February 24, 2015
(http://www.texaslawyer.com/id=1202718841564/Is-a-FirmClient-Arbitration-Clause-Unconscionable?slreturn=20150202095738)
By John Council, Texas Lawyer
The Texas Supreme Court generally likes to enforce arbitration contracts set up between businesses to keep their disputes out of court. But is it fair if the agreement is drawn up by a law firm to make sure its client’s malpractice claim never sees a jury? That’s a question the high court recently decided to tackle.
The case that the high court recently granted review is Royston, Rayzor, Vickery & Williams v. Lopez, a 2-1 decision issued by Corpus Christi’s Thirteenth Court of Appeals in 2013.
In that dispute, Frank Lopez retained Royston to represent him in a claim against his common law wife after she won $11 million playing the lottery. Lopez signed an employment contract with the firm that gave Royston a 20 percent contingency fee and contained an arbitration provision to settle any disputes he had with the firm—but it did not apply to any claims the Royston firm had to recover its fees.
Lopez later sued Royston for malpractice, among other things, and asserted that Royston “provided alcoholic beverages” to him at mediation and encouraged him to take a “meager” settlement, and failed to zealously present his damage claims, according to the Thirteenth Court’s majority decision.
Royston moved to compel arbitration in the case, which the trial court denied. On appeal, the Thirteenth Court found that the arbitration provision was “unconscionable.”
“Given the relationship between attorney and client, the relative expertise of lawyers in understanding the differences between arbitration and litigation and the relative costs thereof as compared to their clients, we find, under the specific facts of this case, that the arbitration agreement, by specifically excepting claims protecting Royston’s fees and costs, is unconscionable,” wrote Justice Gina Benavides. “The terms of the arbitration provision are very unusual and, on their face, distinctly favor Royston over its relatively unsophisticated client, Lopez.”
Justice Gregory T. Perkes dissented to the decision, writing that Lopez had not met his affirmative burden of proof showing that the arbitration agreement was unconscionable.
Ross Sears, a partner in Houston’s Williamson, Sears & Rusnak who represents Lopez, is not happy the high court granted review to the case on Feb. 20 because his client has prevailed so far in the lower courts. But he said he is not surprised, either, given the interest the Texas Supreme Court has shown previously in upholding arbitration contracts signed between parties.
“There should be an exception when it comes to the attorney/client relationship,” said Sears of arbitration contracts.
“A lawyer puts his interests ahead of his client when he puts an arbitration provision in his employment agreement,” Sears said. “Arbitration certainly does not favor the client because every arbitrator I know is a retired lawyer or a retired judge, and that is not a jury of my client’s peers—that’s for sure.”
Brandy Wingate Voss of the Smith Law Group, who represents Royston, declined to comment.
