## Facts

- Philip I. Moncharsh, an attorney, was hired as an associate by the law firm Heily & Blase in 1986 and signed an employment agreement.
- The agreement included a restrictive client-solicitation/fee-splitting provision stating that if a firm client left the firm and retained Moncharsh (or an attorney he recommended), the firm would receive 80% of the fees Moncharsh later received from that client and Moncharsh would receive 20%.
- The agreement also required binding arbitration of disputes arising out of the employment relationship, with the arbitrator’s decision designated final and binding.
- Moncharsh left the firm in 1988; disputes arose regarding fees from certain clients who continued with Moncharsh.
- The firm demanded 80% of those fees under the agreement; the dispute proceeded to arbitration.
- The arbitrator largely awarded the firm 80% of the disputed fees (with a limited exception as to one client on unconscionability grounds).
- Moncharsh petitioned to vacate or modify the award, arguing the fee-splitting provision was illegal and against public policy, including the California Rules of Professional Conduct.
- The superior court confirmed the award and the Court of Appeal affirmed.

## Issues

1. Whether courts may review a private contractual arbitration award for errors of law apparent on the face of the award, including where the asserted error causes substantial injustice.
2. Whether a court may refuse to enforce an arbitration award on the ground that it enforces an allegedly illegal fee-splitting provision contrary to public policy and professional conduct rules.

## Decision

- The California Supreme Court affirmed confirmation of the arbitration award.
- Courts generally may not vacate or correct a contractual arbitration award for errors of fact or law, even if the error appears on the face of the award and is claimed to cause substantial injustice.
- Judicial review is limited to the grounds specified by statute for vacating or correcting awards (e.g., corruption, fraud, misconduct, or the arbitrator exceeding powers) and narrow illegality/public-policy exceptions.
- Alleged illegality directed at a particular contract term, rather than the arbitration agreement itself or the contract as a whole, does not bar arbitration of the dispute; the legality question is ordinarily for the arbitrator to resolve.
- The asserted professional-conduct concerns in an ordinary fee dispute did not justify expanded judicial review or displacement of the arbitral forum.

## Legal Principles

- Contractual arbitration is chosen for finality; parties accept the risk of factual or legal mistake in exchange for a quicker and less expensive resolution.
- The statutory provisions governing vacatur and correction of arbitration awards supply the principal, exclusive grounds for judicial intervention; courts may not add a general “legal error” or “substantial injustice” basis for review.
- When alleged illegality pertains only to a severable portion of the contract and not to the arbitration clause itself, the controversy—including the illegality contention—remains arbitrable, and the arbitrator’s determination is generally final.
- Professional responsibility rules do not, by themselves, require court resolution of a fee dispute submitted to arbitration or expand the scope of post-award judicial review.

## Conclusion

The court held that private arbitration awards are ordinarily insulated from judicial review for legal or factual error and may be disturbed only on limited statutory or narrow public-policy grounds; because the alleged illegality targeted a specific fee-splitting term rather than the arbitration agreement itself, the award was properly confirmed.


Moncharsh v. Heily & Blase, 3 Cal. 4th 1 (Cal. 1992)