Arbitration Clause Must Be Explained To Client

The Washington Court of Appeals – Division Three- has upheld a trial court determination that Washington State has jurisdiction over Texas lawyers who provide debt relief services to state residents.

 [Law firm] LWG purposely advertised on the Internet to Washington residents, made service promises to Washington residents, entered into contracts with Washington residents, and received payments from Washington residents. Ms. Miller’s suit relates to these activities. Having Washington as the forum state does not offend traditional notions of fair play and substantial justice, considering the type of the complaint, the convenience of the parties, and the equities involved. Based on the above, Ms. Miller met her burden to show that Washington had personal jurisdiction over LWG to avoid dismissal. The trial court properly concluded likewise.

Further, the court found that a contractual provision that required clients to submit to arbitration in Texas was not explained to the clients and was unenforcable.

 Here, no attorney or attorney’s representative discussed the arbitration provisions with Ms. Miller, or advised her of the rights at stake. She was not counseled or advised regarding the consequences of relinquishing the legal protections provided by Washington law or of the protections provided by Texas law. Ms. Miller was not informed of the advantages or disadvantages of arbitration, including the requirement she must bring arbitration claims in Texas. Moreover, no one explained the inconsistent and mutually exclusive venue and jurisdiction provisions. Based on existing case law and the RPCs, we, like the trial court, conclude the agreement between the parties was procedurally unconscionable. Therefore, it was void and we need not address substantive unconscionability.

(Mike Frisch)