Opinion ID: 421676
Heading Depth: 1
Heading Rank: 2

Heading: Fees for Salaried Counsel.

Text: 46 The court held that defendants employing salaried in-house counsel were not entitled to share in the fee award. The basis for their exclusion was that fees were awarded to compensate defendants for the cost of litigating a frivolous lawsuit and that defendants relying upon in-house counsel had not incurred any additional costs as their counsel were paid a fixed salary. We think that this argument misperceives the basis for an award under Roadway Express and also oversimplifies the effect of a lawsuit on a party represented by in-house counsel. 47 In Roadway Express the Court recognized that fees could be awarded against counsel as a sanction intended to enforce the orderly administration of justice. As we recently observed, the primary purpose of an award against counsel is to punish, McCandless v. Great Atlantic and Pacific Tea Co., 697 F.2d 198, 202 (7th Cir.1983), and, we hope, deter counsel from undertaking frivolous lawsuits. As with fee awards entered against a party guilty of bad faith litigation, an award against counsel serves only incidentally to compensate the prevailing party for fees that should never have been incurred. Id. at 200; Copeland v. Martinez, 603 F.2d 981, 984 (D.C.Cir.1979), cert. denied, 444 U.S. 1044, 100 S.Ct. 730, 62 L.Ed.2d 729 (1980). Thus, a prevailing party's decision as to how to engage counsel should have no bearing upon the court's decision to punish malfeasant counsel. The amount of fees actually incurred by the wronged party is a rational starting point for determining the size of the award, but it is no more than a guidepost. Furthermore, we have held in the context of a fee award to a state Attorney General for litigating an anti-trust action on behalf of the state that the entitlement to reasonable attorneys' fees is that of the plaintiff, not of his attorney.... The amount plaintiff actually pays his attorney is irrelevant, since the determination of what is a 'reasonable' fee is to be made without reference to any prior agreement between the parties. Illinois v. Sangamo Construction Co., 657 F.2d 855 (7th Cir.1981). 48 Even if we were to accept that the purpose of awarding fees to defendants was to compensate them for fees that should never have been incurred we would reverse the court's exclusion of defendants employing in-house counsel. The court applied a but for analysis in determining that defendants with in-house counsel had suffered no harm from this suit. In reaching this conclusion the court oversimplified the effect of this litigation on those defendants. Defendants chose to hire in-house counsel because that was the most efficient means of handling a large amount of legal work. The conclusion that plaintiff's suit did not harm these defendants rests upon the faulty assumption that in-house counsel would do nothing that would benefit defendants had they not been involved in this litigation, and that defendants therefore suffered no detriment. A more realistic assessment of the situation would indicate that for every hour in-house counsel spent on this case defendants lost an hour of legal services that could have been spent on other matters. The value to defendants of this lost time is, of course, the amount it would require to hire additional counsel to do the neglected work. Whether defendants actually hired additional counsel or went without legal advice on some matters is irrelevant as the value of the loss is the same. An award of reasonable fees will compensate defendants for this loss. To hold otherwise would either force these defendants to abandon in-house counsel for a more inefficient system or leave them open to frivolous suits by unscrupulous counsel undeterred by the threat of a fee award.