Kate Whitlock Argues Before Virtual Supreme Court in Georgia Legal Malpractice Case
April 22, 2020 (Atlanta, GA) – On Tuesday, April 21, 2020, Hawkins Parnell & Young senior partner Kate Whitlock argued remotely before the Georgia Supreme Court in Innovative Images, LLC v. Summerville, et al.
At issue in this appeal is whether arbitration clauses in attorney-client engagement agreements are enforceable if the attorney failed to explain the potential disadvantages of arbitration to his or her prospective client before execution of the agreement. Innovative hired Summerville for purposes of an appeal. When their attorney-client relationship was originally established in July 2013, Summerville had presented Innovative with a four-page Engagement Agreement which included an arbitration clause that stated: “Any dispute arising under this agreement will be submitted to arbitration….The decision of any such arbitrator or arbitrators shall be binding, conclusive, and not appealable.”
When Innovative sued, Summerville filed a motion to compel arbitration. Innovative opposed the motion, arguing that clauses mandating binding arbitration of legal malpractice claims are unenforceable unless the client has been fully apprised of the disadvantages of arbitration and has given informed consent to inclusion of the provision. The trial court ruled in favor of Innovative, finding the clause “unconscionable” and therefore unenforceable as such an arbitration clause can be enforced “only when preceded by a substantial explication of the rights affected by the clause, and such an explanation did not occur here.” The Georgia Court of Appeals reversed, finding that an “unconscionable contract is one abhorrent to good morals and conscience. It is one where one of the parties takes a fraudulent advantage of another. It is an agreement that no sane person not acting under a delusion would make and that no honest person would take advantage of.” The Court of Appeals further stated that “we must bear in mind that ‘Georgia law recognizes and protects the freedom of parties to contract,’” and that “contracts will not be avoided by the courts as against public policy, except where the case is free from doubt and where an injury to the public interest clearly appears.” This attorney engagement agreement was not that. In granting cert, the Georgia Supreme Court specifically asked the parties to answer these questions: “Under the Georgia Rules of Professional Conduct, is an attorney required to fully apprise his or her client of the advantages and disadvantages of arbitration before including a clause mandating binding arbitration of legal malpractice claims in the parties’ engagement agreement? If so, does failing to so apprise a client render such a clause unenforceable under Georgia law?’
At the Supreme Court, the attorney for Innovative Images argued that under the Georgia Rules of Professional Conduct, “an attorney is required to fully apprise his or her client of the advantages and disadvantages of arbitration before including a clause mandating binding arbitration of legal malpractice claims in the parties’ engagement agreement.” Under Rule 1.4 (b), a lawyer is required to “explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.” Hawkins Parnell & Young lawyers Kate Whitlock and Kelli Steele argued on behalf of Summerville that a prospective client is not a “client” to whom fiduciary and other special duties are owed. Nothing in the Rules of Professional Conduct precludes a lawyer from offering an engagement agreement with an arbitration provision or suggest that additional disclosures for arbitration are required. And, in any event, if there were a Rules violation, that would be a disciplinary matter, not a legal one.
The case is Innovative Images, LLC v. Summerville, et al., Supreme Court of Georgia, case no. S19G1026.