IN A DECISION called "significant" by malpractice attorneys, the New Hampshire Supreme Court has upheld the exemption of lawyers from lawsuits under the state's Consumer Protection Act. The Consumer Protection Act allows litigants to seek double or treble damages and to recover legal fees.

The Averill v. Cox decision, released on Oct. 31, 2000, also resolved two other uncertain issues, said William Saturley, a Manchester attorney who often writes on professional liability issues. Saturley said that it's now clear that mandatory arbitration clauses in legal fee agreements are permissible (although they should be used with caution) and that, indeed, the client owns his legal file and is entitled to receive it at the conclusion of representation at no cost.

The key issue in the case had been the plaintiff's contention that the trial court had erred in ruling that attorneys are "per se exempt" from the Consumer Protection Act. The plaintiff's attorney, Charles Dibble of Contoocook, had sought to distinguish the "non-commercial" aspects of legal practice - regulated by the court - from the business dealings of lawyers, which he contended should be subject to the act, based on a prior decision of the court, Gilmore v. Bradgate Assocs., Inc., 135 NH 234 (1992). That decision, although it did not deal pecifically with lawyers, asserted that the Consumer Protection Act could be applied to transactions involving individuals in regulated industries. In the Averill ruling, the court expressly overruled Gilmore and reaffirmed the exemption of attorneys from the act by asserting the primacy of another court decision, Rousseau.

The court pointed to the network of regulatory regimes and consumer protections that apply to lawyers as being "comprehensive" and emphasizing the distinctive nature of the legal profession as compared to other professions. "We conclude that our regulation of the practice of law is comprehensive and protects consumers from the same fraud and unfair practices as RSA chapter 358-A," the court announced in a decision written by Associate Justice John T. Broderick, Jr., with Chief Justice David Brock and Associate Justice Sherman Horton concurring. (Two other justices, William Johnson and W. Stephen Thayer, sat for oral argument but were not on the court when the case was decided.)

The court acknowledged that the primary aim of the Professional Conduct Committee is to administer discipline, not to compensate clients harmed by misconduct. The court contended that its disciplinary actions "protect the public as effectively from deceptive or unfair actions in the marketplace as would double or treble damages under the [Consumer Protection] Act" because of the deterrent effect of the court's power to suspend or disbar lawyers. The court also pointed to the creation of the Public Protection Fund, requirements for annual filings of certificates of compliance regarding lawyers' trust accounts, and the greater openness of the disciplinary process as components added since the Rousseau decision that strengthened the regulation of the profession.

Dibble, the plaintiff's attorney, said the ruling was a "travesty" because it reaffirms the lawyers' exemption from the Consumer Protection Act, and might even lead to other professions claiming exemptions from the act. Dibble said the court's regulatory mechanisms do not effectively protect consumers. "The words Justice Broderick wrote are fine, but down in the trenches, it just doesn't work," said Dibble. "There is no protection for the 'small' claim," he added, because plaintiffs must generally have legal representation to effectively lodge a complaint against an attorney. Without extra damages or the prospect of recovery of legal fees, the claimed loss must be very high for a litigant to afford a lawyer to assist him in pursuing a claim against an attorney, Dibble argued.

"It is an interesting time for this decision to come out with the legal profession under such scrutiny," said Dibble.

The decision also remanded back to the trial court the merits of the dispute and the question of whether a mandatory arbitration clause in the fee agreement is enforceable. The trial court had ruled that the plaintiff was not entitled to question the validity of the arbitration clause without challenging the validity of the entire contract. The court took a more cautious tone on this issue, saying arbitration clauses cannot be considered on the same basis as such clauses in other types of contracts.

Quoting a 1985 ruling by the court, the Supreme Court wrote that an attorney attempting to enforce an arbitration clause "has the burden of proving that it is fair and reasonable, and that the client had full knowledge of the facts and of his legal rights..."

On a final point related to an issue never before addressed by the court, the Averill decision holds that attorneys bear the expense of retaining a copy of a client's file. The defendants did not dispute whether the client was entitled to the contents of his file, and the court affirmed that "a client's file belongs to the client, and upon request, an attorney must provide the client with the file." The court noted a potential distinction between "work product" and "end product," and that the client might not be entitled to all documents in the file. The court declined to decide this issue.

"For future guidance, we note that any provision in a written agreement to have a client pay for the costs of copying his or her file upon termination of representation should be clearly indicated," the court wrote, adding that merely specifying that the client pay "out of pocket" expenses is not sufficient to require the client to pay for a copy of his or her own file. Instead, if the attorney wishes to retain a copy of the client's file, the photocopying should be at the attorney's expense.

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