Arizona Court of Appeals Division Two Holds that Law Firms Representing Themselves Are Not Eligible for Attorney Fee Awards.

Munger Chadwick successfully sued Farwest for breach of contract and unjust enrichment, then sought an award of attorneys’ fees pursuant to A.R.S. § 12-341.01(A).  Farwest objected, arguing that the statute does not apply because Munger Chadwick represented itself.  The trial court awarded fees, relying on Hunt Investment Co. v. Eliot, 154 Ariz. 357 (App. 1987).  In Hunt, an attorney who was a partner in an investment partnership received a fee award for representing the partnership because a partnership cannot represent itself.  The trial court applied the same reasoning to Munger Chadwick.  Farwest timely appealed.

The Court of Appeals reversed the fee award.  Hunt stands only for the proposition that, unlike a self-representing individual, a partnership or corporation cannot be represented by someone who is not authorized to practice law.  If Munger Chadwick could not represent itself, logically it could not represent any corporation, which is contrary to common practice.  The Court also looked to Rule 31(a)(1) of the Rule of the Supreme Court of Arizona, noting that supreme court exercises jurisdiction over any “person or entity” engaged in the practice of law.  Similarly, the Arizona Rules of Professional Conduct and the Restatement (Third) of the Law Governing Lawyers both recognize that law firms can represent clients, not just individual lawyers.

The Court also rejected Munger Chadwick’s argument that the two attorneys from the firm who handled the case did so in their free time, rather than as attorneys working for the benefit of the firm.  The purpose of the fee-shifting rule is to ensure that all parties to litigation be treated equally in their ability to secure compensation for attorney fees.  It would not be equitable, and in fact might encourage specious litigation, to permit licensed attorneys to recover fees for self-representation when lay persons are not eligible to do so.

Judge Eckerstrom authored the opinion; Judges Espinosa and Olson joined.