Authored By: David Mollicone and Jennifer Cupples
Effective September 1, 2022, the Michigan Rules of Professional Conduct expanded with the addition of MRPC 1.19. The new rule, entitled “Lawyer-Client Representation Agreements: Arbitration Provisions,” requires that a client either be independently represented in entering into an agreement for legal services which contains an arbitration provision, or give written informed consent to the arbitration provision. More particularly, the new rule states:
A lawyer shall not enter into an agreement for legal services with a client requiring that any dispute between the lawyer and the client be subject to arbitration unless the client provides informed consent in writing to the arbitration provision, which is based on being
(a) reasonably informed in writing regarding the scope and the advantages and disadvantages of the arbitration provision, or
(b) independently represented in making the agreement.
To aid practitioners, the Official Comment to MRPC 1.19 identifies the following eight subjects, which are “presumed to be sufficient to enable a client to give informed consent”:
(1) By agreeing to arbitration, the client is (a) waiving the right to a jury trial, (b) potentially waiving the right to take discovery to the same extent as is available in a case litigated in a court, (c) waiving or limiting the right to appeal the result of the arbitration proceeding to specific circumstances established by law, and (d) agreeing to be financially responsible for at least a share of the arbitrator’s compensation and the administrative fees associated with the arbitration;
(2) whether the agreement to arbitrate includes arbitration of legal malpractice claims against the lawyer;
(3) identification of the organization or person(s) that will administer the arbitration;
(4) if the client declines to agree to arbitration at the onset of the attorney-client relationship, there is no prohibition against the lawyer and the client agreeing to arbitrate the matter at a later date;
(5) arbitration may be conducted as a private proceeding, unlike litigation in a court;
(6) the parties can select an arbitrator who is experienced in the subject matter of the dispute;
(7) depending on the circumstances, arbitration can be more efficient, expeditious and inexpensive than litigation in a court; and
(8) the client’s ability to report unethical conduct by the lawyer is not restricted.