"Fees on Fees" - Can Directors and Officers Recover Attorneys' Fees to Enforce Corporate Indemnities?

Executive Insurance Advisor

PUBLISHED ON: December 31, 2002

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Should directors and officers be permitted to recover attorneys’ fees when they attempt to recover attorneys’ fees? No, that is not a typographical error.

Many directors and officers are entitled to indemnification from the corporations that they serve either under corporate bylaws or under statute. This may mean that a corporation has an obligation to pay attorneys’ fees in defending a civil law suit, a criminal prosecution, or a governmental investigation. If the corporation resists paying the fees and expenses associated with such actions, the officer or director may be forced to sue to enforce his or her indemnity rights. Are the attorneys’ fees expended in enforcing those indemnity rights recoverable under the corporate indemnity?

Two recent cases take differing views on the “fees on fees” issue.