CONTROVERSIAL ISSUE

SUMMARY: In the past, legislation has been introduced in the Maryland General Assembly to establish in statute the authority and privileges of in-house or corporate counsel.

Legislation filed in the 1989 and 1990 sessions concerned clarification that attorneys admitted to the Maryland Bar and employed by a corporation had the right to appear on behalf of that corporation during court and administrative proceedings with the same rights as an attorney in private practice. While the MSBA did not oppose these bills, questions were raised about whether there was a need for the legislation since there was little evidence that corporate counsels had been denied the right to represent their employers in court.

In the 1991 session a bill to establish the rights of corporate counsel to recover the same expenses in an action as an attorney in private practice was proposed. The MSBA Committee on Laws consulted with the MSBA Committee on Ethics, Committee on Client Protection, Section of Business Law and Section of General Practice prior to recommending that the MSBA Board of Governors oppose the legislation.

The primary reason for opposing the bill was that granting corporate counsel, who are salaried employees, the privilege of collecting the same amount as private attorneys would constitute fee-splitting unless the in-house counsel could document that he or she had received the full amount of the award for attorney's fees. An overwhelming majority of the House Judiciary Committee agreed with this argument and voted to reject the bill.

Following the conclusion of the General Assembly session, the Maryland Court of Special Appeals handed down an opinion that supported the arguments put forward by the MSBA on the in-house counsel issue. In an unreported opinion (Equitable Bank, N.A. v. Edward R. Butler, et. at., No. 951, September Term, 1990) the Court stated:

"When a private attorney is retained, a substantial portion of his fee represents the overhead associated with a private law practice, i.e., office space, support staff, research materials, etc. An attorney who is employed as an in-house counsel by a corporation, however, receives a salary in addition to those items that constitute the overhead of a private practice. The in-house attorney is not required to pay for those overhead expenses out of his salary. Indeed, one very important purpose for employing in-house counsel is to avoid the high fees associated with retaining private firms."

No legislation concerning in-house counsel has been introduced since 1991.

MSBA 2002 POSITION: Continue to oppose any legislation that would enable corporations to collect attorney fees over the actual expenses incurred for the payment of the salaries and benefits to in-house counsel.

SAMPLE LEGISLATION:
House Bill 664, General Assembly of Maryland, 1991

Return to 2002 Final State Legislative Program Table of Contents

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