53 So. 3d 1132
Fla. Dist. Ct. App.2011Background
- Feldman retained the Davis Griffey Law Firm to pursue a FINRA claim against Merrill Lynch for investment losses, under a contingency fee agreement of 30% of any settlement or recovery before deducting $600.
- The contingency fee agreement includes a narrowly drafted arbitration clause (Paragraph 8) limited to determining a probable fee, to be decided by an AAA panel, only if the client terminates after the firm has provided substantial legal services.
- The law firm withdrew from representation on May 7, 2009; Feldman alleged voluntary withdrawal after a grievance threatened by Feldman, while the firm claimed withdrawal due to a conflict of interest caused by Feldman’s Bar grievance.
- After withdrawal, the firm demanded a $180,000 contingency fee; Feldman refused, and the firm filed a charging lien and later sought to compel arbitration to resolve the fee dispute; FINRA arbitration proceeded and settled September 9, 2009 with new counsel for Feldman.
- The circuit court granted the firm’s motion to stay and compel arbitration, interpreting the agreement as permitting arbitration of the fee dispute, and found the issues within arbitration’s scope; Feldman appealed.
- The court held the arbitration provision is highly limited and that threshold questions—whether the withdrawal was voluntary, whether substantial services were provided, and whether the clause complies with applicable Florida Bar rules—must be determined by the trial court before sending any fee dispute to arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope of arbitration provision | Feldman argues the clause covers only a probable fee upon client termination after substantial services. | Davis firm contends the clause encompasses all fee disputes and mandates arbitration. | Arbitration scope is limited to probable fee; threshold determinations required. |
| Withdrawal timing and entitlement to fees | If withdrawal was voluntary, firm is not entitled to fees. | Withdrawal may have been necessitated by client conduct, preserving potential entitlement to a fee. | Trial court must determine whether withdrawal was voluntary or caused by client conduct before arbitration. |
| Compliance with Rule 4-1.5(i) notice | Mandatory arbitration provision may be unenforceable if proper written notice of independent advice was not given. | Provision compliant with rule; otherwise enforceable. | Rule 4-1.5(i) may render the provision unenforceable; remand to assess notice and enforceability. |
| Arbitration vs. trial court determination | Because scope and enforceability are unresolved, trial court should determine threshold issues before arbitration. | Arbitration should proceed under the contract’s terms. | Reverse and remand to reinstate suit and decide threshold issues first. |
Key Cases Cited
- Citigroup, Inc. v. Boles, 914 So.2d 23 (Fla. 4th DCA 2005) (arbitration scope governed by contract language)
- O’Keefe Architects, Inc. v. CED Constr. Partners, Ltd., 944 So.2d 181 (Fla. 4th DCA 2006) (contract interpretation governs arbitrability)
- Rentoumis v. Florida Dept. of Environmental, 950 So.2d 466 (Fla. 4th DCA 2007) (three elements for arbitration: valid agreement, arbitrable issue, waiver)
- Seifert v. U.S. Home Corp., 750 So.2d 633 (Fla.1999) (scope of arbitration determined by contract and de novo review)
- Faro v. Romani, 641 So.2d 69 (Fla.1994) (withdrawal by attorney forfeits contingent fee before contingency occurs)
- The Florida Bar v. Hollander, 607 So.2d 412 (Fla.1992) (contingency agreements must be enforceable and ethical)
- Chandris, S.A. v. Yanakakis, 668 So.2d 180 (Fla.1995) (bar rules govern enforceability of contingent fee provisions)
- Lackey v. Bridgestone/Firestone, Inc., 855 So.2d 1186 (Fla. 3d DCA 2003) (noncomplying clauses may be severed; contract may still be enforceable)
- Rosenberg v. Levin, 409 So.2d 1016 (Fla.1982) (probable fee limited to reasonable value of services prior to discharge)
- Royal Prof'l Builders, Inc. v. Roggin, 853 So.2d 520 (Fla. 4th DCA 2003) (trial court decides non-arbitrable questions when clause lacks panel authority)