The grounds on which a binding arbitration award may be challenged in court are very limited, and a recent attack on an award against a former law-firm client was unsuccessful.
In Vigilant v. Lamprey (First Appellate District Division One), a client which had lost at arbitration against its former attorneys attacked the award against it on the ground that the law firm had never filed a petition to compel arbitration. In an unpublished decision dated December 6, 2010, the Court of Appeal had no difficulty concluding that under the facts of the case no petition to compel arbitration had been necessary and that the $1.3 million award in favor of the firm should be confirmed.
The client, a hedge fund, had been represented by a series of law firms in a FINRA arbitration. After the FINRA arbitration was resolved pursuant to a settlement, the client filed a legal malpractice complaint against four of the law firms that had represented it in the FINRA arbitration. One of the firms filed a petition to compel binding AAA arbitration, and another firm, Goodin, McBride, et al., filed a cross-complaint seeking the recovery of unpaid fees and other relief.
The court granted the petition to compel arbitration, and at the hearing on the petition all of the parties, including Goodin which had not filed a petition to compel arbitration, agreed to participate in the AAA arbitration. The client and Goodin arbitrated their claims against one another at a hearing lasting 18 days. The result was that the panel rejected the claims against Goodin and issued a $1.3 million award in Goodin’s favor.
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