Mandatory Fee Arbitration – Attorneys

Fee arbitration for attorneys

The right to fee arbitration comes from the Mandatory Fee Arbitration Act, Business and Professions Code sections 6200 through 6206. BHBA is a State Bar approved program serving Los Angeles and Ventura counties.
Authority
B&P Code 6200–6206
Jurisdiction
Los Angeles & Ventura
Filing fee
5%, capped at $5,000
Timeline
About six months from filing to award
Threshold

Jurisdiction and scope

Los Angeles County  ·  Ventura County
BHBA hears attorney fee disputes where at least one of the attorneys involved maintains an office in Los Angeles County or Ventura County, maintained an office in either county at the time the services were rendered, or where the majority of the legal services were provided. A substantial portion of services performed in either county also confers jurisdiction.
What is arbitrable
The arbitrator determines whether the fees and costs charged were reasonable and appropriate. Evidence of malpractice or professional misconduct is admissible, but only to the extent it bears on the fees to which the attorney is entitled. No award of affirmative relief will issue on those claims.
What is not arbitrable
  • Claims for damages based on malpractice or professional misconduct
  • Fees or costs determined or determinable by statute or court order
  • Claims between attorneys for the division of fees
  • Claims assigned by the client
  • Disputes where you are admitted only in another jurisdiction, maintain no California office, and rendered no material portion of the services here
  • Requests from someone neither liable for nor entitled to a refund of fees

Timing

Arbitration cannot be commenced if a civil action on the same fee claim would already be time-barred under Business and Professions Code section 6206. Filing a request tolls the limitations period while the arbitration is pending.
Statutory prerequisite

Notice of Client’s Right to Arbitrate

Before commencing an action against a client to recover fees, Business and Professions Code section 6201 requires you to serve written notice of the client’s right to arbitrate, either before or at the same time you serve the summons.
Use the State Bar approved form. Substitute language is not accepted.
The mandatory form is the State Bar approved Notice of Client’s Right to Arbitrate, revised March 2013. Reproducing the same or similar language on your own letterhead, or in the body of a letter to the client, is not a legally acceptable substitute.

After you serve it

  • The client has 30 days from receipt of the notice to request arbitration. The filing date is the day BHBA receives the completed request and payment of the filing fee
  • If the client files, your participation is mandatory
  • If the client does not file within 30 days, the right is waived and you may proceed. You may still choose to arbitrate if the client agrees in writing

Other ways a client waives the right

Besides the 30-day lapse, a client waives fee arbitration by answering the complaint or filing an equivalent response before requesting arbitration, by filing a pleading seeking judicial resolution of the fee dispute, or by suing you for malpractice or misconduct. The parties may agree in writing to set aside a waiver.
Pending litigation

Automatic stay

If you commence an action to collect fees and the client files a request for arbitration, the action is automatically stayed on filing.
BHBA does not communicate with the court. The party who requested arbitration has the duty to notify the tribunal and attach a copy of the request. If that party has not appeared in the action or is not subject to the court’s jurisdiction, the burden shifts to you as plaintiff to file the notice of stay immediately. Notice of Stay of Proceedings (form CM-180).
Initiating

Filing a claim against a client

You may file, but the client’s participation is optional unless the parties agreed in writing to arbitrate fee disputes. Absent such an agreement, the arbitration proceeds only if the client consents in writing on BHBA’s approved form within 30 days of service of your request. Practically, an attorney-initiated filing is an invitation the client can decline.
You must still wait 30 days before filing suit. Plan on roughly six months to conclusion if the client responds.

Filing fee

5% of the amount in dispute, capped at $5,000, paid by the filing party at the time the form is completed. It covers up to four hours of mediation and up to four hours of arbitration. The fee becomes part of the dispute, so it can be built into a settlement, and if the matter goes to hearing the arbitrators decide who ultimately pays it.
Procedure

From filing to award

Response
Due within 30 days of service of the request, on BHBA’s approved form.
Mediation
Available at any point by agreement of both parties, and included in the filing fee.
Panel composition
One attorney arbitrator where the amount in dispute is $25,000 or less. Three where it exceeds $25,000, comprising an experienced attorney panel chair, a second attorney arbitrator, and a non-attorney lay arbitrator. Where the amount exceeds $25,000, the parties may agree in writing to a single attorney arbitrator instead.
Assignment
Notice identifying the arbitrators is served within 60 days of receipt of the reply, or of the date the response period expired.
Hearing timing
Within 45 days of assignment for a single arbitrator, 90 days for a three-member panel.
Hearing
Usually two to four hours. Format is the panel chair’s call, and most are held over Zoom. Parties may present evidence and cross-examine. Judicial rules of evidence do not apply. No stenographic, audio, or video recording is permitted.
Nonappearance
The hearing proceeds and an award issues on the evidence presented. No award issues against a party solely for being absent. A party who willfully fails to appear forfeits the right to trial de novo and bears the burden of proving the nonappearance was not willful.
Award
Submitted to BHBA within 15 days of the close of hearing for a single arbitrator, 25 days for a panel, then served by BHBA.
Confidentiality
The file, the hearing, and the award are confidential. Disclosure of privileged material or work product during the process does not waive its confidential character for any other purpose.
After the award

Binding effect and what follows

Arbitration is non-binding unless the parties agree in writing, after the dispute arises, to be bound. A pre-dispute agreement is not a valid binding agreement.
Either party may request trial de novo within 30 days of service of a non-binding award. Absent a timely request, the award becomes binding automatically. A written request to correct the award does not extend the 30-day clock.
A binding award may be corrected, vacated, or confirmed under Code of Civil Procedure section 1285 and following. Confidentiality ends if a party goes to court to challenge or enforce the award.
If an award requires you to refund fees and you do not pay, the client may submit a Request for Enforcement to the State Bar no earlier than 100 days and no later than four years after service of the award.
Drafting

Fee agreements and arbitration clauses

A client’s statutory right to fee arbitration under the MFAA cannot be waived in advance. What a fee agreement can do is provide that any dispute not resolved through the MFAA process proceeds to binding contractual arbitration, which changes what happens after a non-binding award rather than displacing the MFAA.
Schatz v. Allen Matkins Leck Gamble & Mallory LLP (2009) 45 Cal.4th 557 addressed the interaction between the MFAA and the California Arbitration Act. Worth reading before you rely on an arbitration clause to control a fee dispute.
File

File or respond

Statutes, forms, advisories, and case law are collected under Resources.
Contact

Questions about the program

BHBA staff can answer procedural questions and tell you where a matter stands in the arbitration process. BHBA cannot give legal advice about your dispute, advise you on what amounts or information to enter on the form, or predict how an arbitrator will rule.