Enforceability of Clauses Requiring Arbitration of Malpractice Claims: Plummer v. McSweeney

By David Hricik, Mercer Law School

In Plummer v. McSweeney, the plaintiff, Plummer, sued a law firm for legal malpractice. The firm moved to compel arbitration.  The district court denied that motion because, among other things, the clause required that the client pay a pro rata share of the arbitration fees and that rendered it substantively unconscionable since she could not afford it and that amount plainly exceeded the ordinary filing costs of a lawsuit. It also held that the firm’s post-dispute offer to pay her costs did not change that result. The firm appealed.

The Eighth Circuit reversed.  It held that under D.C. law the post-dispute offer to pay mooted the substantive unconscionability.  It also rejected procedural unconscionability because she could have chosen another firm and the agreement made clear its terms were negotiable.

Finally, it rejected, as not controlling, the requirements that an ABA ethics opinion had imposed on arbitration clauses.  In part it stated:

Plummer also points out that, since Haynes [a case applying D.C. law in this context] the American Bar Association released an ethics opinion on the effect of its Model Rule 1.4(b) (on which D.C. Rule 1.4(b) is based) on the use of arbitration provisions in retainer agreements. See ABA Comm. on Ethics & Prof’l Responsibility, Formal Op. 02-425 (2002). The ABA opined that “the lawyer should make clear that arbitration typically results in the client’s waiver of significant rights, such as the waiver of the right to a jury trial, the possible waiver of broad discovery, and the loss of the right to appeal.” It also notes other effects that an attorney “might explain” as well. Some courts have even expanded on this opinion, requiring attorneys to discuss with clients a wide assortment of the potential consequences that could attend agreeing to arbitrate disputes with an attorney. See, e.g., Hodges v. Reasonover, 103 So. 3d 1069, 1077 (La. 2012).

The case has some facts that make the result even harsher, but the incentive it creates — to allow a lawyer to impose an unconscionable agreement on a client but then obviate that later — plainly undermines the goal of full and fair disclosure to clients.  Lawyers should be careful, despite the case, to comply with ethical rules:  a lawyer may set herself up to compel arbitration and lose her license.

About David

Professor of Law, Mercer University School of Law. Formerly Of Counsel, Taylor English Duma, LLP and in 2012-13, judicial clerk to Chief Judge Rader.

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