Problems with Fee Arbitration Programs

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Problems with Fee Arbitration Programs

Fee arbitration programs can be an easy, low cost way to resolve billing disputes between attorneys and their clients. In fee arbitration, a neutral third party will review the bill and then determine what is a fair cost for the attorney’s services. This can help the attorney and client avoid a lawsuit, thereby saving time, expense, and difficulty. However, there are three recurring problems that consistently crop up among the various fee arbitration programs.

1. Arbitration Is Usually Not Mandatory

First, although many states, 42 to be exact, offer some sort of fee arbitration program, only 9 make the attorney’s participation mandatory. In the rest of the states, there are no consequences for an attorney that decides not to participate in the fee arbitration. This leaves the client only with the option of filing a lawsuit in order to dispute the attorney’s bill.

2. Clients Have Difficulty Collecting Awards

Second, according to the American Bar Association (ABA), over half of the existing state fee arbitration programs do not assist the client in collecting awards from their lawyers. This means that even if the arbitrator finds in the client’s favor, a particularly bad lawyer can simply choose to not pay. Again, the client’s only recourse would be to file a lawsuit in order to recover the disputed amount.

3. Fee Arbitration Is Not a Well Known Option to Clients.

Despite these potential problems, most lawyers are honest and want to resolve any potential disputes with their clients, making fee arbitration an excellent way to resolve billing issues. However, this leads to what is perhaps the greatest problem with fee arbitration programs: no one seems to know about them.

There are a two main factors contributing to this problem:

Should I Contact an Attorney?

Despite these problems, arbitration is an efficient and effective way to settle a dispute. If you have any concerns over your lawyer’s bill, your first step should be to speak directly to your lawyer. If that does resolve the issue, you should then contact an attorney to see if arbitration is the best decision to resolve your situation and to help you choose an arbitrator.

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Last Modified: 02-12-2014 04:02 PM PST

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