Recovery of Contractual Attorney Fees By Attorney Litigants
The Second District Court of Appeal in Soni v. Wellmike Enterprise Co. Ltd. (2014) 169 Cal.Rptr.3d 631 recently surveyed the relevant case law concerning attorney fee awards to attorney litigants.
In Soni, Surjit Soni dba The Soni Law Firm (“Soni”) sued Wellmike for recovery of unpaid fees for legal services. Soni prevailed at trial, and subsequently brought a motion for recovery of attorney fees pursuant to the attorney-client agreement. Acknowledging the general rule prohibiting recovery of attorney fees for self-representation, Soni argued that Mr. Soni was a sole proprietorship, that he did not represent himself, and that instead he retained other attorneys to represent him.
The trial court denied the request for attorney fees, concluding that Soni “operated as a law firm which was represented in this litigation by employees or associates of the firm, rather than by outside counsel.” Soni appealed. The Court of Appeal affirmed the order denying attorney fees.
The Soni court set forth an overview of the line of cases reviewed in reaching its conclusion, enumerating the following rules:
- “No recovery of attorney fees by pro se attorney litigants.”
In Trope v. Katz (1995) 11 Cal.4th 274, a law firm acted in propria persona to sue its former client for recovery of unpaid fees. Following favorable judgment, the firm sought to recover attorney fees provided for by the retainer agreement. The trial court denied the request, and both the Court of Appeal and California Supreme Court affirmed.
The Supreme Court held, “an attorney who chooses to litigate in propria persona and therefore does not pay or become liable to pay consideration in exchange for legal representation cannot recover “reasonable attorney’s fees” under section 1717 as compensation for the time and effort he expends on his own behalf or for the professional business opportunities he forgoes as a result of his decision.” The Court reasoned that allowing attorney litigants to recover attorney fees would effectively result in disparate treatment of pro se litigants.
- “Trope rule does not preclude corporate litigant from recovering for services of in-house counsel.”
In PLCM Group, Inc. v Drexler (2000) 22 Cal4th 1084, the Supreme Court affirmed an award of attorney fees under Civil Code section 1717 to a corporate litigant represented by in-house counsel. The Court reasoned,
“There is no problem of disparate treatment; in-house attorneys, like private counsel but unlike pro se litigants, do not represent their own personal interests and are not seeking remuneration simply for lost opportunity costs that could not be recouped by a nonlawyer. A corporation represented by in-house counsel is in an agency relationship, i.e., it has hired an attorney to provide professional legal services on its behalf. Nor is there any impediment to the effective and successful prosecution of meritorious claims because of possible ethical conflict or emotional investment in the outcome. The fact that in-house counsel is employed by the corporation does not alter the fact of representation by an independent third party. Instead, the payment of a salary to in-house attorneys is analogous to hiring a private firm on a retainer.”
- “Attorney litigant represented by other members of his or her firm in a personal matter may recover fees.”
In Gilbert v. Master Washer & Stamping Co. (2001) 87 Cal.App.4th 212, the Court of Appeal held, “a lawyer represented by other members of his law firm is entitled to recover reasonable attorney fees where the representation involved the lawyer’s personal interests and not those of the firm.”
- “No recovery of attorney fees where law firm is represented by members of the firm.”
In Witte v. Kaufman (2006) 141 Cal.App.4th 1201, the Court of Appeal reversed an award of attorney fees to a law firm represented by its attorneys, stating, “The attorneys of KLA are the law firm’s product. When they represent the law firm, they are representing their own interests. As such, they are comparable to a sole practitioner representing himself or herself.”
- “No right to attorney fees where law firm and its partners are represented by an associate in a matter involving the interests of their firm.”
In Carpenter & Zuckerman v. Cohen (2011) 195 Cal.App.4th 373, the Court of Appeal affirmed the trial court order denying attorney fees, holding,
“(1) substantial evidence supports the trial court’s finding that the attorney who represented plaintiffs in the prior appeal was doing so as an associate of the law firm and not as an independent contractor, and, therefore, plaintiffs legally are not entitled to an award of attorney fees; and (2) the trial court was justified in concluding that based on the record, the individual plaintiffs could not recover attorney fees in connection with the appeal because there was no showing of any distinction between the cross-claims against the law firm plaintiff and those against the individual plaintiffs.”
Applying these rules, the Soni court held that the trial court properly denied Soni’s request for attorney fees. The court noted that evidence of pages from the State Bar website listing Mr. Soni’s contact information as “The Soni Law Firm” and showing the firm’s address as the contact for individual attorneys, as well as pleadings indicating the attorneys were members of the firm, supported the trial court’s finding that The Soni Law Firm operated as a law firm and the attorneys representing it were its employees.
The Soni court concluded that because the firm’s associates represented the firm’s interests in the action, the general rule applied that “a law firm which represents itself in litigation cannot recover its own attorney fees.” The appellate court therefore affirmed the trial court’s order denying Soni’s motion for attorney fees.
ABOUT THE AUTHOR: Mina Miserlis is senior counsel at Tyson & Mendes LLP. She specializes in personal injury and high net worth insurance issues. Contact Mina at 858.263.4108 or email@example.com.
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