The Michigan Supreme
Court recently reversed a ruling in the Michigan Court of Appeals, finding that a law firm that represented itself could not collect attorney fees as a sanction.
In Fraser Trebilcock Davis & Dunlop PC v. Boyce Trust, a Michigan law firm had represented itself in a billing dispute against a former client. The law firm had accepted case evaluation in its favor in the amount of $60,000. The client, however, did not respond to the settlement offer.
In Michigan, litigants in a civil suit are required to submit their claim to case evaluation in an attempt to settle their cases before trial. Courts give “teeth” to the case evaluation process by punishing parties that reject the amount and do not do at least 10% better at trial. If a party rejects the amount and does not do 10% better at trial, they will have to pay the other sides costs and attorney fees after the case evaluation. This is called “case evaluation sanctions.”
Because the client in Fraser Trebilcock had not accepted the case evaluation settlement and the verdict in favor of the law firm was more than 10% more than the case evaluation settlement offer, the trial court determined that the law firm should be awarded case evaluation sanctions against the client. The issue arose, however, as to whether the law firm was entitled to attorney fees where it had represented itself in the dispute.
Both the trial court and the Court of Appeals held that the law firm was entitled to recover an attorney fee where it represented itself. See the link below to access the blog we wrote on the Court of Appeals’ decision:
The Supreme Court of Michigan, however, disagreed with the trial court and the Court of Appeals. The Supreme Court held that in order to recover an “attorney” fee, there must be an agency relationship between a lawyer and the client , as well as separate entities between the attorney and the client. Because the law firm represented its own interests in the lawsuit, it did not have “separate entities” as client and attorney and was, therefore, not entitled to an attorney fee.
