Texas: Arbitration Clause Between Attorney and Client Upheld
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This post is authored by Lonnie Schooler with Jackson Walker. Lonnie is on the State Bar of Texas’ ADR Section Council. Thanks to Lonnie for brining this decision to us and for providing this outstanding analysis of Royston, Rayzor, Vickery & Williams LLP v. Lopez.
Introduction. The Texas Supreme Court on June 26, 2015, through Justice Johnson issued its unanimous decision in Royston, Rayzor, Vickery & Williams L.L.P. v. Lopez (which included a concurring opinion by Justice Guzman, joined by Justices Lehrman and Devine), upholding an arbitration clause contained within an engagement letter that the Royston, Rayzor law firm had entered into with the client.
Background Facts. The arbitration clause in question required submitting to arbitration any dispute arising out of the agreement except for claims made by the law firm for recovery of fees or expenses. The law firm took on the representation of the client in a divorce proceeding, subject to the terms of this agreement. The underlying matters were resolved at mediation. The client thereafter sued the law firm, claiming it had induced him to accept an inadequate settlement. In response to this lawsuit, the law firm moved to compel arbitration.
Challenges to the Arbitration Clause. As identified by the Court, the client challenged the enforceability of the arbitration clause on several fronts:
- the provision was so one-sided as to be unconscionable;
- the provision violated public policy because of the kind of agreement it was (an introductory agreement to become the client of an attorney);
- the burden of proof should have been borne by the law firm, because of the client’s status as a prospective client, to demonstrate that the firm had met its ethical obligation to explain the effects of the arbitration clause to the prospective client; and
- the arbitration clause was illusory because it did not universally require the law firm to arbitrate all of its potential claims congruently with the client’s obligation to arbitrate all of his.
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