Law Firm Cannot Recover Fees For Representing Itself

In a case arising from a corporate receivership and dissolution action from which a law firm had withdrawn when it had been joined as a defendant, the Nevada Supreme Court held:

These consolidatedmatters arise from an action in which a law firm sought to recover attorneyfees incurred for its representation of a corporation in a separatereceivership and dissolution action.  The district court awarded the requestedfees; approved the law firm’s garnishment and directed the corporation’sreceiver to pay the firm out of the receivership funds; and awarded the firmadditional fees under the offer of judgment protocol.  The corporation hasappealed from the attorney fees judgment and post-judgment order, and thereceiver has appealed from the court’s order on garnishment.

            As a thresholdmatter, the firm challenges this court’s jurisdiction to consider the receiver’sappeal, asserting that the receiver was not a party below and that he was notaggrieved by the district court’s order on garnishment.  Having considered theparties’ jurisdictional arguments, we conclude that we have jurisdiction overthe receiver’s appeal because the court’s order constituted a final judgment inthe garnishment proceeding, and since the order was rendered against thereceiver, who was the garnishee defendant in that proceeding, he is anaggrieved party entitled to appeal.

            As for the merits ofthe parties’ appeals, we address whether the failure to pursue a claim underthe receivership claims process necessarily precludes the recovery of attorneyfees outside of the receivership court.  We also address whether fees areappropriate when a firm represents both the corporation and its majorityshareholder and president, as well as whether the firm can recover fees forrepresenting itself in the separate attorney fees action.

            We conclude that claimsfor attorney fees incurred in a receivership and dissolution action can beliquidated in a separate action.  The court in that separate action, however,has no jurisdiction to levy on receivership funds without the receivershipcourt’s permission.  Accordingly, as we conclude that no conflict of interestbarred recovery here, we affirm the district court’s judgment liquidating thefirm’s attorney fees.  We reverse, however, the district court’s ordersconcerning garnishment and disbursement of receivership funds.  Finally, weconclude that a law firm cannot recover fees for representing itself, and wetherefore reverse the post-judgment order awarding attorney fees.

(Mike Frisch)