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Rejecting arguments that it is a violation of Pennsylvania's Rules of Professional Conduct to include an arbitration clause in a law firm's retainer agreements, a state appellate court has sent a legal malpractice suit against Ballard Spahr to arbitration.

The Pennsylvania Superior Court on Monday ruled 2-1 in Mackin Medical v. Lindquist & Vennum, which is a legal malpractice case brought against the former firm Lindquist & Vennum, which merged with Ballard Spahr in 2017. The nonprecedential decision reversed a ruling by the Philadelphia Court of Common Pleas, which had determined the case could not proceed to arbitration.

Although the trial court had ruled that including an arbitration clause in the law firm's retainer went against rules of professional conduct barring attorneys from placing limits on their liability for malpractice, Superior Court Judge Judith Olson, who wrote the majority opinion, said that sending the case to arbitration would not limit the parties' ability to recover.

"The AAA's Commercial Arbitration Rules do not limit appellant's potential liability to Mackin Medical. Instead, the rules provide the arbitrator with the authority to grant 'any remedy or relief that the arbitrator deems just and equitable,'" Olson said. "Further, nothing in the parties' agreement limits the broad grant of authority to the arbitrator to award 'any remedy or relief that the arbitrator deems just and equitable.'"

While the trial court's opinion had noted procedural differences between arbitrating a case and litigating it in court, Olson said those differences did not amount to a limitation that would run afoul of the professional conduct rules.

"As the trial court recognizes, these are procedural differences between courts and AAA arbitration," Olson said. "The procedural differences do not, in any way, prospectively limit the substantive scope of Mackin Medical's potential claims against appellant or limit appellant's liability to Mackin Medical."

Judge Kate Ford Elliott joined Olson, while Judge Jack Panella issued a one-sentence dissenting opinion, saying he would affirm based on the trial court's opinion.

According to Olson, Mackin Medical retained Lindquist & Vennum in 2013 to handle antitrust and competition issues. Five years later, Mackin Medical sued Lindquist &  Vennum, Ballard Spahr and several attorneys, alleging legal malpractice in connection with efforts to renegotiate a licensing contract.

The defendants filed preliminary objections seeking to send the case to arbitration, but Mackin Medical challenged those objections, arguing that the arbitration provision was unenforceable because it went against the Rules of Professional Conduct, the company had not been fully informed about the effect of the agreement, and the dispute fell outside the scope of the provision.

According to Olson, the trial court initially ruled the agreement was ambiguous, but then in its opinion to the appeals court the trial judge "seemingly abandoned" the ambiguity issue, and reasoned that the arbitration provision violated Section 1.8 of the Rules of Professional Conduct.

Along with determining that nothing in the arbitration agreement would limit the parties' liability, Olson noted that comment 14 to Rule 1.8 said the rule was not meant to bar an attorney from entering into an arbitration agreement, and that retainer agreements do not constitute a "business transaction with a client" under the rules.

Further, Olson said the ruling went against the Federal Arbitration Act.

"Here, the trial court invalidated the arbitration provision based solely upon procedural differences that exist between courts and arbitration," Olson said. "In doing so, the trial court has 'singl[ed] out [this] arbitration provision[]'—and, in effect, all arbitration provisions—'for suspect status' based solely upon procedural differences that exist between adjudication before courts and arbitration. This rationale thwarts the will of Congress and violates the FAA."

David Kwass and Elizabeth Bailey of Saltz Mongeluzzi & Bendesky are representing Mackin Medical. In an emailed statement, Kwass said, "Though we are disappointed in the holding and are still considering our next steps, we look forward to pressing the merits of our client's case, regardless of the forum."

Conrad O'Brien attorney Nicholas Centrella, who represented Lindquist & Vennum, did not return a message seeking comment.