Are there any restrictions on the ability of a securities arbitration panel to award attorney fees?

Yes, there are restrictions on the ability of a securities arbitration panel to award attorney fees in California. Generally speaking, a securities arbitration panel cannot award attorney fees unless they are provided for in an existing contract between the parties or the fee is approved by the court. When deciding whether to award attorney fees, the panel will consider factors such as the financial resources of the parties, the amount of fees incurred relative to the amount at issue, the time and effort expended by each party’s counsel, the complexity of the legal issues, and the reasonableness and success of the claims. Additionally, the panel must determine whether the award is reasonable under the circumstances and if the client was fully informed of the risks of the litigation before entering into the contract. In addition, the California Supreme Court has held that arbitrators must exercise their discretion with restraint and with due consideration for public policy interests such as “encouraging the resolution of controversies without resort to costly litigation.” The Supreme Court also held that an arbitrator should not award attorney fees if the other party substantially prevails. Finally, the California Supreme Court also has held that an arbitrator may not award attorney fees where the party seeking the award was represented by an attorney on a contingent-fee basis because the contingent-fee arrangement would reward the attorney for his or her success in obtaining a favorable award in the arbitration.

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Are there any restrictions on the ability of a securities arbitration panel to award attorney fees?

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