Third Party Beneficiaries Of An Attorney’s Retention Agreement Are Bound By Its Arbitration Provision

A California appellate court has held that a malpractice action brought by the shareholders of the entity that engaged the law firm are bound by the retention agreement’s arbitration provision. In Avetisyan v. Mitchell Silberberg & Knupp, the court held that the shareholders, while not signing a separate engagement agreement, were third party beneficiaries of the firm’s agreement with the company they owned, and thus bound by its arbitration requirement.