The Ninth Circuit has allowed concurrent counsel engaged in a fee dispute with their client to recover prevailing party attorneys’ fees when the attorneys represent each other in the fee dispute. When a fee contract provides for recovery of attorneys’ fees by the prevailing party, attorneys may recover fees paid to their own counsel. The fees must be incurred in the context of a valid attorney-client relationship where the interests of the attorney and the client are distinct. The California Supreme Court holds a corporation may recover attorneys’ fees for the reasonable value of the services of in-house counsel.
The Law Offices of Conrado Joe Sayas, Jr. (“Sayas”) and Quisenberry & Kabateck, LLP (“Q&B”) jointly represented the Desais in an insurance bad faith action. Sayas, Q&B and the Desais had entered into a contingency fee agreement that contained a prevailing party attorneys’ fees clause in the event of a dispute between the lawyers and the clients. After their insurance bad faith case was settled, the Desais became dissatisfied with the representation of Sayas and Q&B and refused to honor the agreement. Sayas and Q&B moved to recover attorney fees and costs under the contingency fee agreement.
Sayas and Q&B successfully moved for summary judgment on their fee dispute and were awarded $333,267 collectively in attorney fees and costs. Sayas and Q&B then moved for attorney fees under California Civil Code §1717 for fees they incurred in prosecuting the fee dispute. The district court awarded Q&B $45,653, and Sayas $16,991.
The court allowed each attorney to recover its attorneys’ fees because Sayas and Q&B each retained the other. The fees were actually incurred, which was evidenced by an obligation by each to pay attorneys’ fees to the other. An attorney-client relationship existed with distinct interests between the attorney and the client.