You’ve Got to Know When to Hold Them, Know When to Fold Them

Today, with the permission of my client, I bring you, The Case of the Attorney Who Wouldn’t Let it Go.

Here are the simple facts.

In January 2018, our client (we’ll call him Jack because that’s his name) hired an attorney named J. Niley Dorit to evaluate the medical records of Jack’s deceased mother for a potential medical malpractice / wrongful death suit against her doctors. The parties signed a fee agreement in which Jack agreed to pay Dorit a $10,000 non-refundable retainer fee. This sum was intended to cover Dorit’s time spent evaluating the claim, as well as “the costs of additional medical records and/or expert medical review if indicated.” The agreement contained an arbitration clause, which stated, “Should there arise any disagreement as to the amount of attorneys fees and/or costs, Client agrees to enter into binding arbitration of such issue or dispute before the Bar Association of San Francisco (BASF).”

On March 19, 2018, Dorit called Jack on the phone to present his analysis of the records. According to Dorit, Jack cut him off soon after Dorit began his presentation. Jack asked Dorit simply to provide his ultimate conclusion about the potential claims. Dorit said he did not think a malpractice claim was viable.

Jack was frustrated, feeling that Dorit had not provided $10,000 worth of services, especially given that he apparently had not consulted any medical experts. Conversely, Dorit felt that his experience with medical malpractice cases qualified him to review the file sufficiently to determine if a malpractice case was warranted. The medical file was huge, so Dorit felt he had earned his $10,000 fee in examining the file.

The Fee Agreement

California tries to be pro-client, so under the law, if there is a dispute about fees, the client has the option to submit the matter to arbitration under the Mandatory Fee Arbitration Act (“MFAA”), conducted by the local bar association.

The process is designed to be very informal, and the arbitrator is not even required to follow the rules of evidence. It is a quick, low-cost way to have a fee dispute decided. Often the attorney fees involved in a fee dispute are relatively nominal, and it would never make economic sense to have to sue in court, let alone hire yet another attorney to do so. Rather than to force clients to stew in their own juices over the anger of having no recourse, the MFAA provides a quick review of the fees paid. And contrary to popular belief that the process is rigged in favor of attorneys, the MFAA arbitrators are very strict in determining if the attorney has observed all legal requirements.

But there is one special rule with MFAA arbitrations. Since they are so informal, and since the client is encouraged to pursue the arbitration without an attorney, they follow the “knock knock the game is locked” rule. Nothing that happens in the arbitration can be used for any other purpose. After all, it wouldn’t be fair to encourage a client to represent himself, and then use the result of that hearing in some other capacity.

Thus, a perfect process existed for Jack and Dorit to have the dispute decided, without going to court or even squaring off at ten paces. They submitted the fee dispute to MFAA arbitration. They presented their evidence to the Arbitrator, and ultimately he found in favor of Dorit, and allowed him to keep the $10,000 fee, awarding Jack nothing. Jack even had to cover the filing fee. Jack walked away, disappointed but feeling better that he had been heard.

But Dorit did not go quietly into the night. Dorit was upset that Jack had dared to question his entitlement to the $10,000 in fees, which he felt had been a malicious thing to do, so he sued Jack in San Francisco Superior Court for Malicious Prosecution.

When Jack brought the complaint to me, looking for a defense, I was outraged. A client had used the very process clients are told to use, a process that is supposed to be quick and informal, and as a result he was facing tens of thousands of dollars in defense costs, and whatever damages a judge or jury might decide to award.

On the one hand, I could understand Dorit’s frustration over having to defend his fees. He’s probably a fine attorney, worth every cent of the $10,000, and he likely took it as a personal affront that his fees were questioned. But there are certain statutes designed to protect consumers, and I feel that the business people who are subject to these statutes should view them as a good thing.

In another case I recently handled, a homeowner complained to the Contractor’s Licensing Board (“CLB”) over the work performed by the contractor building their home addition. While the CLB was investigating, the contractor sued the homeowner for defamation, claiming the report to the CLB was a lie. What does that accomplish? A good contractor who does good work should have no issue with the CLB taking a look at his work. I got the case thrown out using the technique I am about to discuss, and the CLB ultimately concluded that the contractor had violated numerous building codes. No doubt, the contractor had hoped to get the homeowner to stop the investigation in exchange for dismissal of the defamation action, before the CLB looked at his work.

So back to Jack. I couldn’t let this stand. I brought what is called an anti-SLAPP motion, to have the complaint thrown out. “SLAPP” stands for Strategic Lawsuit Against Public Participation. Such a motion is used to prevent someone from using a legal action to silence a person’s criticism, or to deny them access to some legal process. The “public participation” can take many forms, from posting a review on Yelp to filing an action in court.

The motion analysis has just two steps. First the court determines if the conduct of the plaintiff falls under the anti-SLAPP statute. The judge agreed with me that it did, since Dorit was suing Jack for using the MFAA process. Once that first test is met, then the burden shifts to the Plaintiff to show that he is more likely than not to prevail on the action.

This is the beautiful balance afforded by the anti-SLAPP statute. It doesn’t mean that a plaintiff can never sue based on someone’s speech, it just requires the plaintiff to immediately put his cards on the table and show that he at least has a viable action, if his evidence is believed. In fact, for purposes of the motion, the judge is not permitted to weigh the evidence; only the plaintiff’s evidence is considered (subject to certain exceptions not relevant here).

But in considering the motion, the judge failed to understand one crucial aspect of anti-SLAPP law. As stated, it is normally the case that I must first demonstrate that the conduct in questions falls under the anti-SLAPP statute, and then the plaintiff puts on his evidence to show that he is more likely than not to suceed.

However, under the law, certain speech is absolutely protected. For example, it you stand up at a City Council meeting and state that the mayor is on the take, there is nothing she can do about it, even if she can prove the statement is false. Why? Because we have decided that the right to speak freely to our government officials is so important that said speech is absolutely protected. We simply cannot allow a situation where citizens fear retribution if they criticize the government.

In the case of an absolute privilege, there is no evidence the plaintiff can put on to overcome that privilege, so the second step of the anti-SLAPP analysis becomes moot.

And so it was in this case. As with the case of a City Council meeting, the same public policy apples to anything said in conjunction with litigation (appropriately referred to as the “Litigation Privilege”). If parties and witnesses could be sued for things said in court, the judicial system would completely break down. Every action would spin off new actions, with the loser claiming that the other side had defamed them in court. And would you ever appear as a witness in court, if you knew you would be sued as a result? (That doesn’t mean one can lie with impunity in court — perjury is a crime — it just means that you can’t bring a civil action for what was said in court.)

But this aspect of anti-SLAPP law went over the judge’s head, despite my best efforts. The MFAA process is absolutely protected, but the judge decided that Dorit could proceed with the action and try to prove malice by Jack.

I had to appeal the judge’s ruling, and the Court of Appeal agreed with me and ordered the trial judge to grant my anti-SLAPP motion. Aside from the absolute privilege (which even the Court of Appeal danced around a bit), there was another issue.

Remember the highly legal “knock knock the game is locked” provision of the MFAA? Nothing, not a beam of light or even a single proton, can escape the arbitration hearing. So I had come up with the idea that under this rule, Dorit could never prove his malicious prosecution action. Why? Well, to completely understand, you must first watch this legal training video.

And so it was for Dorit’s attempt at a malicious prosecution action. To sue for malicious prosecution, you must PROVE that you prevailed in the original action. This makes perfect sense. If someone sues you and wins, then it would be ridiculous to argue that the lawsuit had been frivolous and malicious. So to bring a malicious prosecution action, you must allege and prove that you prevailed in the underlying case. This is also why a defendant can never cross-complain for malicious prosecution in the same action he is claiming is frivolous. He can’t allege and prove that he won the action, before he wins the action.

So, do you see where this is going? Because nothing can come out of the arbitration, every time Dorit tried to proclaim that he had won, he could only be met by Doctor Evil saying “shh.”

“But the arbitrator held . . .”

“Shh.”

“But Jack had to pay . . .”

“Shh.”

“But I got to keep . . .”

“Shh.”

The Court of Appeal understood, and reversed the denial of my motion.

We can now seek reimbursement of all the attorney fees, from the trial court and appeal. Unlike other fee provisions, that sometimes make attorney fees discretionary, the anti-SLAPP statute makes them mandatory. We don’t know yet how much the court will award, but it should award all the fees incurred. Dorit may elect to simply write a check, but historically we will agree to some sort of payment plan. If so, then it will go something like this scene with Steve Martin.