Frequently Asked Questions: Fee Disputes

The State Bar’s Mandatory Fee Arbitration Program is an informal, confidential, and low-cost forum for resolving fee disputes between attorneys and their clients. Clients have the right to have a neutral party—an arbitrator—hear fee disputes with their attorneys. The arbitrator determines whether the fees and costs charged by the attorney are reasonable for the services provided.

This kind of arbitration is mandatory for an attorney if requested by a client.

If an attorney claims you owe an outstanding balance of fees or costs, they must provide to you a “Notice of Client’s Right to Fee Arbitration” form approved by the State Bar before or at the time of filing a lawsuit or other proceeding to collect the amount. After receiving the notice, you have 30 days to request mandatory fee arbitration through the appropriate local bar association program. If the local bar association does not provide mandatory fee arbitration, you may request it from the State Bar. If you fail to request mandatory fee arbitration within 30 days of receipt of the notice, you will have waived your right to arbitration, and the attorney may take legal action to collect the fees or costs.

After you submit a request for arbitration form and filing fee to the appropriate program, the attorney may then respond to your request. A neutral arbitrator, or a panel of three arbitrators, depending on the amount in dispute, will be assigned to listen to both you and the attorney, and decide the appropriate fees. The arbitrator may decide that you paid the attorney more than is appropriate, and you may be awarded a refund of attorney’s fees or costs already paid.

Alternatively, the arbitrator may decide that you must pay the attorney any unpaid fees, or that neither of you owe anything further. In no event will an arbitrator order you to pay more than what you agreed to in your fee agreement.

Depending on the circumstances, the arbitrator will consider several factors in reaching a decision. These may include:

• Whether there was a written fee agreement;
• The value of the attorney’s services;
• Whether the attorney spent an appropriate amount of time on your case;
• Whether there are any billing errors; and
• Whether any professional negligence or misconduct by the attorney affected the value of the services.

The arbitrator will decide the matter based on written submissions and the evidence presented at the hearing. The award will be either binding or nonbinding, depending on what the two parties choose.

In nonbinding arbitration, once the decision is served, either party has 30 days to file a court action to reject the award and ask for a trial. The party who files this action becomes the plaintiff in a lawsuit. This may require additional costs, and you may wish to have a new attorney represent you.

The decision to choose nonbinding or binding arbitration is up to the parties.

Fee arbitrations are nonbinding unless the parties agree in writing, after the dispute arises, to binding arbitration before the arbitrator takes any evidence. If only one of the parties agrees to binding arbitration, or if a party fails to respond, the matter will proceed as nonbinding arbitration.

If neither party files an action in court to reject the award and request a trial within 30 days of the date the award is served, the nonbinding award will automatically become binding on the parties. If the arbitration is binding, the award is final when issued, and neither you nor the attorney can request a new trial in court. A binding award can only be corrected or vacated by a court for very limited reasons.

Arbitration hearings are informal, but you should obtain a copy of the rules of procedure from the program handling your fee dispute to educate yourself with the process.

The program will assign your dispute to a volunteer attorney arbitrator who must be licensed in good standing with the State Bar. Depending on the amount of your fee dispute, the panel will consist of one attorney arbitrator, or a three-member panel consisting of two attorney arbitrators and one nonattorney arbitrator.

You may be represented by an attorney, but it is not required. You may also arrange for an interpreter to attend the hearing with you. If you would like moral support, ask the arbitrator if a family member or friend can accompany you to the hearing.

Both you and the attorney will have a chance to make statements, ask each other questions, and present evidence—such as letters, billing statements, or the fee agreement. You may also present witnesses, for example, someone who heard you and your attorney agree to the fee. If you have problems obtaining documents needed for the hearing from the opposing attorney, you may ask the arbitration panel to intervene.

Fee arbitration hearings are confidential and are closed to the public. Most local bar programs don’t allow arbitration hearings to be recorded or transcribed due to confidentiality rules.

Also, keep in mind that fee arbitration aims to determine if the fees charged were appropriate for the attorney’s work on your case. Arbitrators may consider the attorney’s performance in your case to reach their decision, but they cannot award any additional money for what may be attorney malpractice or professional misconduct.

If you choose to arbitrate, the attorney must participate in most cases. Exceptions include these situations:

• Fees set by law or the courts, such as the ordinary charges for probating a will, or attorney’s fees that a judge orders one spouse to pay the other in a divorce.
• Fees charged by an attorney who is not a licensee of the State Bar of California, who does not have offices in California, and who did the majority of the work for you out of state.
• Fee disputes in which you or the attorney filed a suit, and the attorney notified you of your right to arbitrate, using the required State Bar form, but you filed a suit or answered a suit in court before requesting arbitration.
• Fee disputes in which you are not the attorney’s client, unless you paid fees to the attorney for a client.

To initiate fee arbitration, you must complete a fee arbitration request form from the appropriate bar association and submit the filing fee set by that program. Find local fee arbitration programs. Attach copies of any documents requested on the form. You should include information that specifically relates to the attorney’s fees and costs, and explain why you believe the attorney’s fees are excessive or that no additional fees are owed. You will have an opportunity to present additional information at the arbitration hearing.

If you are seeking a refund of attorney’s fees that you have already paid, you may request Mandatory Fee Arbitration any time as long as you are still within the legal time limit for filing a lawsuit about the fee dispute. To preserve your right to arbitrate, you should file a request for arbitration promptly.

No. By law, mandatory fee arbitration cannot help you recover damages or offset expenses incurred for the attorney’s misconduct or malpractice. If the arbitrator determines that the attorney’s malpractice or professional misconduct reduced the value of legal services provided, the arbitrator can reduce the attorney’s fees.

If you think you have a separate claim for legal malpractice, you should seek legal counsel. However, if you file a lawsuit for malpractice or seek court resolution of the fee dispute after receipt of the Notice of Client’s Right to Fee Arbitration, you waive your right to pursue mandatory fee arbitration.

The Mandatory Fee Arbitration Program does not have the authority to discipline attorneys for professional misconduct.

If you wish to file a disciplinary complaint with the State Bar of California about your attorney’s conduct, you may do so online. Please keep in mind that a discipline complaint and a request to arbitrate a fee dispute are separate matters. Filing a complaint may result in disciplinary action against the attorney; however, the result may or may not require the attorney to refund fees.

To help you decide whether to file a complaint, visit the Want to File a Complaint webpage.

If you received a Notice of Client’s Right to Fee Arbitration form from the attorney, you have 30 days from the date you received it to submit your arbitration request form to the program.

If you do not file the arbitration request form within 30 days of receiving this notice, you will lose your right to arbitrate your fee dispute. A telephone call or letter to the program requesting arbitration will not protect that right. You must be sure that the request form is complete and submitted with any required filing fee.

If the attorney has already filed a lawsuit against you for unpaid fees, you may choose to either respond to the lawsuit or request fee arbitration. If you file a response to the lawsuit, you will lose your right to arbitrate the fee dispute. If you request arbitration, the lawsuit will be stayed, but you should file the appropriate notice of automatic stay with the court. To preserve your right to arbitrate, you should file a request for arbitration promptly.

The program is generally designed so that a client may require their attorney to participate in fee arbitration. However, an attorney may require the client to participate if the client and attorney have a signed agreement to submit fee disputes to a mandatory fee arbitration program. In general, binding arbitration agreements are not enforceable if they were entered into before the dispute arose.

Unless the parties have reached a settlement agreement, a decision will not be made at the hearing. After the hearing, you will receive the arbitrator’s “Findings and Award,” as well as a written “Notice of Your Rights After Arbitration,” which explains your options after the award is issued. The Findings and Award may provide you with a refund of fees or costs, an amount of outstanding fees you owe to the attorney, or a determination that no money is owed to either party. The arbitrator may also allocate the program filing fee, regardless of which party initially paid it.

Our program does not offer mediation by itself. To receive mediation services through the State Bar, your fee dispute must be eligible for fee arbitration through the State Bar, and the dispute will proceed to mediation first if all parties agree in writing to mediate.