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First Circuit Requires Arbitration Of Legal Malpractice Claims Based On Arbitration Clause In Attorney-Client Engagement Letter

The First Circuit has enforced the arbitration clause in a law firm's attorney-client engagement letter and required the firm's former client to arbitrate his claims for legal malpractice and violation of the Maine Unfair Trade Practices Act.

Plaintiff was a licensed investment advisor who retained the law firm to defend him against efforts by the State of Maine to revoke his license. He had prior experience with arbitrations as both a claimant and a respondent. The arbitration provision in the engagement letter was on the sixth and seventh pages of the agreement. It was not highlighted in any way, nor did anyone at the firm draw his attention to it before he signed the letter.

The provision says in part: "Any fee dispute that you do not submit to the arbitration under the Maine Code of Professional Responsibility, and any other dispute that arises out of or relates to this agreement or the services provided by this law firm shall also, at the election of either party, be subject to binding arbitration."

Plaintiff was apparently dissatisfied with the law firm's services and filed his malpractice suit in federal district court. The district court granted defendant's motion to compel arbitration and dismiss the suit.

The First Circuit rejected plaintiff's argument that Maine's Rules of Professional Conduct do not permit arbitration of malpractice claims unless the attorneys have obtained the client's "informed consent" as to arbitration. The Court said that malpractice claims clearly fall within the scope of the arbitration clause even though it does not specifically mention "malpractice." Both Maine law with respect to arbitration and Supreme Court interpretations of the Federal Arbitration Act oppose an argument that arbitration is slanted towards law firms.

The Court next addressed plaintiff's argument that Maine law disfavored arbitration clauses between fiduciaries and clients. The Court noted that the Maine Professional Ethics Commission had issued an opinion that attorneys may enter into agreements with their clients to arbitrate all disputes, including malpractice claims. The Maine courts have never indicated any disagreement with this opinion. The Commission said the arbitration agreement must be clear but the attorney was not required to advise the client to consult other counsel about the agreement. The American Bar Association has issued a similar ethics opinion. The First Circuit affirmed.

Bezio v. Draeger, No. 13-1910, 2013 WL 6570920 (1st Cir. Dec. 16, 2013)

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