Law FirmRisk Management

Should Law Firms Be Using Binding Arbitration In Their Fee Agreements?

By December 1, 2011 No Comments

Binding Arbitration for Legal Malpractice Disputes is becoming more common and may be an effective tool in controlling Legal Malpractice Claims.


By: Kenneth R. Zuetel, Jr.
Member: California and Nevada State Bar Associations


After 33 years of defending various professionals, including attorneys, against claims of malpractice, I have become a firm believer in binding arbitration as the best way to hold down run-away jury verdicts and the settlements (and high insurance premiums) they spawn.  All this while also bringing sanity to the attorney sued.
Binding arbitration is an alternative to the court/jury system. It allows litigants virtually all of the same rights as in the court system, except that an arbitrator resolves the case as opposed to a jury.  I have found that retired judges make the best arbitrators for attorney malpractice cases.

They tend to be more conservative, better understand the law, less emotional and sympathetic, and willing to apply “technical defenses” (e.g., statutes of limitation, causation, professional judgment, etc.) than juries.  Attorneys who are defendants have also expressed their appreciation for the fact that proceedings are private in nature, and are much quicker than jury trials.  Plus, the time to obtain a resolution is usually much quicker in arbitration than in the court system.  Nor does the defendant attorney need to sit through the entire arbitration proceedings — like he or she would be required to do if a jury heard his case.

Indeed, the defendant attorney is ordinarily present at the arbitration only for his testimony.  Retired judges understand that attorneys have busy lives and, unlike juries, do not view dis-favorably an attorney who does not remain throughout the entire proceedings.

I would invite all potential insureds to consider binding arbitration as a cornerstone to their potential arsenal of weapons designed to level the playing field for defendant attorneys charged with malpractice.

For more information about using binding arbitration in your fee agreements please contact us. We welcome your comments.

Author Marcus Cusick

Marcus Cusick operates Guardian Brokers; a specialist insurance agency focused on providing risk management and insurance to professionals throughout the West. Marcus advises clients on improving practices, claim prevention, malpractice, ethics, and regulatory agency discipline.

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