Supreme Court to the bar: You have a heightened duty to inform clients in order to defend an enforceable arbitration provision

Attorneys are "held to an even higher degree of responsibility" than vendors in a typical commercial transaction, which requires the attorney to generally explain to a client the benefits and disadvantages of arbitrating a prospective dispute between the attorney and client, said a unanimous Supreme Court in Delaney v. Dickey, Docket No. A-30-19. The decision, handed down on Dec. 21, prospectively imposes this obligation on attorneys who include an arbitration clause in their retainer agreements.

The New Jersey State Bar Association (NJSBA) participated as amicus in the matter to urge the Supreme Court to reverse an Appellate Division decision expanding the requirements of the Rules of Professional Conduct to require such explanation. The NJSBA noted any such expansion should be done through the rulemaking process and should be applied only after attorneys are put on notice.

"An attorney's professional and fiduciary obligations require scrupulous fairness and transparency in dealing with clients—requirements different from the typical norms that regulate arm's-length commercial transactions between vendors and customers," said Justice Barry T. Albin, who authored the opinion. Justice Albin relied on the Rules of Professional Conduct 1.4 for the holding.