A mandatory arbitration clause in Reed Smith's client engagement letters is unenforceable because it was not specifically signed by the client and did not inform the client of the rights he was giving up, a Philadelphia judge has ruled in an issue of first impression in the state.

Philadelphia Court of Common Pleas Judge John M. Younge rejected Reed Smith and partner Douglas Widin's additional argument in Batoff v. Widin that the arbitration clause should be enforced in this legal malpractice action because their client was a sophisticated businessman and attorney.

Plaintiff Jerald S. Batoff sued Reed Smith and Widin over their work in negotiating a $20.5 million settlement with Batoff's insurance company after his Villanova mansion burned down in April 2012. Batoff has alleged Reed Smith advised him to enter the settlement without the involvement of the tenants who were living in the home at the time of the fire despite the fact that the lease agreement's lease-to-own provision required the tenants' involvement in such negotiations.