Highlights of the Fee Arbitration Board

Issue November 2004 By Paul Peter Nicolai

The MBA's Legal Fee Arbitration Board (FAB) resolves legal fee disputes between attorneys and between attorneys and their clients. 2004 marks the 30th year of FAB's operation. FAB is believed to be one of the oldest continuing fee arbitration forums in the United States.

FAB is an alternative to using small claims, district or superior courts. The arbitration hearing has only one purpose: to decide what is the fair and reasonable value of the attorney's legal services. Arbitrators do not make rulings on the behavior or ethics of the attorney or other issues, including malpractice issues.

FAB also serves as a resource for both attorneys and clients by providing a staff person to answer questions on legal fees, publishing model fee agreements and presenting programs that promote healthy communications between attorneys and clients.

From 1997 through 2004, FAB decided 281 cases. In those decisions, a total of $5,596,807 in legal fees were upheld as fair and reasonable. The average case found the fair and reasonable legal fee to be $19,917.

FAB hears two types of cases. The principal caseload is attorney/client cases where either the attorney or the client files over a fee dispute. Here, 255 of the 281 decided cases were in this class. In those 255 cases, FAB upheld a total of $5,325,385 as being fair and reasonable legal fees for an average of $20,833 per case.

The other class is attorney/attorney cases. These arise from fee splitting arrangements or where successor counsel becomes involved in a contingent fee matter. Here, 26 of the 275 decided cases were in this class. In those 26 cases, FAB upheld a total of $218,080 as being fair and reasonable legal fees for an average of $8,388 per case.

Awards in favor of claimants were made in approximately 21 percent of the attorney/client cases. Even where there was an award in favor of the client, FAB upheld a total of $760,033 as being fair and reasonable attorney fees for an average of $13,104 per case.

A FAB case begins with either party filing a petition for arbitration. The process is entirely voluntary on the part of all parties. FAB does compel anyone, attorney or client, to submit to its jurisdiction.

For attorney/client cases, filing fees range from $50 to $225 depending on the size of the fee involved. Attorney/attorney case filing fees are $125 for each MBA member party and $250 for each non-member party.

Cases involving $10,000 or less are heard by a single arbitrator. Cases involving over $10,000 are heard by a panel of three arbitrators; two attorneys and one non-attorney. All panelists are uncompensated volunteers. As a result of their efforts, the filing fees represent the only charges involved in this process.

Paul Peter Nicolai is past chair of the Fee Arbitration Board, a member of the House of Delegates and also serves on the Law Practice Management Section.