ALBANY, May 23 (Reuters) - A proposal by New York court administrators to prohibit disbarred or suspended attorneys from participating in fee dispute programs could harm clients and clog small claims courts with new cases, attorneys from across the state said.

The fee dispute program was created as an inexpensive and efficient alternative to litigation for clients who feel they've been overcharged for legal services. It allows arbitration or, in some places, mediation to resolve disputes. Attorneys may initiate fee disputes, but those cases are far less common.

The state Office of Court Administration in March proposed preventing disbarred or suspended attorneys from taking part in the programs. Under the proposal, resolution of fee disputes involving attorneys facing disciplinary action would be delayed until the disciplinary proceedings were complete.

But a number of attorneys, some of whom arbitrate fee disputes, wrote in public comments that the proposal could block clients with legitimate cases from using the program and that an attorney's misconduct is irrelevant unless it is directly related to a client's fee dispute.

"If it ain't broke, don't fix it," wrote Rochester attorney Louis Kash, who is the chair of the Monroe County Bar Association's fee dispute program.

Kash and others said the proposal could steer some fee disputes into the courts, which would undermine the purpose of the arbitration program. Last year, he said, an unnamed Monroe County attorney was suspended, and the resulting publicity spurred about 40 former clients to file fee disputes. If the new proposal were in place, Kash wrote, those cases would have been diverted into Rochester small claims courts, "an undesirable result ... because of the likelihood of inconsistent outcomes."

Others took issue with the provision that would bar attorneys who are the subjects of open complaints from participating in fee dispute programs. Claims of professional misconduct are kept confidential until an attorney is formally disciplined, but the fee dispute rule, several people said, could force attorneys to out themselves as the subjects of complaints.

"The mere fact of a complaint is hardly compelling evidence that the lawyer actually engaged in misconduct," wrote Richard Supple, the chair of the New York City Bar Association's Professional Discipline Committee. NYCBA opposes the proposed rule.

And in the relatively rare cases in which attorneys initiate fee disputes, clients could delay arbitration by filing frivolous complaints, wrote Anthony Sabino of Sabino & Sabino, who works as a fee arbitrator in Nassau County. The dispute would then be delayed until the complaint was dismissed.

"By that time, the fee could be beyond recovery," Sabino wrote.

Under the current program, arbitrators are allowed to determine only whether a fee was reasonable and are barred by state regulations from considering "claims involving substantial legal questions, including professional malpractice or misconduct." Cases involving disciplined attorneys could run afoul of that rule, according to the OCA, but several comments said that concern is overblown.

"Arbitrators understand that they cannot resolve issues of malpractice or other legal questions," wrote Malvina Nathanson, an arbitrator with the New York County Lawyers' Association's fee dispute program. "However, whether the fees were reasonable in terms of the services rendered can be determined without regard to malpractice."

OCA spokesman David Bookstaver declined to comment on specific concerns.

"The comments are there to provide input to the Administrative Board of the Courts, who will be addressing this matter in the future," he said.

The board's next meeting is on June 14, but the fee dispute proposal may not be discussed until a later meeting, Bookstaver said.

(Reporting by Dan Wiessner)

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