The debt collection process in New York is different for lawyers than others. A dispute over legal fees, non-payment, billing rate, or a client seeking a refund, is commonly referred to as a “ fee dispute.”
In New York state, there are rules that govern how to pursue a fee dispute. The rules are the same regardless if you are the lawyer or the client.
The state established the New York State Fee Dispute Resolution Program to resolve disputes about legal fees outside of a court setting. The program requires mandatory arbitration of fee disputes in certain situations. Even if the dispute does not fall under the parameters of the resolution program, both parties are still encouraged to participate in the program.
For some, mandatory arbitration of fee disputes is included in the underlying engagement (retainer agreement) between lawyer and client.
The New York State Fee Dispute Resolution Program
The New York State Fee Dispute Resolution Program was designed to promote an informal and speedy resolution of fee disputes between the parties through arbitration and mediation. If arbitration is requested by the client, the lawyer must participate. A lawyer’s failure to participate will result in a referral to the grievance committee.
Section 137.1 provides a list of which matters are exempt from fee arbitration. The list is as follows:
- Criminal cases
- Amounts involving a sum of less than $1,000 or more than $50,000 (disputes involving other amounts may proceed with arbitration if both parties consent)
- Claims involving substantial legal questions, such as malpractice or misconduct
- Claims for damages or affirmative relief other than adjustment of the fee
- Disputes where the fee to be paid by the client has been determined pursuant to statute, rule, or court order
- Disputes where there have been no attorney’s services for more than two years
- Disputes where the attorney is admitted to practice outside of New York and maintains no New York office, or where no part of the services was rendered in New York
- Disputes where the request for arbitration was made by someone other than the client or the legal representative of the client.
How Do You Begin Fee Arbitration?
If the parties previously agreed to arbitrate then a request to arbitrate is sent to the other party by Certified Mail or personal service. If the parties had not previously agreed to arbitrate, but the fee dispute is covered by the program, there are papers that must be served on the client or the lawyer.
If the client fails to respond in 30 days, then the lawyer can proceed to file a legal action with the court to enforce their rights to be paid. A lawyer must respond to a client’s demand to arbitrate a fee dispute. If they fail to respond, they are referred to the grievance committee for “appropriate action.”
If the client or the lawyer disagrees with the arbitrator’s decision, they can have a judge review the claim by filing for a trial de novo. Regardless, any arbitration award would need to be confirmed in court to become a judgment (just as any other arbitration award).
If both sides agree to mediate, they can mediate the dispute before moving to arbitration. As with all mediation, there must be agreement amongst the parties.
If you need assistance, you can hire a lawyer to represent you in any fee dispute proceedings.
If you have questions about a debt collection matter, contact Frank, Frank, Goldstein and Nager.
