The United States Court of Appeals for the First Circuit recently enforced a lawyer-client arbitration agreement even though the agreement (1) failed to specify that malpractice claims were within its scope, and (2) failed to recommend consultation with independent counsel. See Bezio v. Draeger, No. 13-1910 (1st Cir. Dec. 16, 2013). In so doing, the First Circuit expressly rejected Louisiana’s more restrictive approach to lawyer-client arbitration agreements, which the Louisiana Supreme Court set forth last year in Hodges v. Reasonover, 103 So. 3d 1069 (La. 2012).
In Hodges, the Louisiana Supreme Court noted that a lawyer-client arbitration clause “does not inherently limit or alter either party’s substantive rights; it simply provides for an alternative venue for the resolution of disputes,” and held that a “binding arbitration clause between an attorney and client does not violate Rule of Professional Conduct 1.8(h) provided the clause does not limit the attorney’s substantive liability, provides for a neutral decision maker, and is otherwise fair and reasonable to the client.” Hodges, 103 So. 3d at 1076. However, the Louisiana Supreme Court imposed a number of “minimum” requirements for the enforcement of arbitration clauses in this state:
At a minimum, the attorney must disclose the following legal effects of binding arbitration, assuming they are applicable:
- Waiver of the right to a jury trial;
- Waiver of the right to an appeal;
- Waiver of the right to broad discovery under the Louisiana Code of Civil Procedure and/or Federal Rules of Civil Procedure;
- Arbitration may involve substantial upfront costs compared to litigation;
- Explicit disclosure of the nature of claims covered by the arbitration clause, such as fee disputes or malpractice claims;
- The arbitration clause does not impinge upon the client’s right to make a disciplinary complaint to the appropriate authorities;
- The client has the opportunity to speak with independent counsel before signing the contract.
See id. at 1077. If a Louisiana lawyer includes these terms in the lawyer’s engagement agreement, it will be enforceable.
To download model engagement agreements that include Louisiana-compliant arbitration clauses, click here: Model Lawyer-Client Agreements.