New York Business Litigation Lawyer Blog
A client sued its law firm for malpractice. The law firm commenced an arbitration addressed to its unpaid fees, as required by the parties’ retainer agreement. The client sought to stay the arbitration pending the outcome of the lawsuit while the law firm attempted to stay the lawsuit pending the outcome of the arbitration.
Finding that no question existed as to the arbitrable nature of the legal fees, the lawsuit would be stayed while the arbitration progressed because “where ‘arbitrable and nonarbitrable claims are inextricably interwoven, the proper course is to stay judicial proceedings pending completion of the arbitration, particularly where . . . the determination of issues in arbitration may well dispose of nonarbitrable matters.’” The court then addressed the fact that no arbitration agreement was ever signed addressed to the client’s malpractice claims, stating “[t]o the extent plaintiff argues that it cannot be forced to arbitrate its malpractice claim because it did not explicitly agree to do so, both the First and Second Departments have clearly found that a nonarbitrable issue can be decided in an arbitration when it is inextricably intertwined with an arbitrable issue, particularly where, as here, the determination of the arbitrable unpaid fees claim may dispose of the nonarbitrable malpractice claim.”
Protostorm, Inc. v. Foley & Lardner LLP