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In-house Counsel Costs - What are your thoughts?

Do you believe it is appropriate for a party to recover the reasonable costs of any in-house counsel who conducted or assisted the party's conduct of the arbitration?

Please provide your thoughts/comments below.

Comments (5)

Arbitrators generally do not include time spent by in-house counsel (or other corporate management time) as part of a party's arbitration costs on the basis that it does not add any incremental cost to the party (but see Paris Arbitration Rules, Art. 7.6, providing that "costs may also include management time and expenses"; and see also paragraph 5.7.3.2 of the Chartered Institute of Arbitrators' Guideline for Arbitrators on Making Orders Relating to the Costs of the Arbitration, which suggests that arbitrators may (at least in England-seated arbitrations) treat management time as "other costs" of the parties, a reference to the definition of costs in section 59 of the English Arbitration Act 1996).

In some cases, where the party is represented by in-house counsel and is entitled to an award of legal costs, arbitrators will assign to the corporate counsel's time an hourly rate that is lower than that charged by outside counsel to ensure that the winning party is being reimbursed and not making a profit on the arbitration. Third-party costs, on the other hand, whether outside counsel or a vendor employed to manage processes like disclosure of electronically-stored information, are easy to quantify because there are third-party invoices and these costs are readily included in arbitral awards.

Since most in-house counsel are on fixed salary by their employer, I would say no. In all likelihood the arbitration process did not cost the company extra for in-house counsel.

Paul Nicolai:

If the claim is statutory, prevailing case law allows for the recovery of those costs.

If the claim is contractual, it would first depend upon the contract language and secondarily, common law.

Agree with all who caution that this matter is often addressed by applicable state statutes. For example, Massachusetts generally follows the American Rule, however there are exceptions ... parties can contract for circumstances under which one may be entitled to attorney's fees; and, courts have concluded that an attorney representing himself in a civil action filed in Superior Court was "represented by counsel" within the meaning of G.L.c. 231, s 6F, which does not specifically exclude in-house counsel. Similarly, under Rule 4.2 (Professional Conduct) there is no carve-out for in-house counsel vis-a-vis the meaning of "represented by counsel".

Michael A. Lampert :

Most American courts allow in house counsel fees to be recovered in a shifting situation on adequate proof of reasonable hourly rate and hours. If arbitrators don’t behave similarly in house counsel may be chilled from drafting arbitration clauses
Fee Shifitng: The Recovery of In-House Legal Fees, 39 Wm Mitchell L. Rev. 227 -Recent Massachusetts Appellate Decision
http://masscases.com/cases/app/85/85massappct292.html
-Billable hours: http://blogs.findlaw.com/in_house/2016/03/billable-hours-are- back-for-many-in-house-attorneys.html

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