Is Outside Corporate Lawyer An Agent or Independent Contractor ?
Although outside trial attorneys are independent contractors, they also "fall within the category of agents. They are fiduciaries; they owe to the principal the basic obligations of agency: loyalty and obedience." (Rest.2d Agency (1958) 14N, com. a, p. 80.)
And, "as a general proposition the attorney-client relationship, insofar as it concerns the authority of the attorney to bind his client by agreement or stipulation, is governed by the principles of agency. . . . Hence, 'the client as principal is bound by the acts of the attorney-agent within the scope of his actual authority (express or implied) or his apparent or ostensible authority; or by unauthorized acts ratified by the client.' . . . ." (Blanton v. Womancare, Inc. (1985) 38 Cal. 3d 396, 403 212 Cal. Rptr. 151, 696 P.2d 645, 48 A.L.R.4th 109, citations omitted.)
Hence, in a broad and general sense, an outside attorney retained to represent a corporate client at trial is both an independent contractor and an agent. (See City of Los Angeles v. Meyers Bros. Parking System, Inc. (1975) 54 Cal. App. 3d 135, 138 126 Cal. Rptr. 545 "Agency and independent contractorship are not necessarily mutually exclusive legal categories as independent contractor and servant or employee are. In other words, an agent may also be an independent contractor.".)
For this reason, whether an outside trial attorney is an agent of his or her corporate client within the meaning of section 317 must be determined by reference to the purpose of the statute. (See Wilcox v. Birtwhistle (1999) 21 Cal. 4th 973, 977 90 Cal. Rptr. 2d 260, 987 P.2d 727; Grubb & Ellis Co. v. Spengler (1983) 143 Cal. App. 3d 890, 896-897 192 Cal. Rptr. 637.)
Section 317 is an indemnity statute, not an attorney fee statute.
The Legislature did not provide therein for an award of attorney fees whenever an agent is successful in litigation with a corporate principal.
Rather, indemnification is limited to actions in which a person is involved "by reason of the fact that the person is or was an agent of the corporation." ( 317.)
In an agency relationship, the agent's acts are regarded as the acts of the principal. (Civ. Code, 2330, 2338.)
An agent of a corporation may become liable, or may be alleged to be liable, to the corporation or to third parties, for conduct which was in fact performed as the acts of the corporation. (Civ. Code, 2343; see 2 Witkin, Summary of Cal. Law (9th ed. 1987) Agency and Employment, 57-61, pp. 64-68.)