The New Jersey Supreme Court recently ruled that a lawyer may provide for mandatory arbitration even of malpractice claims – in its retainer agreement. But it must explain to its client the advantages and disadvantages of the choice. The court referred the issue to is Advisory Committee on Professional Ethics – on which I serve, as I do on the amicus committee of the State Bar, and the Editorial Board of the New Jersey Law Journal half of whose members recused because they are involved one way or another in the issue which is a truly hot button issue in the New Jersey Bar.
The Law Journal Editorial Board calls for independent representation of clients in such matters. The ACPE has solicited comments from the Bar. It may be a bumpy ride. Published Opinions of the ACPE are binding – but subject to discretionary review by the Court itself.
“We believe that requiring a prospective client, not independently represented, to give up the right to choose the forum of dispute resolution at the outset of a relationship is detrimental to the client’s interest and should be banned. If, and when, a dispute arises between lawyer and client, the respective parties may agree that it is in their individual interest that the dispute be arbitrated rather than fought in court. Presumably, at that time, the client will have secured new counsel who can, independently, advise the client of the wisdom of resolving the dispute in one forum or another.
We cannot conceive of a lawyer independently consulted by a client about the wisdom of signing a mandatory arbitration clause advising that client to forfeit the choice of forum for dispute resolution at the outset of a representation. Some courts require a client to get independent advice before agreeing to mandatory arbitration in a retainer agreement. Others ban it outright. The ABA allows such a provision provided “the advantages and disadvantages are discussed.”