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Reimbursement of attorney’s fees when the attorneys are in-house

After litigation under some statutes, the prevailing side is entitled to recover the fees of its attorneys. A small body of substantive law has developed around the rights of in-house lawyers to recover attorney’s fees.

My crude understanding is that sometimes, if inside lawyers are to recover their costs, a court must agree that employed lawyers are entitled to have their “fees” recovered. Second, the court must determine the recompense to be awarded for the time and efforts of the inside attorneys. Some courts have looked to prevailing rates of outside counsel who handle similar work in that jurisdiction. Other courts have approved a fully-loaded cost of in-house lawyers (See my post of July 27, 2007 on this term.). A few courts have set arbitrary or idiosyncratic lodestars. Whichever formula a court approves, this is one situation where tracking internal time can turn out to be useful.

To recover attorney’s fees is different in intent than to operate a law department as a profit center (See my posts of Feb. 8, 2006 on DuPont’s law department and its efforts to collect money as a profit center; Dec. 10, 2007 on recoveries of class action settlements; and June 15, 2006 and references cited.).

I welcome commentary on this aspect of management from those who know more about it than I do.