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 advise what a fair cost for the attorney’s services was. This can help the attorney and client avoid a lawsuit, thereby saving time, expense, and difficulty. However, there are several recurring problems that crop up among the various fee arbitration programs.
First, although 42 states 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.
Second, according to the American Bar Association (ABA), over half of the state fee arbitration programs do not assist the client in collecting awards from their lawyers. Thus, 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 is to file a lawsuit in order to recover the overpaid amount.
Despite these potential problems, the vast majority of lawyers are honest and want to resolve the dispute. As such, fee arbitration is still an excellent means of resolving billing issues. This leads to what is perhaps the greatest problem with fee arbitration programs: No one seems to know about them. Only a handful of states require that lawyers provide a written notice of arbitration programs to their clients. Also, states that advertise these programs tend to do target lawyers, not the public at large. Most people never find out about these programs, and as a result fee arbitration programs are under utilized.
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Last Modified: 11-22-2010 12:16 PM PST
