Can a lawyer require a client to agree to arbitrate all fee and malpractice disputes in the retainer agreement?

Plain-English summary

Opinion 211 (adopted May 15, 1990) addressed a firm's form retainer agreement requiring arbitration of all claims between the firm and its clients, including the firm's claims for unpaid fees and the client's claims for malpractice. Fee disputes were to go to the D.C. Bar Fee Arbitration Board (or a mutually chosen panel); all other disputes to American Arbitration Association arbitration in the District. The agreement also had the client consent to Superior Court jurisdiction, pay 15% of any balance owed as attorney's fees if the firm prevailed, and accept a two-year limitations period for arbitration. The firm asked whether the mandatory arbitration provisions were proper.

The committee reconsidered its earlier Opinion 190, which had allowed mandatory arbitration clauses with full disclosure and without independent counsel, and concluded that opinion was incorrect. It reasoned that the salient features of arbitration (whether arbitrators are paid, the absence of discovery, the lack of a public proceeding and jury, the availability of damages, and forum-selection consequences) are difficult to catalog and cannot realistically be disclosed to a prospective client at an initial meeting, and that limited disclosure coupled with advice to seek independent counsel would not cure the problem. Drawing on Rule 1.8(a) (business transactions with a client), and the approaches of the Michigan and Philadelphia bars, the committee concluded that mandatory arbitration agreements covering all lawyer-client disputes are not permitted unless the client is in fact counseled by another lawyer; it saw no problem where the client already has independent counsel.

The committee added that, where an arbitration clause reaches malpractice claims, the restrictions of DR 6-102(A) and Rule 1.8(g) on limiting malpractice liability must be observed, so the agreement's two-year limitations period was improper because it shortened the three-year period the law allowed. It also concluded the 15% collection charge had to be tested under DR 2-106(A)'s bar on a clearly excessive fee and might well be excessive. The committee noted it was not addressing an agreement limited to fee-only arbitration before the D.C. Bar board, which could come out differently, and two members dissented, reading Supreme Court and D.C. precedent as favoring enforceable arbitration.

Currency note

The D.C. Bar marks Opinion 211 as superseded by D.C. Bar Legal Ethics Opinion 376.

This opinion was issued in 1990, before the District of Columbia's adoption of the 2007 revisions to the Rules of Professional Conduct, and was decided as the Rules took effect January 1, 1991. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Could a lawyer require a client to arbitrate all fee and malpractice disputes?

A: Not without independent counsel. The committee concluded such a mandatory arbitration clause is not permitted unless the client is actually represented by another lawyer.

Q: Why was disclosure plus advice to get a second lawyer not enough?

A: The committee concluded the complexities of arbitration cannot realistically be disclosed at an initial meeting, and that few clients would or could see a second lawyer just to enter the agreement, so actual independent counsel was required.

Q: Could the agreement shorten the time to bring a malpractice claim?

A: No. The committee concluded that DR 6-102(A) and Rule 1.8(g) barred shortening the malpractice limitations period below the three years the law allowed.

Q: Was the 15% collection charge permissible?

A: Questionable. The committee concluded the charge had to be tested under DR 2-106(A)'s bar on a clearly excessive fee and might well be excessive given arbitration's lower costs.

Background and rules framework

The opinion was decided as the Rules of Professional Conduct took effect, drawing on the former Code's DR 2-106(A) (no clearly excessive fee) and DR 6-102(A) (no limiting malpractice liability) and on Rules 1.5(b), 1.8(a), and 1.8(g). The committee treated Rule 1.8(a) (business transactions with a client), which requires fair terms fully disclosed in writing, a reasonable opportunity to seek independent counsel, and the client's written consent, as the governing rule, and read the malpractice-liability limits of DR 6-102(A) and Rule 1.8(g) to constrain any arbitration procedures reaching malpractice claims.

Citations and references

Rules of Professional Conduct and Code provisions:

• D.C. RPC 1.8(a) / Model Rule 1.8 (business transactions with a client)
• D.C. RPC 1.5(b) / Model Rule 1.5 (written fee disclosures)
• D.C. RPC 1.8(g) / Model Rule 1.8 (no prospective limit on malpractice liability)
• Former Code DR 2-106(A) (no clearly excessive fee) and DR 6-102(A) (no limiting malpractice liability)

Statutes:

• D.C. Code § 12-301(8), the three-year limitations period for malpractice

Other opinions cited:

• D.C. Opinion 190: the earlier view that mandatory arbitration could be adequately disclosed without independent counsel, which this opinion concluded was incorrect
• Michigan Op. RI-2 and Philadelphia Op. 88-2: requiring independent counsel or written waiver advice for mandatory arbitration clauses
• D.C. Opinion 155: a collection charge must bear a reasonable relationship to costs incurred

See also

• DC Ethics Op. 376: Mandatory Arbitration Provisions in Fee Agreements
• DC Ethics Op. 218: Mandatory Arbitration of Fee Disputes
• DC Ethics Op. 238: Written and Fixed Fee Agreements

Source

• Landing page: https://www.dcbar.org/for-lawyers/legal-ethics/ethics-opinions-210-present/ethics-opinion-211