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Commercial Division Blog

Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: June 12, 2021

Alleged Failure of Law Firm to Have a Written Engagement Letter Insufficient Basis to Vacate Arbitral Award in Fee Dispute

On May 20, 2021, the First Department issued a decision in Matter of Gibson, Dunn & Crutcher LLP v. World Class Capital Group, LLC, 2021 NY Slip Op. 03252, holding that the alleged failure to have a written engagement letter was an insufficient basis to vacate an abritral award in a legal fee dispute, explaining:

Respondents’ arguments attacking the substance of the arbitrator’s decision also fail. An arbitral award will be overturned only in the extremely limited instances where it violates a strong public policy, is irrational, or exceeds a specifically enumerated limitation on the arbitrator’s power. The law and public policy upon which respondents rely is the requirement that an attorney provide a client with a written letter of engagement, with their main argument being that an attorney’s claim for breach of contract is unsustainable against a client who did not enter into a written engagement. However, even if the arbitrator had made an error of law or fact in concluding that respondents had breached the retainer agreements, this alone would not justify vacating the award.

(Internal quotations and citations omitted).

Commercial litigation involves more than courts. Disputes often are–by agreement–decided by private arbitrators. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have a question regarding a dispute that is subject to an arbitration agreement.

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