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Wednesday, May 08, 2019


Wolfgang P. Hirczy de Mino, Ph.D. (Political Science)

There is another pertinent development on the judicial policy side of the fee shifting issue:

About 2 weeks ago, the Texas Supreme Court addressed the significance of the word "incurred" in statutes that authorize award of attorney's fees in Rohrmoos Venture v. UTSW DVA Healthcare, LLP, No. 16-0006 (Tex. Apr. 26, 2019).

Rohrmoos is going to be the leading case on the matter of how reasonable and necessary fees are to be proven in the fee-shifting context in Texas state courts. It basically adopts the federal Lodestar approach for use in state courts beyond cases involving statutes that are analogues of federal ones, such as the TCHRA that was at issue in El Apple I, Ltd. v. Olivas, 370 S.W.3d 757 (Tex. 2012).

But the Rohrmoos opinion also parses the distinction between enabling statutes that require attorney's fees to be "incurred" to be recoverable and those that do not. See the excerpt pasted below.

The key implication here is that the TCPA should not include the "incurred" qualification as to attorney's fees. Barring success in re-locating the Oxford comma in the legislative process, however, perhaps defendants eligible to use the TCPA and attorneys interested in working such cases can contract around the pro-bono/no-fee problem. By way of Plan B.

Since the attorney who normally does contingency-fee work would not take the case except on the reasonable expectation of success and payment by the opposing side, the attorney could agree to start work under a normal hourly-fee agreement without requiring immediate payment (in the case of a cash starved defendant) and send the client regular billing statements (to help support the fee claim later), and could also agree not to sue the client to collect those fees if the client can't cover them from fees ordered paid by the opponent under the fee-shifting provision of the TCPA.

The client would be, and would remain, liable to the attorney for the fees incurred by the client at all times, but would avoid facing a lawsuit by her/his own attorney over those fees, should the case not end favorably for the client, or the fee award be insufficient to cover all fees. See See Sullivan v. Abraham, 488 S.W.3d 294, 299 (Tex. 2016) (noting that "reasonable" attorney's fee is one that is fair and moderate rather than excessive or extreme and that determination thereof rests within trial court's discretion); Kurtz v. Kurtz, No. 14-08-00351-CV, 2010 WL 1293769, at * 2-3 (Tex. App.-Houston [14th Dist.] Apr. 6, 2010, no pet.) (mem. op.) (noting that limited remand for determination of reasonable attorney's fees recoverable for specified portion of case is appropriate). As for sanctions, see Tex. Civ. Prac. & Rem. Code § 27.009(a)(2); Kinney v. BCG Att'y Search, Inc., No. 03-12-00579-CV, 2014 WL 1432012, at *11 (Tex. App.-Austin Apr. 11, 2014, pet. denied) (mem. op.) (noting that TCPA "gives the trial court broad discretion to determine what amount is sufficient to deter the party from bringing similar actions in the future").

The attorney could manage the risk of working (or credit, as it were) without ultimately getting paid by carefully evaluating the case upon intake, as would be done contingent fee cases.

Eventually the client's obligation to the attorney would become time-barred if not satisfied from an award in the client's favor, or not completely satisfied, if the award is less than the amount of the billed fees. But if the TCPA motion fails, and the case continues, the client will also need legal help defending the lawsuit on the merits. At that point, an attorney will want to get off the case if he or she is not getting paid by the client, and non-payment of fee bills is generally considered a valid ground for attorney withdrawal under TRCP 10. If the case is a pro bono case to begin with, however, it may be more difficult for an attorney to jump ship midstream based on lack of success in getting the case dismissed under the TCPA.

As for the time-keeping burden, under Rohrmoos, Texas attorneys now have to create timekeeper records (if they want to recover fees from the other side when contract or statute authorizes them), whether the case involves a contingent fee contract or not, and that record-keeping requirement also facilitiates segregation of hours incurred on the TCPA motion vs. other legal work on the same client matter.

Excerpt from Rohrmoos:

Furthermore, some enabling statutes have an explicit reference to attorney's fees that are "incurred." See, e.g., TEX. CIV. PRAC. & REM. CODE § 74.351(b)(1) (allowing the recovery of "reasonable attorney's fees and costs of court incurred by the physician or health care provider" for certain situations under the Texas Medical Liability Act); id. § 27.009(a)(1) (providing for recovery of "court costs, reasonable attorney's fees, and other expenses incurred in defending against the legal action as justice and equity may require" under the Texas Citizens Participation Act). In those instances, we have held that the word "incurred," just as the word "reasonable," acts to limit the amount of fees the court may award, and "[a] fee is incurred when one becomes liable for it." Garcia v. Gomez, 319 S.W.3d 638, 642 (Tex. 2010) (holding that "[b]oth the adjective `reasonable' and the verb `incurred' [in section 74.351(b)(1)] act to limit the amount of attorney's fees the trial court may award"); see also Jackson, 351 S.W.3d at 299-300 (denying a pro se attorney fees under the Texas Public Information Act, which has an "incurred" requirement, because he "did not incur attorney's fees as that term is used in its ordinary meaning because he did not at any time become liable for attorney's fees").

As we have explained, attorney's fee awards are compensatory in nature, intended generally to make the prevailing party whole as to reasonable and necessary fees for successfully prosecuting or defending against a claim. See Nalle Plastics, 406 S.W.3d at 173. But when statutes do not contain an explicit requirement that fees be "incurred," e.g., TEX. CIV. PRAC. & REM. CODE § 38.001, we do not imply such a term; rather, we evaluate whether legally sufficient evidence supports that the amount of attorney's fees awarded is reasonable and necessary for the legal representation, so that an award of such fees will compensate the prevailing party generally for its losses resulting from the litigation process.[9] See, e.g., Long v. Griffin, 442 S.W.3d 253, 255 (Tex. 2014) (per curiam). And when contracts provide for recovery of attorney's fees, we similarly do not imply terms but adhere to the parties' intent as expressed in the language of the contract. See URI, Inc. v. Kleberg Cty., 543 S.W.3d 755, 763 (Tex. 2018) (noting that "our primary objective is to ascertain and give effect to the parties' intent as expressed in the instrument"). Here, because there is no "incurred" requirement on the face of the contract, we evaluate whether legally sufficient evidence supports that the amount of attorney's fees awarded is reasonable and necessary for the legal representation, so that a fee-shifting award will compensate the prevailing party generally for its losses resulting from the litigation process.

Historically, claimants have proven reasonableness and necessity of attorney's fees through an expert's testimony—often the very attorney seeking the award—who provided a basic opinion as to the requested attorney's fees. See generally Penn Mut. Life Ins. v. Maner, 109 S.W. 1084, 1084 (Tex. 1908). In recent years, Texas law has developed with references to the Arthur Andersen method (sometimes referred to as the "traditional" method) and the lodestar method for proving the reasonableness and necessity of attorney's fees. See, e.g., Metroplex Mailing Servs., 410 S.W.3d at 900 (suggesting that "[u]nder the traditional method of awarding fees, [as opposed to the lodestar method,] documentary evidence is not a prerequisite"). The court of appeals in this case referenced both methods, distinguishing them and concluding that "Rohrmoos does not assert, and the record does not show, that the lodestar method was statutorily required or that [UTSW] `chose to prove up attorney's fees using this method.'" 559 S.W.3d at 167 (citations omitted). The court of appeals then affirmed the attorney's fee award, holding that "Howard's testimony concerning his experience, the total amount of fees, and the reasonableness of the fees charged was sufficient to support the award" under Arthur Andersen. Id. at 168.

Wolfgang P. Hirczy de Mino Ph.D.(Pol. Science)(Univ. of Houston, 1992)
View my recent work on my SSRN Author page: https://ssrn.com/author=2845050

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