Attorneys' Fees in Derivative Suit in California

A plaintiff in a shareholders' derivative action may recover attorney fees under "one of two doctrinal theories of recovery: the substantial benefit rule and the common fund doctrine." ( Brusso v. Running Springs Country Club, Inc. (1991) 228 Cal. App. 3d 92, 106,; see Mandel v. Hodges (1976) 54 Cal. App. 3d 596, 620 (Mandel); Fletcher v. A. J. Industries, Inc. (1968) 266 Cal. App. 2d 313, 318-325 (Fletcher).) The substantial benefit doctrine "permits the award of fees when the litigant, proceeding in a representative capacity, obtains a decision resulting in the conferral of a 'substantial benefit' of a pecuniary or nonpecuiniary nature." ( Serrano v. Priest (1977) 20 Cal.3d 25, 38.) In the exercise of its equitable discretion, the court may order the award if the "dictates of justice" require that "those receiving the benefit should contribute to the costs of its production." (Ibid.) In exercising these equitable powers, the trial court has broad discretion, and the order will not be disturbed unless the appellate court is convinced the award is "clearly wrong." (Mandel, supra, 54 Cal. App. 3d at p. 624.)