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A federal court in Illinois held that a broad arbitration agreement in a contract between a law firm and its client requires arbitration of disputes arising out of tax advice that the law firm gave the client when the agreement specified that the law firm would also act as a financial advisor.
In Olson v. Jenkens & Gilchrist, No. 05 C 4216, 2006 WL 3354132 (N.D. Ill. Nov. 17, 2006), Olson and other plaintiffs brought suit against Jenkens & Gilchrist and other defendants, including the law firm Timmis & Inman LLP. Plaintiffs sought damages because they suffered losses as a result of an alleged tax shelter scheme put together by defendants.
Timmis & Inman moved to compel arbitration pursuant to an arbitration clause in the agreement between the plaintiffs and the firm. The arbitration clause broadly covered all disputes arising out the agreement.
Agreeing that the dispute was subject to arbitration, the Court compelled the parties to arbitrate. The plaintiffs argued that the arbitration clause did not cover claims relating to their personal taxes because the agreement only dealt with the sale of plaintiffs' businesses. However, the Court disagreed, noting that the agreement also specified that Timmis & Inman would provide legal advice and act as a financial advisor. Therefore, the alleged misconduct relating to personal taxes also fell within the scope of the agreement, and hence, the arbitration clause.
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