Can arbitrators ignore Utah Rules of Professional Conduct when determining attorney fee reasonableness? Grimmer & Associates v. NRLA Explained

A recent Utah Court of Appeals decision in Grimmer & Associates v. NRLA provides important guidance on the scope of arbitral authority when engagement agreements reference the Utah Rules of Professional Conduct in fee disputes.

Background and Facts

Grimmer & Associates agreed to represent NRLA under a hybrid fee arrangement combining reduced hourly rates with contingency fees. After NRLA settled litigation for Galileo stock shares worth less than two dollars each, Grimmer became entitled to 37,500 shares representing 15% of the recovery. However, NRLA failed to transfer the shares, and by the time of the fee dispute, the shares had converted to SoFi stock worth dramatically more due to a corporate acquisition.

The engagement agreement contained a choice of law provision requiring disputes to be “resolved in accordance with the then-prevailing law of the State of Utah, including the Utah Rules of Professional Conduct.” In arbitration, NRLA argued the enhanced value made Grimmer’s fee unreasonable under the Utah Rules of Professional Conduct.

Key Legal Issues

The central issue was whether the arbitrator exceeded her authority by determining that the Utah Rules of Professional Conduct do not provide decisional criteria for attorney fee reasonableness in civil litigation. NRLA contended the arbitrator’s interpretation rendered the choice of law provision’s reference to the professional conduct rules “empty and useless.”

Court’s Analysis and Holding

The court of appeals affirmed, applying the principle that arbitrators deserve considerable deference. The court found the arbitrator’s interpretation arguably reasonable because the choice of law provision could be read as requiring application of Utah law to determine whether the professional conduct rules should serve as fee assessment criteria, rather than mandating direct application of the rules themselves.

The arbitrator had relied on Utah Supreme Court precedent, including Archuleta v. Hughes and Strohm v. ClearOne Communications, establishing that the Utah Rules of Professional Conduct “are not designed to create a basis for civil liability.” The court noted this interpretation was consistent with the rules’ Preamble, which states that enforcement authority lies with disciplinary authorities, not civil litigants.

Practice Implications

This decision reinforces the extremely narrow standard for vacating arbitration awards and clarifies that choice of law provisions referencing professional conduct rules will not necessarily require arbitrators to apply those rules as substantive criteria in fee disputes. Practitioners drafting engagement agreements should be explicit about whether such references are intended to establish disciplinary jurisdiction or create enforceable fee assessment standards in civil disputes.