Thursday, December 25, 2008

Law Firm Cannot Recover Fees For Representing Itself

In a case arising from a corporate receivership and dissolution action from which a law firm had withdrawn when it had been joined as a defendant, the Nevada Supreme Court held:

These consolidated matters arise from an action in which a law firm sought to recover attorney fees incurred for its representation of a corporation in a separate receivership and dissolution action.  The district court awarded the requested fees; approved the law firm’s garnishment and directed the corporation’s receiver to pay the firm out of the receivership funds; and awarded the firm additional fees under the offer of judgment protocol.  The corporation has appealed from the attorney fees judgment and post-judgment order, and the receiver has appealed from the court’s order on garnishment.

            As a threshold matter, the firm challenges this court’s jurisdiction to consider the receiver’s appeal, asserting that the receiver was not a party below and that he was not aggrieved by the district court’s order on garnishment.  Having considered the parties’ jurisdictional arguments, we conclude that we have jurisdiction over the receiver’s appeal because the court’s order constituted a final judgment in the garnishment proceeding, and since the order was rendered against the receiver, who was the garnishee defendant in that proceeding, he is an aggrieved party entitled to appeal.

            As for the merits of the parties’ appeals, we address whether the failure to pursue a claim under the receivership claims process necessarily precludes the recovery of attorney fees outside of the receivership court.  We also address whether fees are appropriate when a firm represents both the corporation and its majority shareholder and president, as well as whether the firm can recover fees for representing itself in the separate attorney fees action.

            We conclude that claims for attorney fees incurred in a receivership and dissolution action can be liquidated in a separate action.  The court in that separate action, however, has no jurisdiction to levy on receivership funds without the receivership court’s permission.  Accordingly, as we conclude that no conflict of interest barred recovery here, we affirm the district court’s judgment liquidating the firm’s attorney fees.  We reverse, however, the district court’s orders concerning garnishment and disbursement of receivership funds.  Finally, we conclude that a law firm cannot recover fees for representing itself, and we therefore reverse the post-judgment order awarding attorney fees.

(Mike Frisch)

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If a law firm is a true Defendant in a civil matter, how can it represent itself?

The law firm has been issued a Fed Tax ID or EIN like any other corporation.
I am a Consumer Law Advocate and this is problematic when the law firm is also the debt collector who has damaged the Plaintiff.

Any thought from this blog would be much appreciated!

Posted by: Marcie Salmon | Jan 23, 2012 4:42:31 PM

I believe that a law firm should represent itself as a Defendant in cases.
I feel that a law firm is a corporation.

Pursuant to Heintz vs. Jenkins, U.S. Supreme Court 1995 and the Fair Debt Collection Practices Act, a law firm who is named as a Defendant in a civil case because they meet the standards of the forementioned......should not be allowed to represent itself.

Any thoughts on this would be appreciated. and for reference I am fully aware of the perspective from the Creditor Rights side of this.
I am now interested in the Consumer Rights point of view.

Posted by: Marcie Salmon | Jan 23, 2012 4:46:49 PM

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