A recent ABA Journal story, “Appeals Court Nixes $650K Legal Fees Award, Says Parties Never Mutually Agreed to Arbitrate” reports that a California appeals court has snatched away more than $650,000 in attorney fees from Glaser Weil Fink Jacobs & Shapiro, LLP by reversing an arbitration award in a dispute involving artist Thomas Kinkade.  The appeals court threw out a lower court ruling that confirmed an arbitration award to the prominent Los Angeles law firm.  The appeals panel held 2-1 that the arbitration agreement between the former clients, who were operators of an art gallery, and the law firm was not binding.  Jonathan Cole, an attorney with Nemecek & Cole, is representing Glaser Weil in the matter.

The underlying case began when George and Esther Goff hired Glaser Weil to represent them in a dispute over royalties with Thomas Kinkade, whose oil paintings of cottages and village streets are mass produced and sold in galleries across the country.  Glaser Weil notified the Goffs that they owed $654,758 in legal fees and that it would file a lawsuit to collect.  It also advised them that they could seek arbitration through the local bar association.  The Goffs are represented by Terran Steinhart, a solo practitioner in Los Angeles. 

The Goffs offered to settle the matter through binding arbitration, which Glaser Weil initially rejected.  However, after it learned the identities of the arbitrators, the law firm agreed to arbitration.  The Goffs subsequently changed their minds and said they did not want arbitration.  The chairman of the arbitration panel decided that the Goffs’ original offer meant that the resolution of the proceeding would be binding.  The panel then awarded the fees to the firm, and the Goffs’ sought to overturn the award in court.

At issue before the Court of Appeals was whether the arbitration decision was final because the law firm initially rejected the clients’ request for binding arbitration.  The appeals panel determined that – because the firm initially rejected the Goffs’ offer and the Goffs rejected the firm’s offer – parties never entered into a written agreement.  When the firm rejected the Goffs’ written request for binding arbitration, “the Goffs’ offer was terminated and could not later be accepted by the firm,” wrote California Court of Appeal Associate Justice Frances Rothschild.