Bexar County Women’s Bar Association Equal Times
The Texas Supreme Court effectively gave a “thumbs-up” to attorney-client arbitration agreements in Royston, Rayzor, Vickery, & Williams, LLP v. Lopez, 467 S.W.3d 494 (Tex. 2015), reh’g denied (Sept. 11, 2015). The plaintiff, Frank Lopez, hired Royston, Rayzor to represent him in a divorce. As part of the representation agreement, Lopez agreed to arbitrate any disputes arising out of the attorney-client relationship, but the law firm excluded from the arbitration agreement any claims it might have against Lopez for expenses or fees. Lopez later sued Royston, Rayzor and the firm moved to compel arbitration.
Lopez contended that the arbitration agreement violated public policy because a law firm must show it explained the advantages and disadvantages of arbitration to a prospective client, per Professional Ethics Opinion 586. The Texas Supreme Court rejected the argument that an attorney’s failure to explain an arbitration agreement rendered the agreement unenforceable. The Texas Supreme Court also rejected Lopez’s arguments that the arbitration agreement was unenforceable because it was substantively unconscionable and illusory due to its purported one-sidedness. The court noted that the contract required that all claims by both parties be resolved by arbitration, except those for fees and expenses. For those claims, the law firm did not have a unilateral choice whether to arbitrate or litigate, instead they were excluded from the arbitration agreement and the firm must litigate those claims. Thus, the court held that the arbitration agreement was not substantively unconscionable.
Royston, Rayzor means that arbitration agreements between attorneys and clients will likely be construed as enforceable even if the agreement excludes claims for fees and expenses, provided that the agreement does not give one party a choice to arbitrate, litigate, or unilaterally change the agreement to avoid arbitration. It also means while there may be an ethical responsibility under Texas Disciplinary Rules to explain the advantages and disadvantages of an arbitration agreement to a prospective client, the failure to do so does not violate Texas public policy and will not render an attorney-client arbitration agreement unenforceable.
Ramona L. Lampley, Case Watch: Royston, Rayzor, Vickery & Williams LLP v. Lopez, Bexar County Women’s Bar Association Equal Times (Dec. 2015).