Part 137. Fee Dispute Resolution Program

137.0 Scope of program
137.1 Application
137.2 General
137.3 Board of governors
137.4 Arbitral bodies
137.5 Venue
137.6 Arbitration procedure
137.7 Arbitration hearing
137.8 De novoreview
137.9 Filing fees
137.10 Confidentiality
137.11 Failure to participate in arbitration
137.12 Mediation

Section 137.0 Scope of program.

This Part establishes the New York State Fee Dispute Resolution Program, which provides for the informal and expeditious resolution of fee disputes between attorneys and clients through arbitration and mediation. In accordance with the procedures for arbitration, arbitrators shall determine the reasonableness of fees for professional services, including costs, taking into account all relevant facts and circumstances. Mediation of fee disputes, where available, is strongly encouraged.

Historical Note

Sec. filed: Jan. 12, 2001; March 26, 2001 eff. June 1, 2001; June 14, 2001 eff. Jan. 1, 2002.

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Section 137.1 Application.

(a) This Part shall apply where representation has commenced
on or after January 1, 2002, to all attorneys admitted to
the bar of the State of New York who undertake to represent
a client in any civil matter.

(b) This Part shall not apply to any of the following:

(1) representation in criminal matters;

(2) amounts in dispute involving a sum of less than $1,000
or more than $50,000, except that an arbitral body may hear
disputes involving other amounts if the parties have consented;

(3) claims involving substantial legal questions, including
professional malpractice or misconduct;

(4) claims against an attorney for damages or affirmative
relief other than adjustment of the fee;

(5) disputes where the fee to be paid by the client has
been determined pursuant to statute or rule and allowed as
of right by a court; or where the fee has been determined
pursuant to a court order;

(6) disputes where no attorney’s services have been rendered
for more than two years;

(7) disputes where the attorney is admitted to practice
in another jurisdiction and maintains no office in the State
of New York, or where no material portion of the services
was rendered in New York;

(8) disputes where the request for arbitration is made by
a person who is not the client of the attorney or the legal
representative of the client.

Historical Note

Sec. filed: Jan. 12, 2001; March 26, 2001 eff. June 1, 2001; June 14, 2001 eff. Jan. 1, 2002.

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Section 137.2 General.

(a) In the event of a fee dispute between attorney and
client, whether or not the attorney already has received
some or all of the fee in dispute, the client may seek to
resolve the dispute by arbitration under this Part. Arbitration
under this Part shall be mandatory for an attorney if requested
by a client, and the arbitration award shall be final and
binding unless de novo review is sought as provided in section
137.8.

(b) The client may consent in advance to submit fee disputes
to arbitration under this Part. Such consent shall be stated
in a retainer agreement or other writing that specifies
that the client has read the official written instructions
and procedures for Part 137, and that the client agrees
to resolve fee disputes under this Part.

(c) The attorney and client may consent in advance to arbitration
pursuant to this Part that is final and binding upon the parties
and not subject to de novo review. Such consent shall be in
writing in a form prescribed by the board of governors.

(d) The attorney and client may consent in advance to submit
fee disputes for final and binding arbitration to an arbitral
forum other than an arbitral body created by this Part. Such
consent shall be in writing in a form prescribed by the board
of governors. Arbitration in that arbitral forum shall be
governed by the rules and procedures of that forum and shall
not be subject to this Part.

Historical Note

Sec. filed: Jan. 12, 2001; March 26, 2001 eff. June 1, 2001; June 14, 2001 eff. Jan. 1, 2002.

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Section 137.3 Board of governors.

(a) There shall be a Board of Governors of the New York
State Fee Dispute Resolution Program.

(b) The board of governors shall consist of 18 members,
to be designated from the following: 12 members of the bar
of the State of New York and six members of the public who
are not lawyers. Members of the bar may include judges and
justices of the New York State Unified Court System.

(1) The members from the bar shall be appointed as follows:
four by the Chief Judge from the membership of statewide bar
associations and two each by the Presiding Justices of the
Appellate Divisions.

(2) The public members shall be appointed as follows: two
by the Chief Judge and one each by the Presiding Justices
of the Appellate Divisions.

Appointing officials shall give consideration to appointees
who have some background in alternative dispute resolution.

(c) The Chief Judge shall designate the chairperson.

(d) Board members shall serve for terms of three years and shall be eligible for reappointment. The initial terms of service shall be designated by the Chief Judge such that six members serve one-year terms, six members serve two-year terms, and six members serve three-year terms. A person appointed to fill a vacancy occurring other than expiration of a term of office shall be appointed for the unexpired term of the member he or she succeeds.

(e) Eleven members of the board of governors shall constitute
a quorum. Decisions shall be made by a majority of the quorum.

(f) Members of the board of governors shall serve without
compensation but shall be reimbursed for their reasonable,
actual and direct expenses incurred in furtherance of their
official duties.

(g) The board of governors, with the approval of the four
Presiding Justices of the Appellate Divisions, shall adopt
such guidelines and standards as may be necessary and appropriate
for the operation of programs under this Part, including,
but not limited to: accrediting arbitral bodies to provide
fee dispute resolution services under this Part; prescribing
standards regarding the training and qualifications of arbitrators;
monitoring the operation and performance of arbitration programs
to insure their conformance with the guidelines and standards
established by this Part and by the board of governors; and
submission by arbitral bodies of annual reports in writing
to the board of governors.

(h) The board of governors shall submit to the Administrative
Board of the Courts an annual report in such form as the Administrative
Board shall require.

Historical Note

Sec. filed: Jan. 12, 2001; March 26, 2001 eff. June 1, 2001; June 14, 2001 eff. Jan. 1, 2002.

Amended 137.3(d) on May 14, 2009

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Section 137.4 Arbitral bodies.

(a) A fee dispute resolution program recommended by the
board of governors, and approved by the Presiding Justice
of the Appellate Division in the judicial department where
the program is established, shall be established and administered
in each county or in a combination of counties. Each program
shall be established and administered by a local bar association
(the arbitral body) to the extent practicable. The New York
State Bar Association, the Unified Court System through the
District Administrative Judges, or such other entity as the
board of governors may recommend also may be designated as
an arbitral body in a fee dispute resolution program approved
pursuant to this Part.

(b) Each arbitral body shall:

(1) establish written instructions and procedures for administering
the program, subject to the approval of the board of governors
and consistent with this Part. The procedures shall include
a process for selecting and assigning arbitrators to hear
and determine the fee disputes covered by this Part. Arbitral
bodies are strongly encouraged to include nonlawyer members
of the public in any pool of arbitrators that will be used
for the designation of multi-member arbitrator panels;

(2) require that arbitrators file a written oath or affirmation
to faithfully and fairly arbitrate all disputes that come
before them;

(3) be responsible for the daily administration of the arbitration
program and maintain all necessary files, records, information
and documentation required for purposes of the operation of
the program, in accordance with directives and procedures
established by the board of governors;

(4) prepare an annual report for the board of governors
containing a statistical synopsis of fee dispute resolution
activity and such other data as the board shall prescribe;
and

(5) designate one or more persons to administer the program
and serve as a liaison to the public, the bar, the board of
governors and the grievance committees of the Appellate Division.

Historical Note

Sec. filed: Jan. 12, 2001; March 26, 2001 eff. June 1, 2001; June 14, 2001 eff. Jan. 1, 2002.

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Section 137.5 Venue.

A fee dispute shall be heard by the arbitral body handling
disputes in the county in which the majority of the legal
services were performed. For good cause shown, a dispute may
be transferred from one arbitral body to another. The board
of governors shall resolve any disputes between arbitral bodies
over venue.

Historical Note

Sec. filed: Jan. 12, 2001; March 26, 2001 eff. June 1, 2001; June 14, 2001 eff. Jan. 1, 2002.

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Section 137.6 Arbitration procedure.

(a)(1) Except as set forth in paragraph (2),
where the attorney and client cannot agree as to the attorney’s
fee, the attorney shall forward a written notice to the client,
entitled Notice of Client’s Right to Arbitrate,by certified
mail or by personal service. The notice (i) shall be in a
form approved by the board of governors; (ii) shall contain
a statement of the client’s right to arbitrate; (iii) shall
advise that the client has 30 days from receipt of the notice
in which to elect to resolve the dispute under this Part;
(iv) shall be accompanied by the written instructions and
procedures for the arbitral body having jurisdiction over
the fee dispute, which explain how to commence a fee arbitration
proceeding; and (v) shall be accompanied by a copy of the “request
for arbitration” form necessary to commence the arbitration
proceeding.

(2) Where the client has consented in advance to submit
fee disputes to arbitration as set forth in subdivisions
(b) and (c) of section 137.2 of this Part, and
where the attorney and client cannot agree as to the attorney’s
fee, the attorney shall forward to the client, by certified
mail or by personal service, a copy of the request for arbitration
form necessary to commence the arbitration proceeding along
with such notice and instructions as shall be required by
the rules and guidelines of the board of governors, and the
provisions of subdivision (b) of this section shall not apply.

(b) If the attorney forwards to the client by certified
mail or personal service a notice of the client’s right
to arbitrate, and the client does not file a request for
arbitration within 30 days after the notice was received
or served, the attorney may commence an action in a court
of competent jurisdiction to recover the fee and the client
no longer shall have the right to request arbitration pursuant
to this Part with respect to the fee dispute at issue. An
attorney who institutes an action to recover a fee must
allege in the complaint.

(i) that the client received notice under this Part of the client’s right to pursue arbitration and did not file a timely request for arbitration or

(ii) that the dispute is not otherwise covered by this
Part.

(c) In the event the client determines to pursue arbitration
on the client’s own initiative, the client may directly contact
the arbitral body having jurisdiction over the fee dispute.
Alternatively, the client may contact the attorney, who shall
be under an obligation to refer the client to the arbitral
body having jurisdiction over the dispute. The arbitral body
then shall forward to the client the appropriate papers set
forth in subdivision (a) necessary for commencement of the
arbitration.

(d) If the client elects to submit the dispute to arbitration,
the client shall file the “request for arbitration form”
with the appropriate arbitral body, and the arbitral body
shall mail a copy of the “request for arbitration” to the
named attorney together with an “attorney fee response”
to be completed by the attorney and returned to the arbitral
body within 15 days of mailing. The attorney shall include
with the “attorney fee response” a certification that a
copy of the response was served upon the client.

(e) Upon receipt of the attorney’s response, the arbitral
body shall designate the arbitrator or arbitrators who will
hear the dispute and shall expeditiously schedule a hearing.
The parties must receive at least 15 days notice in writing
of the time and place of the hearing and of the identify of
the arbitrator or arbitrators.

(f) Either party may request the removal of an arbitrator
based upon the arbitrator’s personal or professional relationship
to a party or counsel. A request for removal must be made
to the arbitral body no later than five days prior to the
scheduled date of the hearing. The arbitral body shall have
the final decision concerning the removal of an arbitrator.

(g) The client may not withdraw from the process after the
arbitral body has received the attorney fee response. If the
client seeks to withdraw at any time thereafter, the arbitration
will proceed as scheduled whether or not the client appears,
and a decision will be made on the basis of the evidence presented.

(h) If the attorney without good cause fails to respond
to a request for arbitration or otherwise does not participate
in the arbitration, the arbitration will proceed as scheduled
and a decision will be made on the basis of the evidence presented.

(i) Any party may participate in the arbitration hearing
without a personal appearance by submitting to the arbitrator
testimony and exhibits by written declaration under penalty
of perjury.

Historical Note

Sec. filed: Jan. 12, 2001; March 26, 2001 eff. June 1, 2001; June 14, 2001 eff. Jan. 1, 2002.

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Section 137.7 Arbitration hearing.

(a) Arbitrators shall have the power to:

(1) take and hear evidence pertaining to the proceeding;

(2) administer oaths and affirmations; and

(3) compel, by subpoena, the attendance of witnesses and
the production of books, papers and documents pertaining to
the proceeding.

(b) The rules of evidence need not be observed at the hearing.

(c) Either party, at his or her own expense, may be represented
by counsel.

(d) The burden shall be on the attorney to prove the reasonableness
of the fee by a preponderance of the evidence and to present
documentation of the work performed and the billing history.
The client may then present his or her account of the services
rendered and time expended. Witnesses may be called by the
parties. The client shall have the right of final reply.

(e) Any party may provide for a stenographic or other record
at the party’s expense. Any other party to the arbitration
shall be entitled to a copy of said record upon written request
and payment of the expense thereof.

(f) The arbitration award shall be issued no later than
30 days after the date of the hearing. Arbitration awards
shall be in writing and shall specify the bases for the determination.
Except as set forth in section 137.8, all arbitration awards
shall be final and binding.

(g) Should the arbitrator or arbitral body become aware
of evidence of professional misconduct as a result of the
fee dispute resolution process, that arbitrator or body shall
refer such evidence to the appropriate grievance committee
of the Appellate Division for appropriate action.

(h) In any arbitration conducted under this Part, an arbitrator
shall have the same immunity that attaches in judicial proceedings.

Historical Note

Sec. filed: Jan. 12, 2001; March 26, 2001 eff. June 1, 2001; June 14, 2001 eff. Jan. 1, 2002.

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Section 137.8 De novo review.

(a) A party aggrieved by the arbitration award may commence
an action on the merits of the fee dispute in a court of competent
jurisdiction within 30 days after the arbitration award has
been mailed. If no action is commenced within 30 days of the
mailing of the arbitration award, the award shall become final
and binding.

(b) Any party who fails to participate in the hearing shall
not be entitled to seek de novo review absent good cause for
such failure to participate.

(c) Arbitrators shall not be called as witnesses nor shall
the arbitration award be admitted in evidence at the trial
de novo.

Historical Note

Sec. filed: Jan. 12, 2001; March 26, 2001 eff. June 1, 2001; June 14, 2001 eff. Jan. 1, 2002.

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Section 137.9 Filing fees.

Upon application to the board of governors, and approval
by the Presiding Justice of the Appellate Division in the
judicial department where the arbitral program is established,
an arbitral body may require payment by the parties of a filing
fee. The filing fee shall be reasonably related to the cost
of providing the service and shall not be in such an amount
as to discourage use of the program.

Historical Note

Sec. filed: Jan. 12, 2001; March 26, 2001 eff. June 1, 2001; June 14, 2001 eff. Jan. 1, 2002.

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Section 137.10 Confidentiality.

All proceedings and hearings commenced and conducted in
accordance with this Part, including all papers in the arbitration
case file, shall be confidential, except to the extent necessary
to take ancillary legal action with respect to a fee matter.

Historical Note

Sec. filed: Jan. 12, 2001; March 26, 2001 eff. June 1, 2001; June 14, 2001 eff. Jan. 1, 2002.

Section 137.11 Failure to participate in arbitration.

All attorneys are required to participate in the arbitration
program established by this Part upon the filing of a request
for arbitration by a client in conformance with these rules.
An attorney who without good cause fails to participate in
the arbitration process shall be referred to the appropriate
grievance committee of the Appellate Division for appropriate
action.

Historical Note

Sec. filed: Jan. 12, 2001; March 26, 2001 eff. June 1, 2001; June 14, 2001 eff. Jan. 1, 2002.

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Section 137.12 Mediation.

(a) Arbitral bodies are strongly encouraged to offer mediation
services as part of a mediation program approved by the board
of governors. The mediation program shall permit arbitration
pursuant to this Part in the event the mediation does not
resolve the fee dispute.

(b) All mediation proceedings and all settlement discussions
and offers of settlement are confidential and may not be disclosed
in any subsequent arbitration.

Historical Note

Sec. filed: Jan. 12, 2001; March 26, 2001 eff. June 1, 2001; June 14, 2001 eff. Jan. 1, 2002.