Workers' Compensation: Arbitration Clauses in Attorney Retainer Agreements

On March 5, 2025, the New Jersey Supreme Court notified the bar regarding including arbitration clauses in attorney retainer agreements. This notice includes an official comment to Rule of Professional Conduct (RPC) 1.4, which provides guidance on using arbitration provisions in these agreements. The notice and the comment are effective immediately.

Key Points:

Attorneys may include arbitration clauses in retainer agreements: These clauses require clients to resolve potential fee disputes and legal malpractice claims through arbitration.
Attorneys must explain the benefits and disadvantages of arbitration. This explanation must be provided to clients before they agree to arbitration.
Arbitration agreements must be in plain English: The language used must be understandable to the least sophisticated client.
The notice includes sample language for arbitration provisions. This language is provided as a guide for attorneys.
Clients have the right to seek independent legal advice: Clients may choose to have another attorney review the arbitration agreement before signing.
Unilateral waivers of arbitration provisions are not allowed: Both parties must agree to waive the requirement.
Attorneys may decline representation if a client rejects an arbitration provision.

Sample Arbitration Provisions:

The notice includes a list of arbitration-related concepts and issues that attorneys should consider when drafting arbitration provisions. These include:

Overview of arbitration
Waiver of jury and appeal rights
Confidentiality
Discovery
Costs
Arbitrator's decision
Rules of arbitration
Selection of the arbitrator
Place of arbitration and choice of law
Fee arbitration

The notice also provides sample language for arbitration provisions. This language covers the following topics:

Agreement to arbitrate
Overview of arbitration
Waiver of right to trial by jury
Confidentiality
Discovery
Costs
Arbitrator's decision
Rules of arbitration
Selection of the arbitrator
Place of arbitration and choice of law
Fee arbitration

Purpose of the Notice:

The Supreme Court issued this notice to guide attorneys in using arbitration clauses in retainer agreements. The Court also hopes to ensure that clients understand arbitration's benefits and disadvantages before agreeing to it.

Additional Information:

The full text of the notice and the official comment to RPC 1.4 can be found on the New Jersey Courts website. https://www.njcourts.gov/attorneys/notices

Additional References:

Delaney v. Dickey, 242 A. 3d 257 - NJ: Supreme Court 2020

Recommended Citation: Gelman, Jon., Arbitration Clauses in Attorney Retainer Agreements (03/08/2025) https://workers-compensation.blogspot.com/2025/03/arbitration-clauses-in-attorney.html

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*Jon L. Gelman of Wayne, NJ, is the author of NJ Workers’ Compensation Law (West-Thomson-Reuters) and co-author of the national treatise Modern Workers’ Compensation Law (West-Thomson-Reuters). For over five decades, the Law Offices of Jon Gelman 1.973.696.7900
jon@gelmans.com has represented injured workers and their families who have suffered occupational illnesses and diseases.