Introduction

The subject of "how to" resolve attorney/client fee disputes efficiently and fairly, while dreary and perhaps unappealing, is nevertheless one that is pe-culiarly with us as practicing lawyers in the 1990's. Like it or not, for reasons of thinning business and insurance industry profit margins, high law firm billing quotas, a contracted legal job market, and intense competition for law firm part-nership, among others, an environment now exists in which sophisticated con-sumers of legal services, notably businesses and insurance companies, are more willing than ever to confront, and even sue, their attorneys when they be-lieve they have been overcharged.

Courts, legislatures and bar associations have developed standards for determining when overcharging has occurred, i.e., when a fee is "unreasonable" or "unconscionable." (ABA Model Rules of Professional Con-duc4 Rule 1.5(A) (1983); California Rules of Professional Conduct, Rule 4-200(B) (1994).) Traditionally, these types of dis-putes were resolved either through direct negotiation or litigation. This article sum-marizes California's mandatory arbitration procedures for attorney/client fee disputes and examines an alternative process, media-tion, and the reasons for its growing appeal to those embroiled in rancorous fee dis-putes.

Mandatory Fee Arbitration : Business & Professions Code Section 6200

Business and Professions Code section 6200 et seq. govern many - perhaps a ma-jority - of attorney/client fee disputes. Under these provisions, with certain excep-tions, arbitration is voluntary for a client and mandatory for an attorney if a claim concerning fees, costs,, or both charged by an attorney is commenced by a client. Mediation is voluntary for both attorney and client. This enabling legislation authorizes local bar associations to promulgate rules and establish procedures for the speedy and fair arbitration and mediation of these dis-putes. The Bar Association of San Francis-co administers both arbitration and media-tion programs for attorney/client fee dis-putes.

Early Mediation of the Attorney/Client Fee Dispute

Trial counsel familiar with attorney/client fee disputes are well-aware of the limita-tions of litigating these cases; limitations which make it useful only as a last resort. Not only is litigation time-consuming and expensive, it fosters sharp adversarial posi-tions which tend to impede, rather than pro-mote, resolution. It can be devastating to the prospective commercial relationship be-tween attorney and client. Publicity associ-ated with such lawsuits is almost uniformly negative; for the client it can decrease the number of qualified attorneys willing to provide legal services; for the attorney it can damage his or her reputation, reducing the number of clients wishing to engage his or her services. Professionally, there is the possibility of adverse disciplinary ramifica-tions. Finally, since fee disputes are intensely fact-specific, an adjudicated resolution is of little precedential value. (Except, perhaps, in the fairly atypical case in which, to set an example, an institutional client may wish to obtain a formal arbitral or judicial finding of fraud or scienter.)

Mediation, in contrast, is well-suited to resolving many attorney/client fee disputes. As a form of assisted negotia-tion, it is a process in which a neutral medi-ator can assist the parties - both together and separately in caucus - to reach a mutu-ally satisfactory agreement that ends the dispute. Its more important benefits are the following. First, mediation is private rather than public - opening the possibility for candid and direct communication between the par-ties, at least via the mediator. The mediator may not be able to restore trust between the parties, but if each party can trust and communicate freely with the mediator, a realis-tic evaluation of settlement options can nevertheless occur. Without violating confi-dences, the mediator can help the parties understand how far apart they are; and if and where a settlement can be struck. In this fashion, a reconciliation of acceptable out-comes can occur.

Second, mediation is fast, inexpensive and efficient. Normally a one-day (or less) mediation session will be sufficient to pro-duce either resolution, or bring the parties closer to agreement by clarifying the issues in dispute such that the parties can decide whether their interests are better served by settlement, or whether their positions are so fundamentally in conflict that they can only be resolved through public trial or arbitration. Upon serious reflection prompted by the mediator, it is unusual that a party will choose trial.

In terms of "timing," mediation can be effective at almost any point. In attorney/client fee cases, since the parties are known and often willing to come to the negotiating table, this means that mediation can be effectively utilized very early in the litigation - even before filing of a complaint. This can auger well for resolving the dispute since settlement options can be ro-bustly explored before patience with negoti-ated approaches has worn thin, before litigation expenses have assumed significant proportions, and before litigation posturing has taken its toll.

Further, the mediator can assist trial counsel in maintaining his or her own good client relations; demonstrating to the client that counsel's vigorous advocacy is not at the client's expense, and that counsel is seri-ously pursuing every possible option for a negotiated resolution. Similarly, no matter how much client control counsel believes he or she has in a given case, there are limits to how far counsel can go in being an advocate for a realistic settlement without jeopardizing the client's faith in him or her as their advocate and champion for trial. In these circumstances, the mediator can as-sume the burden of settlement advocate. When a client feels both strongly and unre-alistically about whether or how a case should be settled, the mediator, as devil's advocate, can help the client evaluate the weaknesses in a case and the risks and costs of litigation - even to the extent of telling a client bluntly that his expectations are unrealistic or that a trier of fact may find his factual contentions incredible. Clients can see firsthand the complexities which exist in the case and which will ne-cessitate substantial investment in discovery if the case is not resolved. This educational function is particularly important in attorney/client fee cases since they often can pose a great challenge to the legal professional to react with calm and dispassion in a situation in which he or she may understandably feel attacked and defensive. Thus, mediation can provide all sides with a highly effective forum in which to make a competent and balanced assessment of the case, without risk to their litigation strategy.

Finally, when possible, it is no doubt prudent for attorneys and their clients to consider and to agree in advance upon an appropriate dispute resolution forum to re-solve fee disputes if and when they arise, i.e. through mediation, arbitration, etc. This may even extend to the designation of a particular dispute resolution services provider to serve in the event of an actual dispute. Such agreements at the outset of the attorney/client relationship can no doubt help reduce uncertainty and misun-derstanding between attorney and client when an actual dispute arises. Moreover, by agreeing in advance upon a specific dis-pute resolution forum, the attorney and client can also help create the conditions for a more stable relationship; one better able to withstand the significant tensions in the relationship; tensions caused at least in part, by the different, powerful and often unspoken expectations that each brings to it.

Conclusion

Mediation is an appropriate process for resolving many attorney/client fee disputes. This stems from its privacy, efficiency and fairness. A skillful mediator can provide all sides with the opportunity to make a com-petent, balanced and rapid assessment of the case, without risk to their litigation strategy. Moreover, it is an opportunity for litigation counsel to demonstrate to his client that he or she is seriously pursuing every possible option for a negotiated resolution, while simultaneously prosecuting or defending the claim to its utmost. Advance agreements are prudent and should be con-sidered by attorney and client; both for their obvious utility should an actual fee dispute arise, and for the relationship--strengthening opportunity that clear, early communication on this thorny issue pro-vides.