Matter of Ebel: Nonpayment of a Part 137 Fee Arbitration Award Constitutes Misconduct Warranting Suspension

Court: Appellate Division of the Supreme Court, Second Judicial Department (Per Curiam)

Decision Date: November 5, 2025

Citation: 2025 NY Slip Op 06059

Introduction

The Appellate Division, Second Department, in Matter of Ebel, addresses a straightforward yet important disciplinary question: what are the professional consequences when an attorney fails to pay a binding fee arbitration award issued under New York’s Fee Dispute Resolution Program (22 NYCRR Part 137) and does not timely challenge it? The court’s per curiam opinion suspends the respondent, attorney John Joseph Ebel, for six months, holding that such noncompliance constitutes conduct prejudicial to the administration of justice and adversely reflects on the lawyer’s fitness to practice, in violation of Rule 8.4(d) and (h) of the Rules of Professional Conduct (22 NYCRR 1200.0).

The case arises from a fee dispute between Ebel and his former clients, the Cebulski family, following a partition action. After the clients terminated Ebel’s representation, they invoked Part 137 arbitration and obtained a $17,000 award. Ebel neither sought a trial de novo nor moved to vacate the award and did not satisfy it. The Grievance Committee for the Tenth Judicial District brought disciplinary charges based on that nonpayment.

The opinion underscores a clear message: once a Part 137 award becomes final and binding, ignoring it—without pursuing the prescribed avenues for judicial review—can itself be professional misconduct warranting suspension, even where the attorney expresses remorse and offers to negotiate payment.

Summary of the Opinion

The Grievance Committee charged the respondent with two counts of misconduct based on a single set of facts: failure to satisfy a binding Part 137 fee arbitration award.
Rule Violations: Rule 8.4(d) (conduct prejudicial to the administration of justice) and Rule 8.4(h) (conduct adversely reflecting on fitness as a lawyer).
Procedural posture: After a hearing, a Special Referee sustained both charges. The respondent largely admitted the factual allegations but denied the legal conclusions; he did not challenge the Committee’s statement of disputed/undisputed facts and did not oppose the Committee’s motion to confirm the Referee’s report.
Findings: The court confirmed the Special Referee’s findings, emphasizing that the fee arbitration award was final and binding because the respondent neither sought a trial de novo nor moved to vacate, and he failed to pay the award.
Sanction: Six-month suspension, commencing December 5, 2025. Reinstatement application not earlier than May 5, 2026, contingent on proof of compliance with the suspension order and applicable rules.

Analysis

Precedents and Authorities Cited

The court’s opinion is rule-centered and does not cite prior case law. The decision relies on:

22 NYCRR Part 137 (New York State Fee Dispute Resolution Program): Provides that arbitration awards are final and binding unless a party timely seeks a trial de novo or moves to vacate within the prescribed period.
Rule 8.4(d) and (h) of the Rules of Professional Conduct (22 NYCRR 1200.0): Proscribe conduct prejudicial to the administration of justice and conduct adversely reflecting on a lawyer’s fitness.
22 NYCRR 1240.8(b)(1): Governs referral to a Special Referee in attorney discipline proceedings.
22 NYCRR 1240.15 and 1240.16: Set forth compliance obligations for suspended attorneys and standards for reinstatement.
Judiciary Law § 90: Authorizes the Appellate Division to regulate attorney discipline and imposes practice restrictions during suspension.
Local rule reference: 22 NYCRR § 691.11 (Second Department) as part of the reinstatement framework cited alongside Part 1240.

While the court does not cite earlier decisions, the ruling is consistent with the Appellate Division’s longstanding view that an attorney’s failure to honor binding adjudicative or quasi-adjudicative outcomes—especially after bypassing available review mechanisms—undermines the administration of justice and reflects adversely on professional fitness. This opinion reinforces that principle specifically in the context of Part 137 awards.

Legal Reasoning

The court’s reasoning proceeds from undisputed facts to legal conclusion:

Finality of the Award: The Part 137 award in favor of the clients was issued on January 22, 2020. The notice made clear that the determination was final and binding unless a dissatisfied party sought a trial de novo or moved to vacate within the prescribed timeframe. The respondent did neither.
Nonpayment: The respondent did not satisfy the award. At the hearing, he acknowledged the award, asserted he disagreed with it, and stated he proposed a payment schedule that the clients rejected. However, the obligation under a binding award is not contingent on client acceptance of proposed alternative terms. Absent a timely challenge through the specified procedures, the award is enforceable as rendered.
Rule 8.4(d) – Prejudice to the Administration of Justice: The court treats nonpayment of a finalized Part 137 award as prejudicial to the administration of justice. The Fee Dispute Resolution Program is an integral court-administered mechanism designed to resolve fee disputes efficiently. Flouting its outcomes after bypassing review avenues undermines that system’s integrity.
Rule 8.4(h) – Adverse Reflection on Fitness: Persisting in noncompliance with a binding adjudicative outcome also reflects adversely on the lawyer’s fitness by signaling an unwillingness to honor professional and legal obligations tied to client relations and court-administered processes.
Mitigation Considered but Insufficient: The Special Referee noted respondent’s age (70), remorse, and family financial responsibilities (including supporting a daughter in medical school). The court considered these mitigation factors but concluded that, under the totality of circumstances, they did not outweigh the seriousness of ignoring a binding award for a prolonged period.
Sanction Selection: A six-month suspension was deemed appropriate. The absence of a challenge to the award or to the Grievance Committee’s motion, coupled with prolonged nonpayment, supported a meaningful period of suspension rather than lesser discipline. The court imposed the standard suspension conditions, including practice prohibitions and compliance reporting.

Notably, although the arbitration panel criticized the respondent’s billing practices—finding he failed to maintain and deliver monthly billing records and lacked contemporaneous time records—those issues are background to the fee dispute and are not the subject of separate charges here. The disciplinary violations adjudicated are narrowly predicated on the failure to honor the final, binding arbitration award.

Impact and Prospective Significance

Strengthened Enforcement of Part 137: The decision underscores that disciplinary authorities will treat nonpayment of Part 137 awards—once final and unchallenged—as misconduct, independent of civil enforcement remedies. Attorneys cannot “wait out” or negotiate around a binding award without risking suspension.
Timely Use of Review Mechanisms Is Essential: If dissatisfied with a fee award, counsel must promptly seek a trial de novo or move to vacate within the program’s timelines. Failure to do so eliminates lawful avenues of contest and converts inaction into misconduct if the award remains unpaid.
Mitigation Has Limits: Personal financial hardship and offers to arrange payment do not absolve the obligation to comply with a final award. While such factors may affect the sanction’s severity, they will not excuse continued noncompliance.
Practical Compliance Consequences: Suspended attorneys face broad practice restrictions, must return court-issued secure passes, and will be required to affirm compliance as a condition of reinstatement. The disciplinary consequence is separate from, and does not erase, the underlying monetary obligation to the client.
Practice Management Lessons: Attorneys using hourly billing should maintain contemporaneous time records and send regular bills as promised in retainer agreements. Although not charged here as an independent violation, inadequate billing records can influence fee adjudications and lead to adverse awards that must then be honored.
Guidance for Clients: Clients contemplating the Fee Dispute Resolution Program can take assurance that awards are meaningful: disciplinary bodies will step in when a lawyer fails to pay an award that has become final and binding.

Complex Concepts Simplified

Part 137 Fee Arbitration: New York’s court-administered program for resolving attorney-client fee disputes. Awards are “final and binding” unless a party exercises specific, time-limited rights to seek a trial de novo in court or to move to vacate the award.
Trial de Novo vs. Motion to Vacate: A trial de novo is a fresh court proceeding to adjudicate the fee dispute anew. A motion to vacate seeks to nullify the arbitration award on recognized legal grounds (e.g., procedural defects). Both have strict deadlines; missing them locks in the award’s finality.
Rule 8.4(d) – Conduct Prejudicial to the Administration of Justice: A broad standard capturing behavior that undermines the legal system’s functioning (e.g., disobeying court orders or binding program outcomes).
Rule 8.4(h) – Conduct Adversely Reflecting on Fitness: Addresses behavior suggesting the attorney’s unfitness or lack of reliability in fulfilling professional obligations, even if not tied to dishonesty or client funds.
Special Referee (22 NYCRR 1240.8): In disciplinary matters, a judge may serve as Special Referee to hear evidence and make findings and recommendations, which the Appellate Division reviews.
Suspension and Reinstatement (22 NYCRR 1240.15, 1240.16; Judiciary Law § 90): During suspension, a lawyer cannot practice, give legal advice, or hold out as an attorney. Reinstatement requires proof of compliance and proper conduct throughout the suspension.
Affidavit of Compliance and Secure Pass: Suspended attorneys must file an affidavit confirming compliance with all suspension requirements and return any court-issued identification passes.

Practice Pointers

Act immediately upon receipt of a Part 137 award. If you disagree, consult counsel and file for a trial de novo or move to vacate within the prescribed time. Silence followed by nonpayment can result in discipline.
If you accept the award’s finality, pay promptly or reach a written settlement that the client actually accepts. An unaccepted payment plan offer does not suspend your obligation to pay.
Maintain contemporaneous time records and send periodic bills consistent with the retainer agreement. Good records reduce the risk of adverse fee determinations.
Document all communications with clients about fees and billing; clear documentation can be critical in both arbitration and discipline contexts.
In mitigation efforts, be prepared to demonstrate concrete steps to cure noncompliance (e.g., proof of payment), not merely intentions or offers.

Conclusion

Matter of Ebel delivers a clear and pragmatic holding: when an attorney does not challenge a Part 137 fee arbitration award within the program’s deadlines, the award becomes final and binding—and failure to pay it constitutes professional misconduct under Rules 8.4(d) and (h). The court’s six-month suspension emphasizes that the Fee Dispute Resolution Program’s outcomes are not optional; they are enforceable obligations whose disregard undermines the administration of justice and reflects adversely on professional fitness.

The opinion reinforces the centrality of compliance and accountability in fee disputes. It also offers a cautionary note about billing practices, reminding practitioners that accurate, contemporaneous records are not only sound practice management but often decisive in fee adjudications. Going forward, attorneys should treat Part 137 awards with the same seriousness as court orders: challenge them timely if warranted, or pay them promptly—because failure to do either exposes counsel to meaningful disciplinary sanctions.