Arbitration/Standard Of Review/MFAA: Arbitrator’s Error In Stating Amount Of Fees Paid By Client Not A Reason To Overturn Arbitrator’s Award In Attorney-Client Fee Dispute

But Court’s Decision On Fee Award Is Vacated, Because There Was No Reasonable Basis For Assigning Different Hourly Rates To Two Attorneys.

     Baxter v. Bock, A142372, A142984, A143689 (1/1 May 18, 2016) (Margulies, Humes, Dondero) (unpublished) rather starkly illustrates the application of different standards of review to the arbitration award in an attorney’s fees dispute, and to the trial judge’s award of attorney’s fees to the client who successfully defended against the attorney’s efforts to collect more.

     Although the parties acknowledged that the arbitrator erred in stating the amount of fees paid by the clients when calculating the amount in dispute in fees between attorney and client, that was no basis for the trial court, which confirmed the award, to vacate the award.  As we know, mistakes of law or fact are ordinarily not a basis for overturning an arbitrator’s award.

     However, when the clients then moved the trial court successfully for an award of attorney’s fees expended defending against the attorney’s claims, a different standard of review applied – an abuse of discretion standard when reviewing a trial court order awarding attorney fees.  Here, the Court of Appeal found no reasonable basis in the record for applying different rates to two of the client’s attorneys.  therefore, the matter was remanded to the trial court solely for reconsidering the lodestar compensation rate for one of the attorneys.

     Another issue involved in this case is whether the arbitrator should have made an additional disclosure relating to bias, because part of his business involved auditing attorney client bills.  The Court of Appeal concluded that the general disclosure requirements of the MFAA and the California Arbitration “are, for practical purposes, the same, and decisions under the ‘impartiality’ disclosure requirements of the CAA may be applied in evaluating arbitrator disclosure obligations under the MFAA.”  However, the arbitrator’s practice was not devoted exclusively to one side of fee disputes; his law firm’s expertise was “in reviewing attorney bills, rather than in representing one side or the other in fee disputes.”  So the disclosures were adequate.