Maine’s Highest Court Invalidates Arbitration Clause Using Fiduciary Defense

Relying on the fiduciary duty in the attorney-client relationship as well as the policies of Maine’s legal ethics code, Maine’s highest court found that attorneys have a duty to explain and make sure a client understands the difference between litigation and arbitration in order for an arbitration agreement to be enforceable in this setting.  See Snow v. Bernstein, Shur, Sawyer & Nelson, P.A., No. 17-54 (Maine Dec. 21, 2017) (click here for a copy of the decision).  Because the attorney at issue had failed to fully inform the client about the arbitration clause in the engagement letter, the clause was not enforceable in connection with a subsequent malpractice claim.

This Maine state law seems at risk of preemption under Concepcion’s broad and vague preemption test.  However, the Maine Supreme Court reasoned that its state law would apply to any contract between an attorney and client regarding the waiver of important rights, and because the state law applies to all contracts and does not single out arbitration, Concepcion preemption does not present a problem here.

Earlier this year, a court in North Carolina similarly found that the doctor/patient relationship required heightened consent in connection with an arbitration agreement (click here for the North Carolina case).  Based on these cases, a developing defense to the enforcement of arbitration clauses appears to be arising involving fiduciary duties.

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