It’s a trap for the unwary.  We’ve written about this here on the blog, in the New York Law Journal and elsewhere.

Fee determinations in legal fee disputes are determinative of a later legal malpractice case.  Let’s take an example.  Attorney does horrible job, loses case for plaintiff on discovery preclusion grounds.  Let’s assume it is clearly malpractice.  Attorney and client get in a dispute over fees.  Attorney claims $ 100,000 in fees.  At arbitration the award is for $ 100,   Huge negative for attorney?  Yes, but any award of fees, even one so small, necessarily determines that there can be no malpractice case, because no fee may be awarded if there is a determination of legal malpractice.

Here is an example:   Wallenstein v Cohen ,2007 NY Slip Op 09023 ,Decided on November 13, 2007 ,Appellate Division, Second Department .   We agree with the defendants that all of the allegations in the complaint were "reasonably and plainly comprehended to be within the scope of the dispute submitted to arbitration" (Altamore v Friedman, 193 AD2d 240, 247). The determination fixing the value of the defendants’ services necessarily determined that there was no malpractice (see Blair v Bartlett, 75 NY 150, 154; Koppelmann v Finkelstein, 246 AD2d 365, 366; Altamore v Friedman, 193 AD2d at 246; Chisolm Ryder Co. v Sommer & Sommer, 78 AD2d 143, 145-146). Accordingly, the Supreme Court should have granted that branch of the defendants’ motion which was pursuant to CPLR 3211(a)(5) to dismiss the complaint as barred by arbitration and award and by the doctrine of collateral estoppel