Concepcion Gives No Easy Out to Lawyers in Client Disputes
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The U.S. Supreme Court’s 2011 blockbuster AT&T Mobility v. Concepcion has helped telecom companies, financial institutions, nursing homes and others force more cases into arbitration.
But it may not have the same benefit for lawyers facing suits by their clients, at least within the Ninth Circuit.
The appellate court ruled Thursday that the Federal Arbitration Act, as interpreted by Concepcion, does not preempt state unconscionability laws that require attorneys to fully and fairly disclose an arbitration provision in a retainer agreement.
Smith v. JEM Group is based on a Washington Professional Conduct Rule that requires “reasonable and fair disclosure of material elements” in an attorney fee agreement. California law also permits arbitration agreements in fee agreements, though the required level of disclosure depends on the specific facts of the case.
“The Washington procedural unconscionability rule applied in this case does not burden arbitration,” Judge William Fletcher wrote for the Ninth Circuit. “Washington law provides only that an arbitration clause in [a fee agreement] is material, and that an arbitration clause is unenforceable if the attorney fails to disclose it fully. This law does not ‘make[] the process slower, more costly, [or] more likely to generate [a] procedural morass,'” he wrote, quoting Concepcion.
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