Massachusetts Court Awards Attorneys' Fees For In-House Counsel's Work

Peter Jarvis and Allison Martin Rhodes are Partners in our Portland office Trisha Rich is an Associate in our Chicago office

HIGHLIGHTS:

In a question of first impression, the Massachusetts Court of Appeals held that trial court judges have discretion to award attorneys' fees for work performed by in-house counsel for claims brought under the state's unfair trade practices law. The court's decision in Massachusetts results in the state joining a growing number of jurisdictions that recognize fee recoveries can be appropriate for work completed by in-house counsel. Forward-thinking lawyers would be wise to identify potential fee-shifting cases early and to request that in-house counsel keep contemporaneous and detailed time sheets. In a question of first impression, the Massachusetts Court of Appeals recently held that trial court judges have discretion to award attorneys' fees for work performed by in-house counsel for claims brought under the state's unfair trade practices law. The case, Holland, et al. v. Jachmann, 85 Mass.App.Ct. 292, 2014 WL 1887534 (2014), decided on May 14, 2014, arose out of a dispute between two entities that had formed following a corporate split by Omniglow Corporation, a manufacturer of light sticks and other luminescent products.

Following the split, the relationship between the two resultant companies, Cyalume and Omniglow (which had retained the original Omniglow name), quickly began to collapse. Shortly thereafter, Omniglow sued Cyalume for unfair business practices under Massachusetts state law. The trial court found in Omniglow's favor and awarded Omniglow legal fees that included an award for work performed by Omniglow's in-house counsel pursuant to Massachusetts' unfair business practices statute.

On appeal, Cyalume argued that Omniglow's in-house counsel was a salaried employee, who did not bill Omniglow for his services and, therefore, Omniglow did not "incur" those fees. In addition, Cyalume argued that the in-house counsel's failure to keep daily time records made the value of his work speculative. The Massachusetts Court of Appeals disagreed and affirmed the trial court ruling, explaining that as a practical matter, every hour that in-house counsel spent on the Cyalume litigation was an hour that he could not spend on other legal matters and as a result, that had a concrete and financial impact on Omniglow. Further, the appellate court reasoned, denying the attorneys' fees to Omniglow based on its...