What is Fee Arbitration?

Jessica Ellis

Fee arbitration is a legal option that avoids court while providing a binding agreement as to the payment of fees. It is most often used to settle disputes between lawyers and clients over fees owed that the client refuses to pay. Some regions, including at least nine US states, have some mandatory fee arbitration laws that require arbitration before a fee dispute is permitted to go to court. Other regions offer fee arbitration as a voluntary alternative to court proceedings.

Fee arbitration helps settle disputes over money owed to an attorney.
Fee arbitration helps settle disputes over money owed to an attorney.

A final bill from a lawyer is a cause of sticker shock for many people. It is not unusual for a lawyer's final bill to be far higher than estimated or anticipated by the client. Not only may a client have an issue with the amount billed for services such as postage costs or research, but he or she may also dispute the value of the lawyer's service, particularly in situations where a court case has been lost or is perceived as mismanaged. Though many experts suggest that a client and attorney should do everything possible to work out a fee disagreement between themselves, sometimes a mutually acceptable agreement is not possible. If this occurs, fee arbitration may be the fastest and least costly option for both sides.

Most regions have forms that can be filled out to request fee arbitration. These are usually available at a local courthouse or through a courthouse website, and often require a filing fee. Arbitration requests will usually require a description of the grievance that explains the necessity for the procedure. They are usually filed by the client, and may require copies of all documents that pertain to the suit. Both parties usually need to sign a document stating they will abide by the ruling of the arbiter regardless of the decision.

After a request is accepted, a date will be assigned for the arbitration and both sides will be notified. Arbitration may be conducted by a single arbiter or may be handled by a panel of three, usually a combination of lawyers and public members. Hearings are usually held in private, where the arbitrating body listens to arguments from both sides and examines documents. In cases where the disputed amount is very high, such as over $100,000 US Dollars, the arbitrating committee may decide to pass judgment onto the court. If there is no reason to pass the dispute on, the arbitrating panel will make a decision based on the evidence which is legally binding.

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