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Mike Stein Quoted in Law360 Article Addressing Supreme Court's Delaney Decision on Arbitration Clauses in Retainer Agreements.


Michael S. Stein, managing partner of Pashman Stein Walder Hayden P.C., was quoted in Law360 article, “NJ Attys Fear Arbitration Clause Issue Will Muddle Retainers.” The article discusses the December 2020 ruling by the New Jersey Supreme Court in the case of Delaney v. Dickey, in which Mike Stein filed an amicus brief and appeared before the New Jersey Supreme Court on behalf of the Bergen County Bar Association. The article discusses the concerns of New Jersey lawyers that the Delaney decision could give rise to onerous and awkward requirements to ensure clients are well-informed about waiving the right to a jury trial in dealings with their own attorneys.

Acknowledging attorney professional conduct rules around the nation, the justices said courts or ethics authorities in states including Louisiana, Michigan, Pennsylvania and Virginia require that lawyers advise prospective clients to seek independent counsel to review arbitration clauses.

It would be a "mistake" for New Jersey to impose such a duty, said Michael S. Stein of Hackensack, New Jersey-based Pashman Stein Walder Hayden PC, which represented the Bergen County Bar Association as an amicus in the Delaney case.

The Bergen County bar thinks the Appellate Division unfairly imposed new standards on attorneys with respect to section 1.4(c) of the state's Rules of Professional Conduct, which says that attorneys "shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation."

Previously, attorneys felt they were satisfying the state's professional standards as long as they adhered to the standard established in the New Jersey Supreme Court's landmark decision in Atalese v. U.S. Legal Services Group, according to Stein. Atalese, which has been the state's guiding case law in arbitration matters since it was decided in 2014, held that arbitration clauses must be "clear and unambiguous" in order to be enforceable.

"[The Delaney] case raised an issue that law firms didn't even know existed prior to the Appellate Division decision," Stein said, referring to what the Bergen bar feels were new standards imposed with respect to section 1.4(c).

Both the Bergen County bar and the New Jersey State Bar Association hope the ethics committee maintains the status quo while clarifying the parameters for making the necessary disclosures about arbitration agreements. The Bergen County bar has modeled its recommendation on an opinion issued by the American Bar Association, which says clients must be informed that agreeing to arbitration forecloses the advantages of a trial and that they may have to fund the cost of the arbitration.

Like the Bergen County attorneys, the NJSBA recommends that the ethics committee formally spell out the disclosure rules that for now are implied in section 1.4(c), but refrain from expanding the requirements.

To view the full article, click here.

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