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Law Firm Growth Mandatory Fee Arbitration: The Overlooked Solution to Legal Fee Disputes
The California Legislature enacted the Mandatory Fee Arbitration Act (“MFAA”), California Business Professions Code sections 6200-6206, to be an efficient means for resolution of disputes between lawyers and clients over legal fees. Arbitrations under the MFAA proceed under a different set of rules than traditional, contractual arbitration. Typically administered by local bar associations, MFAA arbitrations are simple, informal, and limited in scope. Because the Legislature recognized the imbalance in bargaining power that attorneys hold in resolving fee disputes with clients, arbitration under the MFAA endeavors to put clients on equal footing with their former attorneys. Traditional rules of evidence do not apply, and either party may opt out of the resulting award by seeking a trial de novo. For these and other reasons, MFAA arbitration “favors the client.” Because an MFAA award initially is non-binding, many attorneys do not give MFAA arbitration the respect it deserves. But the MFAA can provide substantial benefits to lawyers who take the process seriously, including faster collection of unpaid fees, and the avoidance of pesky malpractice claims.
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