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Snow v. Bernstein

Supreme Court of Maine

December 21, 2017

SUSAN R. SNOW
v.
BERNSTEIN, SHUR, SAWYER & NELSON, P.A., et al.

          Argued: October 25, 2017

          Melissa A. Hewey, Esq. (orally), and Timothy E. Steigelman, Esq., Drummond Woodsum, Portland, for appellants Bernstein, Shur, Sawyer & Nelson, P.A., and J. Colby Wallace

          Thomas F. Hallett, Esq., and Benjamin N. Donahue, Esq. (orally), Portland, for appellee Susan R. Snow

          Panel: SAUFLEY, C.J., and ALEXANDER, MEAD, GORMAN, JABAR, HJELM, and HUMPHREY, JJ.

          JABAR, J.

         [¶1] Bernstein, Shur, Sawyer & Nelson, P.A., and J. Colby Wallace (collectively, Bernstein) appeal from a Superior Court (Cumberland County, Warren, J.) order denying its motion to compel arbitration in a legal malpractice claim filed against it. Bernstein contends that the court erred when it concluded that Bernstein failed to obtain informed consent from its client, Susan Snow, to submit malpractice claims to arbitration, and that federal law does not preempt a rule requiring attorneys to obtain such informed consent from their clients. We agree with the Superior Court and affirm the judgment.

         I. BACKGROUND

         [¶2] The following undisputed facts are set forth in Snow and Bernstein's opposing affidavits filed in conjunction with Bernstein's motion to compel arbitration and Snow's motion to stay arbitration.

         [¶3] In May 2012, Susan Snow retained Bernstein to represent her in a civil action. The firm presented for Snow's signature an engagement letter that, inter alia, set forth the scope of its representation. Located on the last page of that letter was a signature line, above which a bold-faced sentence provided: "I agree to the terms of this letter including the attached standard terms of engagement." Bernstein attached a document to the engagement letter titled "Standard Terms of Engagement for Legal Services." The provision at the heart of this dispute is found on the last page of that document and is titled "Arbitration." That provision provides, in pertinent part:

If you disagree with the amount of our fee, please take up the question with your principal attorney contact or with the firm's managing partner. Typically, such disagreements are resolved to the satisfaction of both sides with little inconvenience or formality. In the event of a fee dispute that is not readily resolved, you shall have the right to submit the fee dispute to arbitration under the Maine Code of Professional Responsibility. Any fee dispute that you do not submit to arbitration under the Maine Code of Professional Responsibility, and any other dispute that arises out of or relates to this agreement or the services provided by the law firm shall also, at the election of either party, be subject to binding arbitration. Either party may request such arbitration by sending a written demand for arbitration to the other. If a demand for arbitration is made, you and the firm shall attempt to agree on a single arbitrator. If no agreement can be reached within 30 days of the receipt of the demand, the party demanding arbitration may designate an arbitrator by sending a written notice to the other party. Within two weeks of that initial designation, the other party shall designate an arbitrator in writing. Thereafter, those two designated arbitrators shall meet promptly to select a third arbitrator. The arbitrators shall conduct the arbitration proceedings according to the procedures under the commercial arbitration rules of the American Arbitration Association and shall hold the arbitration hearing in Maine. . . . Either party shall have the right to appeal a decision of the arbitrators on the grounds that the arbitrators failed to properly apply the law.

(Emphasis added.)

         [¶4] Snow subsequently signed the last page of the engagement letter.[1]At no time-before or after signing the letter-did Bernstein explain to her that, by providing her signature, she was agreeing to submit any future malpractice claims against the firm to binding arbitration.

         [¶5] In August 2016, Snow filed a complaint and jury demand against Bernstein alleging that the firm committed legal malpractice in connection with its handling of her case. Shortly after, Snow filed a motion to stay threatened arbitration pursuant to 14 M.R.S. § 5928(2) (2016). In response, relying on the arbitration provision in the engagement letter, Bernstein filed a motion to compel arbitration.

         [¶6] The court denied Bernstein's motion and granted Snow's. Relying on the Maine Rules of Professional Conduct, comments to those Rules, and opinions of the Maine Professional Ethics Commission that interpreted the Rules, the court concluded that, to include an agreement to arbitrate future malpractice claims against the firm in an engagement letter, Bernstein was obligated to fully inform Snow of the scope and effect of that agreement. Because Bernstein had failed to obtain informed consent, the court concluded that the arbitration provision violated public policy and was therefore unenforceable. The court further concluded that, because an attorney's obligation to obtain the informed consent of his clients does not apply solely to arbitration agreements, requiring informed consent in this context was not preempted by the Federal Arbitration Act (FAA), 9 U.S.C.S. §§ 1-307 (LEXIS ...


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