In a published decision, the Court of Appeal (Fourth Appellate District, Division Three) has held that a law firm which prevailed in mandatory fee arbitration against a former client was entitled to an award of attorney’s fees incurred in the course of the arbitration notwithstanding the fact that it was represented at arbitration by an attorney who was “of counsel” to the firm.  Dzwonkowski v. Spinella, 2011 Cal.App.LEXIS 1408.

InTrope v. Katz(1995) 11 Cal.4th 274, the court held that an attorney litigating in propria persona does not pay or become liable to pay consideration in exchange for legal representation, and therefore cannot recover reasonable attorney’s fees under Civil Code section 1717.  Section 1717 provides for an award of reasonable attorney’s fees when a contract allows for the recovery of fees to enforce the contract.  In the Dzwonkowskidecision, the losing client argued that the firm could not recover attorneys fees for services provided at arbitration by its “of counsel” attorney because, like the pro-per law firm in Trope, the of-counsel attorney did not actually “incur” fees.

The Court of Appeal disagreed.  The court ruled that the of-counsel attorney had, in fact, incurred fees because the evidence showed that there had been: (1) an obligation to pay attorney fees; (2) the existence of an attorney-client relationship; and (3) distinct interests between the attorney and the client.