Fees For Prevailing In Petition To Compel Arbitration In Dispute Between Lawyers And Client Must Wait To See Who Prevails In The Arbitration.

Plaintiffs brought an action against their former lawyers after the lawyers “settled several prior lawsuits brought on their behalf and did not allocate a sufficient amount of the settlement funds to the costs of suit, making plaintiffs liable to the former attorneys for costs that were actually recovered as part of the settlements.” The lawyers petitioned for arbitration, which the trial court granted. The question on appeal is whether the trial court properly awarded attorney fees to the former attorneys as the prevailing parties on the petition to compel arbitration, which was filed in the pending lawsuit, even though the resolution of the underlying causes of action are to be determined through arbitration, and the prevailing party on those claims will not be known until arbitration is completed. The appellate court reversed, stating: “We conclude that because only one side—plaintiffs or their former attorneys—can prevail in enforcing the contingency fee agreement, the determination of the prevailing parties must await the resolution of the underlying claims by an arbitrator. Attorney fees can be awarded only to the parties that prevail in the “action.” (See, Civil Code section 1717, subdivisions (a), (b)(1).) It follows that the trial court erred in awarding interim attorney fees to the former attorneys for filing a successful petition to compel arbitration.”  Roberts v. Packard, Packard & Johnson  (Cal. App. Second Dist., Div. 1; July 3, 2013) 217 Cal.App.4th 822.