Corporations Represented by In-House Counsel in Litigation May Now be Entitled to an Award of Attorney's Fees in California

On May 8, 2000, the California Supreme Court held that in-house counsel “stand in an attorney-client relationship with the corporation and provide comparable legal services.” Consequently, the Court held that a corporation represented by in-house counsel may recover attorney’s fees in the same situations in which that corporation could recover its outside counsel fees. PLCM Group, Inc. v. Drexler, 2000 Daily Journal D.A.R. 4831 (May 8, 2000).

In PLCM, the Supreme Court described the plight of PLCM, which administered a professional malpractice insurance policy through the Los Angeles County Bar Association. The policy had a $20,000.00 deductible per claim. But, if it chose to do so, the insurer could advance sums within the deductible and then seek reimbursement from the insured. One insured was Drexler, a lawyer. In response to a claim for professional malpractice against him, Drexler tendered his claim to PLCM which retained an outside law firm to represent him.

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