PORTLAND, Maine (Legal Newsline) – An arbitration agreement between one of Maine's largest law firms and a former client is unenforceable because the firm didn't clearly explain what rights the client would lose in arbitration, Maine's Supreme Judicial Court ruled last month.

In a ruling announced Dec. 21, the high court affirmed the Cumberland County Superior Court's decision that denied a motion by Portland-based Bernstein, Shur, Sawyer & Nelson to compel arbitration in a legal malpractice claim filed by a former client. 

Attorneys must "fully inform" a client about "the scope and effect" of contractual provisions that would require malpractice claims be submitted to arbitration, a requirement not preempted by federal law, according to the Supreme Judicial Court's ruling.  

The firm’s former client and plaintiff in the case, Susan R. Snow, should have been informed that agreeing to arbitration would mean losing her right to a jury trial, that her rights to appeal would be narrowed and that arbitration evaluates evidence differently than would a court, the Supreme Judicial Court said in its ruling.

"As explained above, this obligation is rooted in principles unrelated to arbitration in particular and applies to situations that go beyond arbitration: namely, that as a general matter, an attorney—who stands as a fiduciary to his client— should fully inform that client as to the scope and effect of her decision to waive significant rights," the Supreme Judicial Court's ruling stated.

According to the ruling, Snow hired Bernstein, Shur, Sawyer & Nelson in May 2012 to represent her in a civil action and at that time signed the firm's standard terms of engagement, including an arbitration clause. Snow later sued for malpractice.

Snow's case isn't the first time a former client has taken Bernstein Shur Sawyer & Nelson to court over alleged poor handling of a case. In summer 2010, following a three-week trial in Cumberland County Superior Court, a jury hit the law firm with a $7.3 million verdict over allegedly negligent representation in a workplace sexual harassment case.

The Cumberland County Superior Court, in a decision handed down about a year ago, also ruled that Bernstein, Shur, Sawyer & Nelson didn't obtain informed consent from Snow that any malpractice claims would have to be submitted to arbitration. The Superior Court also ruled that federal law does not preempt state rules that require attorneys to obtain their clients' informed consent. 

"The rule that lawyers must provide adequate information and explanation to obtain the 'informed consent' of their clients does not apply 'specifically and solely' to arbitration provisions but applies generally to any instance in which a lawyer seeks the client's assent and agreement," the superior court said in its Jan. 20, 2017, ruling.

"Accordingly, the applicable provisions of the Maine Rules of Professional Conduct do not single out arbitration provisions for special treatment and are not preempted under the Federal Arbitration Act."

In affirming the superior court's ruling, the Supreme Judicial Court held that the lower court was not wrong when it ruled the firm failed to obtain Snows informed consent in the arbitration provision and that federal law does not preempt an attorney's requirement to obtain informed consent. 

"Bernstein was obligated to fully inform Snow of the scope and effect of that agreement," the Supreme Judicial Court ruling said. "Because Bernstein had failed to obtain informed consent, the [superior] court concluded that the arbitration provision violated public policy and was therefore unenforceable."

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