Tuesday, June 28, 2016

Not Wrong Enought to Be Arbitration-Wrong

Baxter v. Block, No. A144112 (D1d1 May 24, 2016)

Attorney and Clients arbitrated a fee dispute under the Mandatory Fee Arbitration Act. The Arbitrator awarded $0, finding that Attorney’s services were worth less than he had billed. They were, instead, worth a lesser amount, which just happened to be exactly what Client had paid. 

But Clients hadn’t paid as much as the Arbitrator thought. He apparently relied on a mistaken document. Attorney noted the mistake. And Clients, to their credit, basically admitted it. But the Arbitrator refused to modify his award.
Attorney moved to vacate the award; Clients to confirm it. Clients also asked for their fees on confirmation, based on a fee provision in the retainer agreement. In addition to the payment mistake, Attorney claimed that Arbitrator had failed to disclose that a bunch of his recent work entailed auditing legal bills, which is Attorney claims is a significantly pro-client job for a fee arbitrator that it merited disclosure. The trial court refused to vacate the award on wither grounds and gave Clients their fees, although he cut their fee counsel’s hourly rates and hours significantly.

The court publishes its opinion only on the disclosure issue and the fee calculation. So far as the bill auditing (non-) disclosure goes, the record showed the arbitrator did a bunch of different consulting work around the issue of attorney fees. Some on the client-side like bill auditing. But also some on the attorney-side like testifying about reasonable rates for fee applications. His expertise was thus in billing issues in general, not in representing one side or another in fee disputes. Which meant his consulting work didn’t cause him to have a particular economic incentive to go one way or the other or to rule a certain way to garner the favor of future clients. Because the consulting didn’t create any reasonable doubt about the arbitrator’s impartiality, the judgment could not be vacated for failure to disclose, or to otherwise provide a grounds for disqualification.

And on the fees, Clients’ two attorneys billed Client—and Client sought fee recovery—at the same hourly rate. Both had roughly the same pedigrees and experience. Yet, the trial court gave only one of them a substantial rate cut without any explanation. The court finds this to be an abuse of discretion and sends the case back for an explanation. But it affirms the hours cut, deferring to the trial court’s judgment that the time billed was excessive for a motion to confirm an arbitration award. Such judgment can only be reversed if it is “clearly wrong,” which it wasn’t here.

Reversed in part.

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