Avoiding malpractice and honoring the law robert L. Tobey coyt randal johnston
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10. Proving Attorney’s Fees.Recent case law has highlighted the problems that can arise from the difference between what is required to prove and recover attorney’s fees under the “traditional method” as opposed to the lodestar method. In Arthur Andersen & Co. v. Perry Equipment Corporation, 945 S.W. 2d 812 (Tex. 1997), the Texas Supreme Court considered what proof was required to prove attorney’s fees in a DTPA case. Perry Equipment sued Arthur Andersen for a faulty audit and asserted DTPA claims. Id. at 814. After a favorable verdict and judgment on the DTPA claims, Arthur Andersen appealed to the Texas Supreme Court on several issues including whether Perry Equipment’s attorney’s fees could be calculated as a percentage of recovery. The Supreme Court held that a reasonable fee based solely on evidence of a percentage fee agreement between a lawyer and client may not be determined without consideration of the factors required by Disciplinary Rule 1.04. Id. at 818. The DTPA allows recovery of “reasonable and necessary attorney’s fees.” Id. Factors that a fact finder should consider when determining the reasonableness of a fee include:
These factors have become known in the case law as the Arthur Andersen factors. The Supreme Court concluded that a party’s contingent fee agreement may be considered by the fact finder, and is, therefore, admissible in evidence, but that agreement alone cannot support an award of attorneys fees under the DTPA. In other words, the plaintiff cannot simply ask the jury to award a percentage of the recovery as a fee because without evidence of the factors identified in Disciplinary Rule 1.04, the jury has no meaningful way to determine if the fees were in fact reasonable and necessary. Id. at 818-19. The Supreme Court held that to recover attorney’s fees under the DTPA, the plaintiff must prove that the amount of fees was both reasonably incurred and necessary to the prosecution of the case at bar, and must ask the jury to award the fees in a specific dollar amount, not as a percentage of the judgment. Id. at 819. Following the Arthur Andersen decision, several Supreme Court cases approved attorney’s fees awards using the Arthur Andersen factors under Disciplinary Rule 1.04:
In El Apple I, Ltd v. Olivas, 370 S.W. 3d 757 (Tex. 2012), the Texas Supreme Court discussed the requirement for proving attorney’s fees under the lodestar method. The Texas Commission on Human Rights Act (“TCHRA”) includes a fee-shifting provision that allows a prevailing party to recover reasonable attorney’s fees as part of the costs of pursuing the claim. To calculate attorney’s fees under the TCHRA, Texas courts require the use of the lodestar method, that is, the number of hours worked multiplied by the prevailing hourly rates. If the lodestar calculation does not reflect a reasonable fee, a multiplier may be applied. Id. at 758. After the plaintiff prevailed on liability and damages, her attorneys submitted an application for attorney’s fees. The attorneys estimated they had collectively spent 850 hours on the case, but they did not have time sheets documenting the work that had been performed. Counsel testified their time was reasonable and necessary given the nature of the case and the results obtained. The attorneys also testified that they refrained from taking additional clients because of the case. Id. at 759. After calculating the reasonable hourly rates for the attorneys and accepting the estimate of the reasonable number of hours spent, the court then enhanced the lodestar amount by applying a 2.0 multiplier, resulting in a fee award of $464,000. The Supreme Court first discussed the lodestar method: “Under the lodestar method, the determination of what constitutes a reasonable attorney’s fee involves two steps. First, the court must determine the reasonable hours spent by counsel in the case and a reasonable hourly rate for such work.… The court then multiplies the number of such hours by the applicable rate, the product of which is the base fee or lodestar.… The court may then adjust the base lodestar up or down (apply a multiplier), if relevant factors indicate an adjustment is necessary to reach a reasonable fee in the case.” Id. at 760. The Supreme Court went on to discuss the application of the lodestar rule for class action proceedings. The court stated that for class actions, the eight Arthur Andersen factors are to be utilized to determine a reasonable fee. Id. at 760-61. The class action rule also requires that any adjustment to the base lodestar must be in the range of 25% to 400% of the lodestar figure. Id. at 761. The lodestar method aims to provide a relatively objective measure of attorney’s fees. It has been criticized, however, for providing a financial incentive for counsel to expend excessive time and unjustified work and for creating a disincentive to early settlement. To avoid these pitfalls, a trial court should obtain sufficient information to make a meaningful evaluation of the application for attorney’s fees. Charges for duplicative, excessive, or inadequately documented work should be excluded. A meaningful review of the hours claimed is particularly important because the usual incentive to act so as to minimize attorney’s fees is absent when fees are paid by the opposing party. Id. at 762. The court stated that while Texas courts have not routinely required billing records or other documentary evidence to substantiate a claim for attorney’s fees, the requirement now applies in contested cases under the lodestar approach: “The starting point for determining a lodestar fee award is the number of hours ‘reasonably expended on the litigation.’ The party applying for the award bears the burden of proof. That proof should include the basic facts underlying the lodestar, which are (1) the nature of the work, (2) who performed the services and their rate, (3) approximately when the services were performed, and (4) the number of hours worked. An attorney could, of course, testify to these details, but in all but the simplest cases, the attorney would probably have to refer to some type of record or documentation to provide this information. Thus, when there is an expectation that the lodestar method will be used to calculate fees, attorneys should document their time much as they would for their own clients, that is, contemporaneous billing records or other documentation recorded reasonably close to the time when the work is performed.” Id. at 762-63. The court criticized the attorneys in this case for failing to indicate how the hours they spent in the aggregate were devoted to any particular task or category of tasks. Neither attorney presented time records or other documentary evidence. The attorneys based their time estimates on generalities such as the amount of discovery in the case, the number of pleadings filed, the number of witnesses questioned, and the length of trial. The court held that while relevant, none of this testimony provided the specificity needed for the trial court to determine how many hours were devoted to each of the tasks and whether that time was reasonable. Id. at 763. The court reversed and remanded the judgment for attorney’s fees, requiring the attorneys to reconstruct their work in the case to provide the minimum information the trial court required to perform a meaningful review of their fee application. Id. at 764. The court also held that a trial court may use a multiplier to either increase or decrease the lodestar figure to approximate a reasonable fee. On October 25, 2013, the Texas Supreme Court followed up on the El Apple case with City of Laredo v. Montano, 414 S.W. 3d 731 (Tex. 2013). In this eminent domain case, the lawyers for the successful property owner opted to prove up attorneys’ fees under the lodestar method even though they were not required to do so. The jury awarded the property owner attorneys’ fees of $446,000 for the three lawyers that had represented them. The city challenged the fee awards for two of the lawyers. The lead attorney, Richard Gonzalez, testified that he worked on the case for 226 weeks, and estimated that he devoted an average of a minimum of six hours a week to the case. Gonzalez did not keep time records. Gonzalez multiplied his estimate of six hours per week times 226 weeks times an hourly rate of $250 to conclude that he was owed a fee of $339,000. The court contrasted Gonzalez’s testimony about the time and labor involved in representing the Montanos, the novelty of the case, preclusion of other employment, as well as other Arthur Andersen factors with the testimony of Adriana Benavides-Maddox, who had kept detailed billing records of her tasks and the time spent, and was paid $25,000 for her work at an hourly rate of $200. She also testified that she put in 12 hour days during the five day trial and was, therefore, owed an additional $12,000 for her work at trial. The court held that while Gonzales was not required to prove up attorney’s fees under the lodestar method (unlike the plaintiff in El Apple), he chose to do so. As a result, the standard of proof required in El Apple applied in this case as well. The court criticized Gonzalez because the record provided no clue as to how Gonzales came to conclude that six hours a week was a “conservative” estimate of his time in the case. The court noted that Gonzalez did not make any record of his time in the case or prepare any bills or invoices for the Montanos, and that Gonzalez did not appear to have known how much he was owed for his services until he made the calculations at trial. The fee award to Gonzalez was reversed. On the other hand, the Supreme Court found that the testimony of Benavides-Maddox was sufficient to support the award of attorney’s fees to her including her work at trial. Her testimony about her unbilled work for the trial provided some evidence on which to base an award of attorney’s fees because it concerned contemporaneous or immediately completed work for which she had not had time to bill, or presumably even record, in her billing system. Most recently, the Texas Supreme Court decided Long v. Griffin, 2014 Tex. LEXIS 304 (April 25, 2014). Again, the issue in question was the evidence required to prove the reasonableness and necessity of attorney’s fees under the lodestar method. The affidavit supporting the fee application generally stated the categories of tasks performed, but the application failed to include any evidence containing the requisite specificity. The affidavit stated that one attorney spent 300 hours on the case and another expended 344.50 hours and also stated the attorneys’ respective hourly rates. The affidavit also stated that the case involved extensive discovery, several pre-trial hearings, multiple summary judgment motions, and a 4 ½ day trial, and that litigating the matter required understanding a related suit that settled after 10 years of litigation. Based upon the affidavit, the attorneys requested a total fee of $100,000. After a bench trial, the trial court awarded $35,000 in attorneys’ fees. The Supreme Court held that by relating the hours worked for each of the 2 attorneys multiplied by their hourly rates for a total fee, the attorneys opted to use the lodestar method to calculate the attorneys’ fee request. Relying on EI Apple and Montano, the Supreme Court held that no evidence accompanied the affidavit to inform the trial court of the time spent on specific tasks. As a result, the trial court had insufficient information to meaningfully review the fee request. The affidavit also stated that the Griffins and their attorneys agreed to a 35% contingency fee arrangement, which the affidavit claimed to be reasonable and customary for a suit of that nature. The Supreme Court held that the contingency fee method cannot support the trial court’s fee award because the final judgment awarded no monetary relief except for attorneys’ fees. Because the contingency fee method cannot support the fee award and no legally sufficient evidence supports the award under the lodestar method, the Supreme Court remanded the case to re-determine attorneys’ fees. So, where are we now? In El Apple, the Supreme Court considered a claim under the TCHRA that required attorney’s fees to be calculated under the lodestar method. In Montano, the Supreme Court applied the same methodology to a claimant who was not required to prove up attorney’s fees under the lodestar method, but chose to do so. Some of the questions attorneys and their clients will have to face are:
It will also be interesting to see if courts expand the requirement of detailed billing records to other types of cases than those covered by the use of the lodestar method. Answers to these questions await additional cases from the appellate courts. A recent decision by the Dallas Court of Appeals is a good example of the outstanding issue. Ellis v. The Renaissance on Turtle Creek Condominium Association, Inc., 2014 Tex. App. LEXIS 3007 (March 18, 2014) involved a request for attorney’s fees by the attorney for a condominium association in a breach of contract suit. The court held that the affidavit of the attorney supporting the Association’s motion for summary judgment was sufficient without additional evidence of billing records to support an attorney’s fee award. The court relied on the Arthur Andersen factors set out in the affidavit in making this ruling. The court noted in footnote 8 that if the case involved the lodestar method of determining attorney’s fees the analysis would require other considerations. The court also noted that the opposing attorney did not assert in the record either that the lodestar method was statutorily required in the case or that the Association chose to prove up attorney’s fees using this method. Clearly, the last chapter on the proof required to prove up attorney’s fees in light of the El Apple and Montano decisions has yet to be written. Directory: sites -> default -> files files -> Answer True False 2 points Question 2 files -> Northern England’s set-jetting locations files -> Nstructions for Acquiring Excess Equipment online, through the 1033 Program files -> Occupational health and safety files -> The Black Panther Party’s Ten Point Program files -> International programs roel profile files -> Fermi Questions a guide for Teachers, Students, and Event Supervisors Lloyd Abrams, Ph. D. DuPont Company, cr&D/ccas experimental Station Wilmington, de 19880 files -> Personal Information Name: Maha Al-Ammari Nationality: Saudi Relationship Status Download 347.73 Kb. Share with your friends:
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