Legal Updates for Lawyers’ Professional Liability - CASE LAW UPDATE

District Court for the Eastern District of Pennsylvania Upholds Agreement to Arbitrate Fee Dispute in Attorney Retainer Agreement
PeriRx, LLC v. Harras, Boom & Archer, LLP, Civil No. 24-2601, 2025 WL 2447788 (E.D. of Pa. August 25, 2025) (non-precedential)

The plaintiff filed a legal malpractice action against its attorneys arising out of the attorneys’ representation in a patent dispute. One of the plaintiff’s claims alleged that the attorneys misappropriated $490,000 of their funds that were in an escrow account. 

The defendants filed a motion to dismiss the conversion claim, alleging the claim was covered by the arbitration provision in the parties’ retainer agreement attached as an exhibit to the plaintiff’s complaint. 

The District Court construed the attorneys’ motion as a motion to compel arbitration, which they granted, finding there was a valid agreement to arbitrate fee disputes in section 4 of the retention agreement to which both parties agreed and affixed signatures. 

The court further found that the plaintiff’s allegation that the attorney used funds in the escrow account to compensate herself and her firm without sufficient explanation to the plaintiff about what work those funds supposedly covered fell within the scope of the agreed upon arbitration provision. Additionally, the court compelled arbitration of a portion of the plaintiff’s negligence claim which focused on the same fee-dispute matter. 

^{Legal Updates for Lawyers’ Professional Liability – September 2025 is prepared by Marshall Dennehey to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We would be pleased to provide such legal assistance as you require on these and other subjects when called upon. ATTORNEY ADVERTISING pursuant to New York RPC 7.1 Copyright © 2025 Marshall Dennehey, all rights reserved. No part of this publication may be reprinted without the express written permission of our firm. For reprints or inquiries, or if you wish to be removed from this mailing list, contact tamontemuro@mdwcg.com.}