California SLAPP Law

There is a basic concept concerning legal fees that some attorneys never seem to understand, so the same issue comes up in many variations. Say, for example, that Joe Attorney and Paul Plumber enter into a contract for some plumbing work at the attorney’s home. The contract provides for attorney fees to the prevailing party if they ever get into a contract dispute. Joe Attorney is not happy with the plumbing work, so he sues, and both parties represent themselves at the trial.

Under this scenario, regardless of who wins, neither party will recover any attorney fees, because there are no attorney fees. Paul represented himself, so it’s pretty obvious he has no basis for attorney fees, but often an attorney in these circumstances will improperly seek fees, claiming that he should be reimbursed for the time he spent on the case, just as though he had hired an attorney (so-called “opportunity costs”).  California courts have always rejected this argument, since no attorney was paid for the work, and there are therefore no attorney fees to recover. The fact that the prevailing party happened to be an attorney does not make him eligible for the money he lost fighting the case, anymore than the plumber should be paid for the time he spent prosecuting the case if he prevails.

But this simple reasoning does not keep attorneys from trying. In the latest example, the firm of Carpenter & Zuckerman sued attorney Paul Cohen and his professional corporation Personal Injury Solutions, Inc. Cohen cross-complained back against Carpenter & Zuckerman, alleging, among other things, defamation.

Carpenter & Zuckerman properly responded with an anti-SLAPP motion, which was granted. Cohen appealed, but lost, and Carpenter & Zuckerman filed a memorandum of costs under the anti-SLAPP statute for the attorney fees incurred on appeal (about $33,000). Here is where it gets interesting.

According to the opinion by the Court of Appeal, Carpenter & Zuckerman submitted a declaration from one of the firm’s associates, Candice Klein, attesting to the fact that she had been “retained” by her firm to represent it on appeal. She pointed out that she was not a partner in the firm, had no financial interest in the outcome of the appeal, and asserted that she was hired on an “independent contractor basis”.

It was a valiant effort to distance Ms. Klein from the firm, to create sufficient independence that the court might treat her as a retained attorney, but it didn’t fly with the trial court or the Court of Appeal. A law firm representing itself is not entitled to recover attorney fees, and that does not change when an associate is used. No attorney fees for Carpenter & Zuckerman. It probably didn’t help that Ms. Klien is a graduate of Southwestern University School of Law, one of the finest law schools in the country, creating the automatic assumption that she is really the one running the firm, partner or not.

In defense of Carpenter & Zuckerman, the argument had some merit. In a 2001 case called Gilbert v. Master Washer & Stamping Co., Inc., the Court of Appeal permitted an attorney fee award to a firm that was representing one of its own partners, but in that case the matter involved the partner’s “personal interests”. Similarly, Carpenter and Zuckerman were named individually in this case, but other cases have already held that that is not sufficient if the issues are the same as those asserted against the firm.

Anytime a law firm is sued, any recovery against it will detrimentally affect any partner. And when a law firm is sued in tort for the act of one or more of its lawyers, those lawyers are exposed to liability. In order to recover attorney fees for work done on behalf of individual attorneys in a law firm, there must be a showing that the fees sought to be recovered are not attributable to representation of the law firm. No such showing was made here. Thus, there was not sufficient evidence to overturn the trial court’s conclusion that the individual plaintiffs were not entitled to recover any attorney fees.