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May 7, 2001

PLCM Group v. Drexler (2000) 22 Cal.4th 1084, as modified 6/2/00

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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.

PLCM Group brought a lawsuit to collect the insurance deductible owed by David Drexler.  The trial court awarded PLCM the reasonable value of the services of PLCM’s in-house counsel. 

The California Supreme Court affirmed, holding that when in-house counsel represents an entity, the entity may recover attorney fees under Civil Code §1717.  Like private counsel, in-house counsel stands in an attorney-client relationship with the corporation and provides comparable legal services.  The trial court retains broad discretion to fix an award of reasonable attorney fees, and may use the market value or lodestar method. 



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