCRR ' 137.11

Upon arriving at the hearing, first try and settle with the client. Some attorneys, as part of the settlement, also try to have reciprocal General Releases signed. This will, of course, preclude the client from filing any other claims that may not be covered under the auspices of a Part 137 arbitration, such as malpractice. (The author offers no comment on this practice other than to state that it does occur and that it could very well raise an issue of overreaching.) Make sure, going in, that you know the underlying file and the claims in dispute, and that you review all of the pertinent documents and billing records. Both sides have a right to have counsel present and to call witnesses. 22 NYCRR ' 137.7(c) and (d).

Have the attorney who worked the file present. If you are a partner and didn't do much on the case, or if another attorney in the office has done some of the work at issue, make sure that the attorneys involved in the work are there to testify. Bring the file, if possible, so that the arbitrators can actually see with their own eyes, the amount of work that was done, especially when the client is claiming you billed him for doing little, no, or insufficient work. If no settlement occurs, both parties, and ultimately any witnesses, are sworn in.

When sitting as an arbitrator, I do not participate in settlement discussions because I am hearing the case ' nor do I speak with the parties on an ex parte basis. Only a short time is given for the parties to have settlement discussions.

Normally, if the matter cannot be settled in 15 minutes, the arbitration will commence. Once started, the arbitration will not be interrupted, unless it appears that there are complicated legal issues at the crux of the matter that are outside the scope of the process. Usually, however, such cases have been previously weeded out well before they are ever sent to hearing. Remember, during the course of the hearing, don't act like a “client” ' just put on your case.

The Basics

The attorney has the burden of proof to show the reasonable value of his or her services by a preponderance of the evidence. 22 NYCRR ' 137.7(d). The attorney must testify first. Each party has the right of direct and cross-examination. Listen to the arbitrators. We will also ask a lot of questions to narrow the issues.

Following are the basic documents to present in evidence:

• The client's rights statement;
• The retainer agreement;
• Bills/invoices;
• E-mails and other correspondence;
• Transcripts of allocution;
• Court orders as to fees;
• Client affidavits; and
• The file.

And here are some basic tips concerning what testimony should be presented, and how:

• Keep it short and sweet. Most lawyers don't know when to stop talking.
• Provide a basic overview. What did you do? What is your experience? Is your hourly rate commensurate with your experience and similarly situated attorneys in your locale and field?
• Put in your evidence ' make believe you are in court.
• At the very least, the arbitrator needs the following: Client's Rights Statement; the retainer agreement; and the bills/invoices. It is almost always enough if they meet the requirements of the Matrimonial Rules.
• Claims or allegations sounding in malpractice are not to be heard in this forum.
• Address client complaints or advise of the lack thereof. Were any billing charges/issue raised and resolved during the case?
• Were there any kind words from the client?
• Any problems with the bills you have provided the arbitrators with? If so, let him or her know. Any errors have probably already been observed in the review of the records. Come clean.
• Show the reasonable value of your services. (Use 22 NYCRR Part 1200, Rule 1.5, as a guide to ensure that the fee charged is “not excessive,” therefore, reasonable; See also Willis v. Willis , 149 AD2d 584 (2nd Dept. 1989). If the fees are particularly high, tell the arbitrator what you did (days of depositions, multiple motions, trial, etc.). Point to the five bankers' boxes you brought with you and show them. (You don't need to pull out every document or testify to each item ' they should be reflected in the bills.)
• Were you awarded counsel fees by the court? Did your client testify/submit affidavits as to the great job you did, your compliance with the Matrimonial Rules and that you deserved to get paid from the other spouse?
• If the Client's Rights Statement and Retainer Agreement are compliant (and they should be), the Bills/Invoices are key. Questions to be answered are: Are they true and accurate? How is the billing undertaken in your office? What is the review process? Do you review the bills/slips? Is the client's address correct so we know he/she received them? Were bills sent at least every 60 days? Were there no complaints about them? Were payments made/not made by client? Were the charges/expenses reasonable?
• Don't provide just the slip listings without the bills.
• Don't recite each line item. The arbitrators will already have reviewed the submissions.

The hearing will not last as long as the case. We will probably go for about an hour.

Cross-Examination
Of the Client

The issue again is the “reasonable value of your services.” The panel will not get into issues of alleged malpractice or the client's unhappiness with the result. Stick to the points you need to establish. After the client testifies, cross-examination, if you need it, should be to the point, to get these admissions from the client:

• That the client signed the Retainer and Client's Rights Statement;
• That the client was aware of the hourly rates and the other requirements and terms of the retainer;
• That the client received the bills/the address is correct;
• That the client received the bills at least every 60 days;
• That the client made no complaints during the case, or any complaints were addressed and resolved with credits set forth on the bills;
• That the client signed affidavits and/or testified as to your services and the accuracy of your bills and the work which was performed;
• That the client admits the work was done even if the result was not what they hoped for; and
• That the client did not make payment.

While you are, in effect, the “client” in this proceeding (unless you have retained counsel), keep this in mind: Be civil!

The Decision

In my experience as a fee arbitrator for many years, we always commence deliberations immediately, while the testimony is fresh in our minds. The panel will begin the process as soon as the hearing ends and everyone leaves. Just so you know, we have already reviewed all of the pre-hearing submissions in detail. We have calculators. We take our responsibilities very seriously. The lay arbitrators, though they are not attorneys, tend to have arbitration/mediation backgrounds. They can sometimes be harder on the client than some attorney panel members.

We have 30 days to render our decision. 22 NYCRR ' 137.7(f). We usually, however, do it right after our deliberations, review of evidence, and calculations are completed. We will not tell you what we decided. It gets sent to our contact at the local Office of Court Administration. Both parties will get the decision directly from OCA ' don't call us, we will not give it to you in advance.

If you have demonstrated the reasonable value of your services, including substantial compliance with the Matrimonial Rules, you should get your fee award. If the billing is accurate on top of that, you should get every penny.

More 'Don'ts' and Pitfalls

Know that if you fail to submit a timely, written response to the client's fee dispute application you probably will not be permitted to submit documentary evidence.

When it is your turn to offer direct testimony, don't do too much talking. Get to your points, make your case, and then stop. And make sure that you do not get sucked into offering testimony on potential malpractice issues.

It is important that you know your file, and know of any problems with it. Give extra consideration to settling if the file's flaws are glaring; for example, if you lack a signed Client's Rights Statement.

It is also problematic if there is no retainer agreement with the client, or if that agreement: 1) is unsigned; 2) sets out no termination event, or lists one that you have gone past; 3) does not establish the basis of time charges; or 4) is limited but you have billed out on other, non-covered, matters.

Further, failure to have complete and proper billing records can pose major problems to your case. Did you bill for matters not covered by the retainer? Are the hourly rates different from those quoted in the retainer agreement? Is it difficult to tell from your records just who did the work in question? Are there charges for billing discussions with the client or for time spent on a motion to be relieved? Other red flags are overcharging; double billing; charging for work not performed; failing to credit payments; and getting the dates and/or times wrong.

The Last Few Words

If you are new at this field of law or are dabbling, know the Matrimonial Rules and follow them. If you are not new to matrimonial/family law practice, you should already know and follow the Rules. This is the easiest, best and only way to put yourself in a position to collect your fees, and avoid grievances/malpractice claims relating thereto. A judgment can be filed on confirmation of the arbitration decision under CPLR ' 7510. Many cases settle at arbitration and a judgment may also be filed on consent/confession if the client does not comply with the terms of payment. The process takes a relatively minimal amount of time and is far better than sitting on an account receivable. Presumably, one could wait out the three-year statute of limitations on malpractice claims (see CPLR ' 214(6)) prior to filing for arbitration; however, you still might be faced with a partial malpractice defense even if a counterclaim is time barred. CPLR ' 203(d). If the case can be settled, most such matters simply go away, and you are paid.

On a separate note, if you are not new to matrimonial/family law practice and you are a slavish devotee of the Matrimonial Rules, you might consider volunteering to become a Fee Dispute Arbitrator. It is well worth the effort and is the best way to ensure that experienced practitioners are judging their peers.

Lee Rosenberg, a member of this newsletter's Board of Editors, is a partner at Saltzman Chetkof & Rosenberg LLP in Garden City, NY. He is a fellow of the American Academy of Matrimonial Lawyers.