Bay State Shines Light on In-House Counsel Fees

Bay State Shines Light on In-House Counsel Fees

When Omniglow Corporation, a light stick and luminescent product manufacturer, split in two, forming Cyalume and Omniglow, their relationship soon dimmed, resulting in a lawsuit and a sizeable verdict that included in-house counsel fees.

In Holland v. Jachmann, Omniglow claimed unfair business practices under Massachusetts state law. The court agreed, citing numerous breaches of contract, conversion and violations and Chapter 93A by Cyalume. On appeal, and in reference to the awarding for in-house counsel work, Cyalume claimed that Omniglow’s attorney was salaried so he did not bill for his services and, as a result of his lack of daily, detailed recording, the value of his work could not be accurately calculated. The Massachusetts Court of Appeals disagreed, upholding the trial court’s verdict:

We agree with the judge’s reasoning. On a practical level, as the judge observed, every hour spent on the Cyalume litigation was an hour when Stanbury’s efforts were directed away from other legal matters facing Omniglow. Therefore, having in-house counsel engaged in the present suit had a concrete financial impact on Omniglow, which we conclude “incurred” a cost. …

We also consider the policy underlying c. 93A. To deny attorney’s fees to Omniglow in this case simply because it chose to utilize its own in-house counsel would undercut the deterrent purposes of c. 93A and would implicitly reward the defendants for their questionable behavior. For these reasons, we conclude that an award of attorney’s fees under c. 93A is permissible, in the discretion of the trial judge, for the services of in-house counsel.

The court’s decision also brings to light the matter of in-house counsel and whether the practice of tracking billable hours and keeping detailed contemporaneous time records applies. They most certainly do. As the law firm of Sullivan & Worcester noted:

When actively participating in Chapter 93A claims, in-house counsel may want to consider heeding the Court’s pointed suggestion, and embrace the time keeping habits of an outside law firm in order to ensure the recovery of fees.

We welcome your enlightening comments. Later this week, we turn from keeping time records to whether lawyers are ethically bound to keep up with technology.

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