Lawyers and Legal Fees
The relationship between a client and his or her lawyer is usually one that serves the client’s needs and is satisfying to both the lawyer and the client. At times, though, a disagreement may arise regarding the legal fees charged. When that occurs, the State Bar of Arizona provides a free method to help resolve those disputes.
The lawyer and the client generally agree to the cost of legal services. In most cases, lawyers must communicate the basis or rate of their fee to their clients in writing.
Clients should always receive this fee information in writing. If the fee agreement is contingent on the outcome of a matter or if fees are shared between lawyers, the client must sign the agreement. A written fee agreement is not required for regularly represented clients if the hourly rate will be the same as in other matters but a lawyer must communicate fee changes in writing. If the lawyer states in the agreement that a fee, a retainer, or other money collected from a client is "earned upon receipt," "nonrefundable," or uses similar language, the lawyer must also advise the client in writing that the client can always end their relationship at any time and all or part of the fee may still be refundable.
When a dispute arises over the amount of legal fees, the State Bar’s Lawyer Regulation Office typically does not investigate. Instead, the State Bar offers a free arbitration program to resolve fee disputes. The Fee Arbitration Program is voluntary, but both the client and the lawyer must agree to arbitrate.
Information about fee disputes
If you are disputing the amount of fees charged by your lawyer, the Fee Arbitration Program might be available to you. This is a free, voluntary program in which an arbitrator is assigned to determine the reasonable fees for the legal services performed. The amount in dispute must be $500 or more, and the dispute must be filed within three years of the date the client-lawyer relationship ended. Both the client and lawyer must agree to arbitrate by signing an agreement to arbitrate. Fee arbitration is only available if no litigation to resolve the fee dispute is pending.
For more information about this program, please call the Fee Arbitration Program at 602.340.7379. Download the forms here.
Resolving a fee dispute
The State Bar of Arizona’s Fee Arbitration Program operates the program under procedural rules approved by the State Bar Board of Governors.
The complete rules of procedure governing the Fee Arbitration Program along with the forms needed to file for arbitration are available at the website listed above. Ethical Rule 1.5, which sets forth lawyers’ obligations regarding fees, also is available there.
The signed documents should be mailed to:
State Bar of Arizona, Attn: Fee Arbitration
4201 N. 24th Street, Suite 100
Phoenix, AZ 85016-6266
1. Completing and mailing out the forms
Read the Rules of Arbitration of Fee Disputes. Sign and complete the following forms:
• Petition for Arbitration
• Agreement to Arbitrate
Sign both forms and return them to the State Bar at the address above. Do not fax or email forms. You must also attach a copy of the fee/retainer agreement or letter you signed with the lawyer or law firm.
If someone other than the client paid all or part of the lawyer’s fees, then that person also must sign these forms. Forms not completed or signed will be returned causing a delay in the processing of the file.
Forms and attachments must be submitted in single-sided, loose-leaf form. Do not use staples, tabs or binders.
2. Contacting the opposing party and taking jurisdiction
The State Bar will send copies of the forms to the opposing party, who will have an opportunity to respond. If the opposing party agrees to arbitrate; both parties will be bound by the award.
If the opposing party declines to arbitrate or does not respond, you will be notified and the file will be closed.
The petition will be reviewed to make sure that the dispute is within the Committee’s jurisdiction. If the dispute is not within the Committee’s jurisdiction, you will receive a letter explaining why the Committee declined jurisdiction.
3. Appointment of arbitrators
A Committee member will appoint an arbitrator (or a panel of arbitrators, if a panel is requested and the fees are more than $20,000). Both parties will be notified of the appointment. If either party objects to an appointed arbitrator, the objecting party must do so in writing by a deadline.
4. Setting time for hearing
Both parties will be notified in writing of the date, time and location of the hearing at least 15 days before the hearing date. This notice will be served personally or by first-class mail and sent to each party’s last known address and will constitute notice. As a result, it is important for each party to keep the State Bar informed of any address changes.
5. The arbitration hearing
At the arbitration hearing, both parties may present witnesses and documentary evidence, and you both may be represented by a lawyer. Witnesses may be cross-examined. Any party to the arbitration may make arrangements to have the hearing recorded by a court reporter or by electronic tape recording at the party’s own expense, provided notice is given to the opposing party and the arbitrator(s) at least three days before the scheduled hearing.
If either party fails to appear at the hearing without good cause, the arbitrator(s) may proceed with the hearing and resolve the dispute upon the evidence produced.
6. The arbitration award
A sole arbitrator should render the award within 20 days after the close of the hearing and a panel should issue an award within 40 days after the close of the hearing. These are only suggested time frames and are not mandatory. A signed copy of the award will be mailed to each party upon receipt and review by the State Bar office.
7. Award is final and binding
The arbitration award is final and binding on all parties who agree to arbitrate by signing the Agreement to Arbitrate. The parties will have 30 days to comply with the award unless the arbitrator indicates otherwise. The award may be enforced by any court of competent jurisdiction.