Genevieve Hébert Fajardo, Clinical Professor St. Mary s Law School Homecoming CLE, March 21, 2014

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1 Genevieve Hébert Fajardo, Clinical Professor St. Mary s Law School Homecoming CLE, March 21, 2014

2 Part I: Fee Agreements Today s Takeaway on Fee Agreements: You are CRAZY and RECKLESS if you do not have a fee agreement for every client and every matter Required in contingent fee agreements Fee cannot be illegal or unconscionable Obvious point, but we ll discuss what is a reasonable fee

3 Resources for Sample Fee Agreements Texas Young Lawyers Association: Office in a Flash Dorsaneo, Texas Litigation Guide Chapter 3: Professional Responsibility Chapter 22: Attorney s Fees The Practice of Consumer Law: Seeking Economic Justice (National Consumer Law Center 2d Ed.) Appx. A: Client Retainer Forms and Co-Counseling Agreement (for family law) Berger, Mitchell, Clark, Pretrial Advocacy, chapter 4 (3d ed. 2010)

4 Elements of the Fee Agreement Identifies client Individual? Organization? Couple? Identifies subject of legal representation We will file a breach of contract claim against Krappe Konstruction, Inc. for their failure to complete your backyard deck at 124 Toledo St., San Antonio, TX Include limitations, such as appeals, later modifications, etc. Explicitly makes no guarantees We will use our best efforts to represent you, but we cannot guarantee any results. We will try to recover attorney fees from the other party, but you will not necessarily receive 100% of your fees in return.

5 Elements of the Fee Agreement Describes Fee Structure Hourly, Flat Fee, Contingency, Pro Bono Describes Expenses You will be responsible for all out-of-pocket expenses incurred in connection with my representation. These expenses include charges for filing and serving court documents, courier or messenger services, travel expenses etc. Describes Billing Practices Monthly is typical

6 Elements of the Fee Agreement Covers Withdrawal and Termination Rights Describes Bar Complaint Procedure Required by State Bar: The State Bar of Texas investigates and prosecutes professional misconduct committed by Texas attorneys. Although not every complaint or dispute with a lawyer involves professional misconduct, the State Bar Office of General Counsel will provide you with information about how to file a complaint. For more information, please call This is a toll-free call. Signed by Client and Attorney

7 Part II: Bases for Attorney Fee Recovery American Rule: Parties pay their own fees Attorney fees not recoverable absent contractual or statutory authority Texas follows American Rule: only way to recover fees: Statute (most common) Contract Declaratory Judgment Act Equity (often covered separately) Discovery sanctions, family law, worker s compensation

8 Recovery by Statute: Fee-Shifting Fee-Shifting Statutes: In Texas, over 150 fee-shifting statutes, including: Landlord tenant DTPA Farm mutual insurance company vs. policyholder Whistleblower actions Fraudulent transfer Resources: Complete list of attorney fee-shifting statutes: Dorsaneo s, Texas Litigation Guide O Connors CPRC Plus at 901 (2011)

9 Recovery by Statute: CPRC Ch. 38 CPRC A person may recover reasonable attorney s fees from an individual or corporation, in addition to the amount of a valid claim and costs, if the claim is for: (1) rendered services; (2) performed labor; (3) furnished material; (4) freight or express overcharges; (5) lost or damaged freight or express; (6) killed or injured stock; (7) a sworn account; or (8) an oral or written contract.

10 Recovery by Statute: CPRC Ch. 38 CPRC : To recover attorney's fees under this chapter: (1) the claimant must be represented by an attorney; (2) the claimant must present the claim to the opposing party or to a duly authorized agent of the opposing party; and (3) payment for the just amount owed must not have been tendered before the expiration of the 30th day after the claim is presented.

11 Recovery by Statute: CPRC Ch. 38 CPRC presentment requirement in plain language: Before suit (at latest, 30 days before judgment), send specific money claim to opposing party Be clear and specific about amounts Pleading should include language that claim was made and defendant failed to pay within 30 days Sample language for demand letter and pleading in Dorsaneo s, Texas Litigation Guide, and Putting your claim in a pleading is not enough!

12 Recovery by Contract Look carefully at provisions in contract that provide for attorney fees May cover prevailing party Note: CPRC only applies to the person who is making the claim, not the person defending it.

13 Recovery by Equity Less common in practice Common fund doctrine (ex. Class action or shareholder derivative suit) Claimant maintained suit at her own expense The suit benefitted others The suit created a fund from which attorney s fees can be paid

14 Recovery by Declaratory Judgment Act Discretionary Court may award fees Reasonable and Necessary Equitable and Just Abuse of Discretion Standard See e.g., Bocquet v. Herring, 972 S.W. 2d 19, 21 (Tex. 1998) Note: don t try to get cute with the pleadings can t just throw in declaratory judgment so you can ask for attorney fees.

15 Part III: Proving Up Legal Fees Pattern Jury Charge What is a reasonable fee for the necessary services of Paula Payne s attorney, stated in dollars and cents? Answer with an amount for each of the following: A. For representation in the trial court. Answer: B. For representation through appeal to the court of appeals. Answer: C. For representation at the petition for review stage in the Supreme Court of Texas. Answer: D: For representation at the merits briefing stage in the Supreme Court of Texas. Answer: E: For representation through oral argument and the completion of proceedings in the Supreme Court of Texas. Answer:

16 Proving Up Legal Fees 3 Ways By affidavit By judicial notice By testimony

17 Proving Up Legal Fees 3 Ways By affidavit Usually in summary judgment or discovery motions Affidavit must cover similar factors as expert testimony (see discussion below), including: Amount of hours worked Services performed Necessity of services Billing rate (swear that it is reasonable and customary) Reasonableness of fees

18 Proving Up Legal Fees 3 Ways By judicial notice CPRC : The court may take judicial notice of the usual and customary attorney s fees and of the contents of the case file without receiving further evidence in: (1) a proceeding before the court; or (2) a jury case in which the amount of attorney s fees is submitted to the court by agreement. Stipulations acceptable: parties may stipulate to reasonable fee

19 Proving Up Legal Fees by Testimony By testimony (also applies to affidavits) Pre-trial Tips: think about attorney fee testimony from day one In response to requests for disclosure and other discovery about experts, identify all witnesses (including you!) who may be called to testify at trial. Keep careful time records, because redacted timesheets may be introduced to prove reasonable amount of fees. Think about whether an independent expert should be retained.

20 Proving Up Legal Fees by Testimony: Qualifying an Expert Initial qualifications / foundation: Licensed to practice law Formal and legal education Geographic areas of practice Current job title and firm name Any Bar certifications as specialist Extracurriculars: participation in bar organizations, legal articles written, speaking engagements Substantial experience with this type of litigation

21 Proving Up Legal Fees by Testimony: Qualifying an Expert Foundation to testify about this case: Familiar with this case Familiar with claims and defenses asserted Description of how became familiar with case Familiar with hourly rates charged by lawyers in this area for this type of litigation Familiar with the tasks involved Familiar with the tasks actually performed

22 Proving Up Legal Fees by Testimony: the Opinion Part Description of nature and extent of services (including hours) Tasks were necessary Rates charged were reasonable Time for tasks was reasonable After multiplying time and rate, overall fee is reasonable May be adjusted upward for special expertise, difficult case, etc.

23 What is a reasonable fee? Tex. Disciplinary Rules of Professional Conduct 1.04(b) (1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly; (2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer; (3) the fee customarily charged in the locality for similar legal services; (4) the amount involved and the results obtained;

24 What is a reasonable fee? Tex. Disciplinary Rules of Professional Conduct 1.04(b) (5) the time limitations imposed by the client or by the circumstances; (6) the nature and length of the professional relationship with the client; (7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and (8) whether the fee is fixed or contingent on results obtained or uncertainty of collection before the legal services have been rendered. Adopted in Arthur Anderson & Co. v. Perry Equipment Corp., 945 S.W.2d 812, 818 (Tex. 1997)

25 Support for Expert Testimony: Time Records Accurate time records should be introduced Records show time spent on each task, and tasks should relate to outcome of case May be redacted for privileged information Summarize all legal activities from date of employment, including: Documents prepared / discovery process Hearings attended Research and discovery Trial preparation Settlement Trial

26 Practice Tip: Paralegal Fees Count! Available for substantive legal work: Client and witness interviews, conducting investigations, drafting documents, summarizing depositions, etc. Defined at Definition and Standards Prove up: Description of work Hourly rate and reasonableness Qualification of paralegal to perform legal work Legal work was done under attorney s supervision

27 Practice Tip: Segregation Need to segregate fees when attorney fees are recoverable for one claim (ex. DTPA), but not another (ex. common law fraud). Or where there are multiple defendants, multiple attorneys, etc. BUT, segregation not required when claims are not separable e.g., there are multiple claims arising from the same transaction, and they are so interrelated to be essentially the same set of facts and proof.

28 Part IV: Fee-Shifting Statutes A social justice alternative to pro bono representation Create opportunities for private attorneys to serve legal needs of low and moderate income residents with valid legal claims Often actual damages are smaller than potential attorneys fees. Ex. DTPA cases fee-shifting encourages attorneys to take small money cases that further important public policy goals Other examples: landlord security deposits, foreclosure scams, housing discrimination, 150+ others

29 Fee-Shifting Statutes The need: Unrealistic in typical consumer case to expect consumer to pay hourly or percentage Essential for consumers to have access to counsel even on relatively small claims The complications: a skeptical judiciary In Texas, fee expected to bear some reasonable relation to amount involved. Statutory fee-shifting is not a bonanza. Concurring opinion in El Apple I, Ltd. v. Olivas, 370 S.W. 3d 757 (Tex. 2012). SO, in small damage case, prepare to justify how your fee in excess of recovery is reasonable given the facts of the case.

30 Genevieve Hébert Fajardo, Clinical Associate Professor St. Mary s Law School Homecoming CLE, March 21, 2014

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