                                 NOT FOR PUBLICATION WITHOUT THE
                                APPROVAL OF THE APPELLATE DIVISION
        This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
     internet, this opinion is binding only on the parties in the case and its use in other cases is limited . R. 1:36-3.




                                                          SUPERIOR COURT OF NEW JERSEY
                                                          APPELLATE DIVISION
                                                          DOCKET NO. A-1726-17T4

BRIAN DELANEY,

           Plaintiff-Appellant,

v.

TRENT S. DICKEY and SILLS
CUMMIS & GROSS, PC,

           Defendants-Respondents.


                    Argued January 30, 2019 – Decided August 23, 2019

                    Before Judges Alvarez, Nugent and Reisner.

                    On appeal from the Superior Court of New Jersey,
                    Chancery Division, Essex County, Docket No. C-
                    000214-17.

                    Glenn A. Bergenfield argued the cause for appellant.

                    Richard H. Epstein argued the cause for respondent
                    Trent S. Dickey, and for pro se respondent Sills
                    Cummis & Gross, PC (Richard H. Epstein and Joshua
                    N. Howley, of counsel and on the brief).

PER CURIAM
      This is a legal malpractice action. Plaintiff, Brian Delaney, a former client

of defendant Sills Cummis & Gross, PC (Sills), appeals from the order of

dismissal entered after a judge upheld an arbitration clause in the parties' retainer

agreement. The judge ruled that plaintiff must arbitrate not only his fee dispute

with Sills, but also his legal malpractice claim against Sills.

      Otherwise enforceable agreements between attorneys and clients are

unenforceable if they violate ethical rules governing the attorney-client

relationship. The arbitration clause here incorporated by reference thirty-three

pages of arbitration rules. Sills did not give plaintiff the rules when they

presented him with the retainer agreement to sign, offered no explanation of the

terms of either the retainer agreement or the extrinsic document , and watched

plaintiff sign the retainer agreement knowing he had not read and therefore had

not assented to the terms of the arbitration rules, some of which were material

to the arbitration clause and the client's decision to retain Sills.   Given those

narrow circumstances, we conclude the arbitration clause violates the Rules of

Professional Conduct (RPCs) and is unenforceable. 1 Hence we reverse.

                                         I.



1
  Plaintiff has not argued that any other provision of the retainer is
unenforceable.
                                                                             A-1726-17T4
                                         2
      Plaintiff, a sophisticated businessman familiar with both complex legal

matters and legal documents, became embroiled in a business dispute with his

limited liability company partners in 2014. Two lawsuits ensued. Ten months

after commencement of the first lawsuit, apparently dissatisfied with his

attorneys, plaintiff retained Sills to represent him. In September 2015, he signed

the retainer agreement that is the subject of this appeal.

      The retainer agreement is a three-page letter with an attachment entitled

"Attachment 1 to Engagement Letter—Arbitration Provisions."               Sills is

referenced in the agreement as "we" or "the Firm." Plaintiff is referenced

throughout the agreement as "you."2 The first paragraph summarizes the nature

of plaintiff's dispute with his business partners, including his belief "that the

other members may have defrauded you and/or diverted assets or taken loans for

themselves at the expense of the Company." The terms on the remainder of page

one through the first complete paragraph on page three delineate the agreement's

monetary terms, the parties' rights and obligations concerning the agreement's

termination, and plaintiff's waiver of prospective conflicts of interest on




2
   The retainer agreement appears to be a form agreement used for corporate
clients as it sometimes refers to plaintiff as the "Company."
                                                                          A-1726-17T4
                                         3
unrelated matters. The second paragraph on page three—and the last—is the

arbitration clause.

      The arbitration clause states:

            If you have any issues or problems concerning the
            Firm's services or fees, we encourage you to notify me
            immediately so that we can attempt to promptly address
            the situation. Most issues or problems of this nature
            can be resolved quickly and amicably by the Firm and
            you. However, in the event that we and you are unable
            to come to amicable resolution with respect to any
            dispute (including, without limitation, any dispute with
            respect to the Firm's legal services and/or payment by
            you of amounts to the Firm), we and you agree that such
            dispute will be submitted to and finally determined by
            Arbitration in accordance with the provisions set forth
            on attachment 1 to this retainer letter. In such case, you
            would need to engage separate counsel to represent
            your interests and you would incur additional expense
            in connection with such arbitration. The decision of the
            Arbitrator will be final and binding and neither the Firm
            nor you will have the right to appeal such decision,
            whether in a court or in another arbitration proceeding.
            You understand that, by agreeing to arbitrate disputes
            as provided in this retainer letter, you are waiving any
            and all statutory and other rights that you may have to
            a trial by jury in connection with any such dispute,
            claim, or controversy. Notwithstanding the provisions
            of this paragraph and Attachment 1, the Company [sic],
            will retain the Company's [sic] absolute right to proceed
            under the Fee Arbitration Rules set forth in New Jersey
            Court Rule 1:20A, which will take precedence.

      The attachment's first paragraph states:



                                                                         A-1726-17T4
                                        4
              Any disputes arising out of or relating to this
              engagement agreement or the Firm's engagement by
              you will be conducted pursuant to the JAMS/Endispute
              Arbitration Rules and Procedures (the "JAMS Rules")
              then in effect (see http://www.jamsadr.com), except
              that, notwithstanding those rules, the following
              provisions will apply to the arbitration . . . .

      The additional "provisions" on the attachment contain several material

terms.   First, they mandate the arbitration be conducted by one impartial

arbitrator who can be a judge, practicing attorney, or a person who is not an

attorney, selected by mutual consent, or if the parties cannot agree, in

accordance with the JAMS Rules. Next, they include a waiver by the parties of

any claim for punitive damages and preclude the arbitrator from awarding

punitive damages. They also provide, among other things, that the arbitration

will be binding and non-appealable and the proceedings confidential. Last, they

require the parties to share the arbitrator's fees and expenses, "except that the

award rendered by the arbitrator may include the costs and expenses of

arbitration, reasonable attorneys' fees and reasonable costs for expert and other

witnesses."

      Plaintiff signed the retainer agreement. Plaintiff intended that Dickey

represent him. The retainer letter bears a handwritten signature that spells

"Trent S. Dickey" followed by the parenthetical notation "(TADL)." Dickey


                                                                         A-1726-17T4
                                       5
was not present when plaintiff signed the retainer. His partner, Thomas A. Della

Croce, attended the meeting with plaintiff. In a certification, Della Croce

explained what occurred:

             I attended the initial intake meeting with [plaintiff] on
             September 16, 2015. During that meeting, I presented
             [plaintiff] with a proposed engagement letter. I told
             [plaintiff] that he should take his time reviewing the
             contents of the engagement letter. I also told [plaintiff]
             that he should ask me any questions he had about the
             contents of the engagement letter.

             I observed [plaintiff] review the engagement letter. He
             then signed it in my presence without asking me any
             questions. . . .

      For his part, plaintiff averred in a verified complaint that no one from Sills

"went over the arbitration provision with [him]." He also averred that no one

from Sills explained the nature of the costs associated with the arbitration,

including that they could "easily exceed $20,000" and could be awarded against

him. Nor did anyone from Sills point out that the arbitration fees and c osts

"greatly exceeded" filing fees for a Superior Court action, or that under the

retainer agreement plaintiff could be held liable for Sills' costs and attorneys'

fees, depending on how the arbitrator ruled. Plaintiff asserted that had he been

"made aware of the inequities and costs associated with proceeding with

arbitration, as well as the fact that he was constitutionally entitled to have a jury


                                                                             A-1726-17T4
                                         6
decide issues related to malpractice, he would have never signed the initial

retainer agreement in the form presented by [Sills]," if he signed it at all.

      Plaintiff terminated Sills after Sills had represented him for ten months. 3

Plaintiff refused to pay Sills approximately $400,000, the balance of the fees

Sills had charged.    A month after plaintiff terminated Sills, Sills initiated

arbitration with JAMS in accordance with the parties' retainer agreement.

During the ensuing year, the parties delayed arbitration in an unsuccessful

attempt to mediate their fee dispute and then engaged in discovery in

anticipation of the fee arbitration with JAMS.

      Before the JAMS arbitration hearing commenced, plaintiff filed a

malpractice action against Sills and Dickey. Plaintiff was represented by a new

attorney—not the attorney representing him in the fee dispute. Plaintiff alleged

in the malpractice action that Sills and Dickey failed to conduct certain

discovery, failed to obtain documents that would have purportedly demonstrated

his business associates' mismanagement of the limited liability companies, and

failed to engage forensic experts to value one of the limited liability companies

and analyze the practices of the company's members. When Dickey pressed for


3
   One of the underlying lawsuits had apparently settled, though the parties to
this appeal reference an appeal of the purported settlement.


                                                                            A-1726-17T4
                                         7
arbitration and JAMS refused to stay the arbitration proceedings, plaintiff,

through his new attorney, filed a verified complaint and order to show cause.

Initially believing the arbitration clause included only the fee dispute, p laintiff

sought, among other relief, a declaratory judgment that the retainer agreement's

arbitration provision was unenforceable or, alternatively, a stay of the JAMS

arbitration of the fee dispute pending resolution of the malpractice action.

      The Chancery Division judge determined in an oral opinion that the fee

agreement's arbitration clause was enforceable, it encompassed Sills' fee claim

and plaintiff's malpractice claim, and both claims were subject to JAMS

arbitration. The parties entered into consent orders dismissing the declaratory

judgment and legal malpractice actions. This appeal followed.4

                                         II.

      Plaintiff makes three arguments on appeal. Because his arguments require

us to apply legal principles to undisputed facts, our review is de novo.



4
   Generally, "[a]n order . . . consented to by the attorneys for each party . . . is
not appealable." Janicky v. Point Bay Fuel, Inc., 410 N.J. Super. 203, 207 (App.
Div. 2009) (alterations in original) (quoting Winberry v. Salisbury, 5 N.J. 240,
255 (1950). However, because the consent order was the result of a decision
that in effect compelled arbitration, see R. 2:2-3(a)(3), and in the interest of
judicial economy, we have decided to hear the appeal.



                                                                             A-1726-17T4
                                         8
Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378

(1995).5

      Plaintiff first contends the retainer agreement and the arbitration clause

violate multiple RPCs and are therefore unenforceable. Next, he asserts all

retainer agreements are unethical if they contain a mandatory arbitration clause

that includes a future malpractice action.      Last, he contends the Federal

Arbitration Act (FAA), 9 U.S.C.A. §§1-16, does not preempt regulation of the

practice of law by the New Jersey Supreme Court.

                                       A.

      Plaintiff's last argument requires little discussion. Indisputably, the New

Jersey Supreme Court has the exclusive responsibility to regulate the conduct of

attorneys. N.J. Const. art. VI, § II, ¶ 3 ("The Supreme Court shall make rules

governing the administration of all courts in the State and, subject to t he law,

the practice and procedure in all such courts. The Supreme Court shall have

jurisdiction over the admission to the practice of law and the discipline of

persons admitted."); State v. Rush, 46 N.J. 399, 411 (1966).




5
  Plaintiff's brief contains four point headings. The arguments under one point
heading are not different from, but merely elaborate on, the other three.
                                                                         A-1726-17T4
                                       9
      The Court's exclusive authority "extends to every aspect of the attorney-

client relationship, including agreements for fees."   Cohen v. Radio-Elecs.

Officers Union, Dist. 3, NMEBA, 146 N.J. 140, 155 (1996) (citing In re LiVolsi,

85 N.J. 576, 585 (1981)). "[A]n attorney's freedom to contract with a client is

[thus] subject to the constraints of ethical considerations and [the Court's]

supervision." Ibid. "An otherwise enforceable agreement between an attorney

and client would be invalid if it runs afoul of ethical rules governing that

relationship." Id. at 156.

      Nothing in the FAA suggests otherwise. To the contrary, the FAA states

expressly that arbitration agreements "shall be valid, irrevocable, and

enforceable, save upon such grounds as exist at law or in equity for the

revocation of any contract." 9 U.S.C.A. §2 (emphasis added). The exception is

broad enough to include a retainer agreement that runs afoul of ethical rules

governing the attorney-client relationship.

      The question before us is not, as plaintiff suggests, whether the FAA

preempts the regulation of the practice of law by the New Jersey Supreme Court.

Rather, the question is whether the Sills retainer agreement runs afoul of the

ethical rules governing the attorney-client relationship such that the retainer

agreement—or the arbitration clause—is invalid.


                                                                       A-1726-17T4
                                      10
                                       B.

      Thus, we turn next to plaintiff's first argument—that whether or not

arbitration of legal malpractice claims are per se invalid, the Sills arbitration

clause is nonetheless invalid because it violates RPC 1.4(c), 7.1(a), 1.7(a)(2),

and 1.8(h)(1).

      We first consider RPC 1.7(a)(2), which prohibits an attorney from

representing a client if the representation will be "materially limited . . . by a

personal interest of the lawyer."       Plaintiff contends retainer agreements

requiring arbitration of malpractice claims create an inherent conflict that

violates RPC 1.7(a)(2). However, his brief presents no empirical evidence to

support his factual contentions in support of the argument, and in the absence of

a proper record, the argument does not merit further discussion.         R. 2:11-

3(e)(1)(E).

      Plaintiff next contends that by including the arbitration clause in the

retainer agreement, Sills violated RPC 1.4(c), 1.8(h)(1), and 7.1(a). RPC 1.4(c)

requires a lawyer to "explain a matter to the extent reasonably necessary to

permit the client to make informed decisions regarding the representation." RPC

7.1(a) prohibits a lawyer from making "false or misleading communications

about the lawyer, the lawyer's services, or any matter in which the lawyer has or


                                                                          A-1726-17T4
                                       11
seeks a professional involvement." The RPC states "[a] communication is false

or misleading if it . . . contains a material misrepresentation of fact or law, or

omits a fact necessary to make the statement considered as a whole not

materially misleading." Ibid. RPC 1.8(h)(1) prohibits a lawyer from making

"an agreement prospectively limiting the lawyer's liability to a client for

malpractice . . . unless permitted by law and the client is independently

represented in making the agreement[.]"

       Plaintiff emphasizes RPC 1.4(c)'s language that a lawyer "shall explain a

matter to the extent reasonably necessary to permit the client to make informed

decisions regarding the representation."        He points out that Della Croce

explained nothing. He insists Sills, through Della Croce, had the duty to explain

what parts of the arbitration agreement benefitted Sills and what parts benefitted

him.

       According to plaintiff, Della Croce also violated RPC 7.1(a), because he

neither attached nor explained the JAMS rules, which contained material terms

of which plaintiff was unaware and to which plaintiff did not agree. Plaintiff

cites as examples JAMS rules he interprets as permitting JAMS to reassign the

matter to another office and to stop the arbitration if Sills decides not to pay its

share of fees and expenses due the arbitrator. He notes that under the JAMS


                                                                            A-1726-17T4
                                        12
rules, the rules of evidence are not followed and hearsay is allowed. He contends

the JAMS rules permit the arbitrator to award legal fees to Sills.

      Last, plaintiff accuses Sills of violating RPC 1.8(h)(1) by requiring him

to waive punitive damages.

      Sills responds that plaintiff raised none of these issues before the trial

court. Sills notes the court rules mandate disclosure in an appellate brief of

issues not raised before the trial court. R. 2:6-2(a)(1) ("It is mandatory that for

every point, the appellant shall include in parentheses at the end of the point

heading the place in the record where the opinion or ruling in question is located

or if the issue was not raised below a statement indicating that the issue was not

raised below."). Sills argues that we should disregard plaintiff's arguments

about the RPCs due to his failure to comply with the court rules.

      Alternatively, Sills argues that it violated neither RPC 1.4(c) nor RPC

7.1(a). Sills points out that RPC 1.4(c) requires only that an attorney explain a

matter "to the extent reasonably necessary" to permit a client to make an

informed decision about retaining the firm. Sills contends that if a retainer

agreement is clear on its face, no explanation is reasonably necessary for the

client to make an informed decision, and therefore no explanation is necessary.

Sills insists the agreement in this case is clear and unambiguous on its face.


                                                                           A-1726-17T4
                                       13
         Addressing RPC 7.1(a), Sills argues it did not violate the RPC by

incorporating by reference the JAMS rules.         Specifically, Sills asserts that

"nothing in the JAMS Rules allows for an award of attorney's fees to Sills." Sills

contends the JAMS rules permit the arbitrator to award attorney's fees only if

provided by the parties' agreement or applicable law. Sills insists that "neither

the engagement letter nor applicable New Jersey law allows for fee shifting in

this case, so [plaintiff's] argument is simply wrong."

         Sills insists that it did not violate RPC 1.8(h)(1) because this RPC only

prohibits a lawyer from limiting the client's right to sue for malpractice, not from

limiting damages.

         We begin by exercising our discretion to consider plaintiff's arguments

concerning the RPCs even though he did not squarely raise them before the trial

court.     That happened because plaintiff's malpractice attorney mistakenly

interpreted the arbitration clause as referring to a dispute over fees only, not to

a dispute over Sills' performance. Moreover, though plaintiff did not submit the

JAMS rules to the trial court, they are referenced in the retainer agreement and

Sills does not dispute that they formed part of that agreement.

         We next turn to RPC 1.4(c). As previously noted, this RPC requires a

lawyer to "explain a matter to the extent reasonably necessary to permit the


                                                                            A-1726-17T4
                                        14
client to make informed decisions regarding the representation." Twelve years

before the parties in this case signed the retainer agreement, we explained that

"[t]he potential effect of an agreement to arbitrate must be clear to the client to

be binding upon him." Kamaratos v. Palias, 360 N.J. Super. 76, 87 (App. Div.

2003) (citing Haynes v. Kuder, 591 A.2d 1286 (D.C. App. 1991)). We added,

"[i]t is not sufficient, moreover, that the client have experience in business to

permit a conclusion that the client made an informed decision to agree to proceed

with arbitration in all instances." Ibid.

      In addition, nearly six years before the parties in this case signed the

retainer agreement, we explained: "Full and complete disclosure of all charges

which may be imposed upon the client is also necessitated by RPC 1.4(c)."

Alpert, Goldberg, Butlter, Norton & Weiss, P.C. v. Quinn, 410 N.J. Super. 510,

531 (App. Div. 2009). We asked, rhetorically, "[i]f the client does not know

what charges and costs beyond the hourly rate he may be exposed to, how can

the client be expected to make an informed decision regarding representation."

Ibid. Consequently, we noted:

            Merely directing the client to ask for another document
            that is not directly presented and explained to the client
            but will bind him or her does not fulfill the lawyer's
            obligation pursuant to R.P.C. 1.4(c). This obligation to
            thoroughly explain all the terms of retention is


                                                                           A-1726-17T4
                                        15
            particularly appropriate, given that the lawyer has a
            unique and fiduciary relationship with the client.

            [Ibid. Cf., F.G. v. MacDonell, 150 N.J. 550, 563-64
            (1997)].

      The extent of the required disclosures will depend upon the case.

Certainly, clients must be informed they are "giving up [their] right[s] to bring

[their] claims in court or have a jury resolve the dispute." Atalese v. U.S. Legal

Servs. Grp., L.P., 219 N.J. 430, 447 (2014). In addition, clients should be

informed to some extent of the basis of the costs and charges they will incur by

waiving their right to access the courts and agreeing to arbitration. Quinn, 410

N.J. Super. at 531.

      Here, the retainer agreement included an explanation that by agreeing to

arbitration the client was waiving his rights to seek relief in court.         The

attachment to the retainer agreement also informed the client he would be

required to pay an equal share of all costs and expenses related to compensation

of the arbitrator, the site and any administrative fees.       These statements,

however, provided the client with no information by which he could make any

reasonable estimate of what the arbitration's cost would be. The JAMS rules,

on the other hand, specify the administrative fee and provide a toll-free number

a client can call for information about "individual neutrals' rates." But Sills did


                                                                           A-1726-17T4
                                       16
not include the rules with the retainer agreement. Consequently, the client had

no way of gauging whether the arbitrator's fee would be closer to $10,000,

$50,000 or $100,000.

      Of equal concern, some of the JAMS rules implicate substantive, rather

than merely procedural issues. For example, Rule 17(b) states that "[e]ach party

may take one deposition of an opposing Party or of one individual under the

control of the opposing Party."      Thereafter, "[t]he necessity of additional

depositions shall be determined by the Arbitrator based upon the reasonable

need for the requested information, the availability of other discovery options

and the burdensomeness of the request on the opposing Parties and the

witnesses." That rule and the arbitrator's decision could affect the ability of a

party to develop proofs in a complex case and could affect discovery and trial

strategy. Additionally, because the arbitration clause did not specifically refer

to "malpractice" or "professional negligence," a client reviewing the JAMS rules

might not appreciate the significance of the rules' limitations on discovery.

      We are not suggesting an attorney must explain the JAMS rules to a

prospective client. But the thirty-three pages of JAMS rules should at least be

presented to clients with the retainer agreement. The mere number of rules, as

well as their complexity to a lay person, could cause the potential client to ask


                                                                          A-1726-17T4
                                       17
questions about the rules or seek advice elsewhere before signing a retainer

agreement.

      We also note with interest the parties' dispute about whether the JAMS

rules are against public policy because they permit fee shifting, that is, the award

of attorneys' fees to the prevailing party. Plaintiff says they do. Sills says they

do not. Sills points out that JAMS Rule 24(g) permits an arbitrator to allocate

attorneys' fees only if provided by the parties' agreement or applicable law. Sills

insists that "neither the engagement letter nor applicable New Jersey law allows

for fee shifting in this case, so [plaintiff's] argument is simply wrong." Sills'

position appears to be inconsistent with the provision in its engagement letter's

attachment:

              The Firm and You will pay an equal share of all costs
              and expenses related to compensation of the arbitrator,
              the site and any administrative fees, except that the
              award rendered by the arbitrator may include the costs
              and expenses of arbitration, reasonable attorneys' fees
              and reasonable costs for expert and other witnesses.
              [(Emphasis added).]

It is difficult to reconcile Sills' argument with the emphasized language in the

retainer agreement's attachment, a fact that perhaps suggests the retainer

agreement is not as clear in some respects, as the trial court determined.




                                                                             A-1726-17T4
                                        18
      As previously noted, the Supreme Court has held that "[a]n otherwise

enforceable agreement between an attorney and client would be invalid if it runs

afoul of ethical rules governing that relationship." Cohen, 146 N.J. at 156. We

conclude that because Sills gave plaintiff no explanation about the retainer

agreement's or arbitration provision's terms, did not provide plaintiff with the

JAMS rules, provided no explanation about the JAMS rules, and watched

plaintiff sign the agreement knowing he had not assented to the JAMS rules, this

otherwise enforceable agreement runs afoul of two of the ethical rules governing

the attorney-client relationship. Accordingly, we find the agreement invalid.

      Although not determinative, we also find the agreement violates RPC

1.8(h)(1), which prohibits an attorney from making an agreement with a client

that prospectively limits the attorney's liability to the client for malpractice. If

accepted, Sills' argument—that an attorney cannot prospectively prevent a client

from filing a malpractice action, but can limit the amount of damages the client

can recover in such an action—would permit an attorney to restrict a client's

recovery in a lawsuit to nominal damages. Moreover, we find some merit in

plaintiff's claim that Sills' mutual waiver of its right to recover punitive damages

from a client is largely illusory.     Nonetheless, plaintiff's legal malpractice




                                                                            A-1726-17T4
                                        19
complaint did not include a claim for punitive damages. We thus repeat that this

RPC violation is not dispositive of whether the arbitration clause is valid.

      In light of our holding, we need not address plaintiff's broader argument,

that the RPCs prohibit all agreements to arbitrate malpractice claims.

                                        III.

      Our holding is narrow. We do not hold that all retainer agreement clauses that

mandate arbitration of legal malpractice claims are per se invalid. Nor do we hold

that the "reasonable explanation" required of an attorney by RPC 1.4(c) cannot be

contained in the written retainer agreement. Rather, we hold that when an attorney

incorporates by reference in a retainer agreement a document that contains material

terms concerning mandatory arbitration of legal malpractice claims, does not

provide the incorporated document to the client, gives the client no explanation

about material terms contained in the document, and asks the client to sign the

retainer agreement without reading the incorporated documents, the agreement runs

afoul of the RPCs and is invalid. We have considered the parties' remaining

arguments and found them to be without sufficient merit to warrant further

discussion. R. 2:11-3(e)(1)(E).

      We thus vacate the trial court's order upholding the arbitration clause and

remand the matter for further proceedings consistent with this opinion.


                                                                            A-1726-17T4
                                        20
      Reversed and remanded for further proceedings consistent with this

opinion. We do not retain jurisdiction.




                                                                 A-1726-17T4
                                     21
