Lack of Specificity Sinks Fee Award
For the third time in two years, the Texas Supreme Court has struck down an attorney fee award because lawyers didn't tell a trial court exactly how much time they spent on each task.
But this time, in Long v. Griffin, while applying precedent about the lodestar fee calculation—a lawyer's hours multiplied by his rate—the high court also found the litigants' contingency fee contract wouldn't support their attorney fee award.
"Even if supporting evidence is not required for the contingency fee method of proof (as it is for the lodestar method), the contingency fee method cannot support the trial court's fee award here because the final judgment awarded no monetary relief except for attorney fees," the high court ruled.
Three Texas lawyers who have written about recovering attorney fees all said that the high court mostly applied its lodestar precedent from the 2012 case El Apple Ltd. v. Olivas and that the Long opinion doesn't impact the contingency fee method.
"I think it's been an open question since El Apple as to whether the contingency fee contract is even relevant," said Jason Powers, a partner in Vinson & Elkins in Houston. He said the Long opinion doesn't address the question "head on," but it's significant that the court talked about the contingency fee method as if it's still an alternative to lodestar.
Joe Roady, a partner in Hirsch & Westheimer in Houston, added, "If there had been a damages recovery, then the contingency fee could have been a potential factor in the setting of a fee."
In using the contingency fee method, a lawyer would argue that his client should recover attorney fees equal to a percentage of the client's damages, explained Trey Cox, a partner in Lynn Tillotson Pinker & Cox in Dallas. He noted that lawyers don't argue that method too often because the high court's lodestar cases clearly require "more specific detail and support" of attorney fees, which is hard to provide with contingency arguments.
"It's not impossible to recover attorney fees without contemporaneous time records, but I think the clearest and best practice for putting yourself and the client in the position to recover attorney fees is to keep contemporaneous time records," he said.
Otherwise, Cox explained, a lawyer would have to review pleadings, discovery and depositions and re-create a record of how much time he spent on each task.
LODESTAR AND CONTINGENCY
The April 25 opinion in Long calls the petitioners the "Long Trusts" and the respondents the "Griffins." The case involved an oil and gas venture.
A trial court in 2003 "largely ruled for the Griffins" on an assignment claim and awarded them $35,000 in attorney fees. But the case progressed to the Supreme Court, which in 2006 determined that the assignment claim couldn't be enforced completely and held that the Griffins couldn't prevail on a separate claim. The high court remanded the case to redetermine attorney fees.
The trial court awarded the Griffins $30,000 in attorney fees plus postjudgment interest.
The Long Trusts appealed to the Supreme Court, arguing, among other things, that there was not sufficient evidence for the fee award.
"Because the Griffins offered no evidence of the time expended on particular tasks, as we have required when a claimant elects to prove attorney fees via the lodestar method, we agree with the Long Trusts that the Griffins did not provide the trial court with legally sufficient evidence to calculate a reasonable fee," said the opinion.
The opinion explained that in El Apple, the Supreme Court ruled that "generalities about tasks performed provide insufficient information." The evidence must show the services performed, when, the time worked, who did the work and the person's hourly rate.
Then, in 2013's City of Laredo v. Montano, the Supreme Court relied on El Apple to reverse an attorney fee award because lawyers "failed to provide evidence of the time devoted to specific tasks."
In this case, the evidence of attorney fees "only offers generalities" about the lawyers' time: One lawyer spent 300 hours and another spent 344.5 hours. The attorney fee affidavit described "extensive discovery, several pretrial hearings, multiple summary judgment motions and a four-and-one-half-day trial," among other things.
The Griffins' attorney fee affidavit also said they agreed to pay their lawyers a 35 percent contingency fee. But the Griffins didn't win damages, only attorney fees, noted the court.
"Because the contingency fee method cannot support the trial court's fee award, and no legally sufficient evidence supports the award under the lodestar method, we remand to redetermine attorney fees," said the opinion.
The court noted, "The attorneys may reconstruct their work to provide the trial court with sufficient information to allow the court to perform a meaningful review of the fee application."
Longview solo Andrew Khoury, who represented the Griffins, didn't return two calls or an email seeking comment. Locke Lord partner Tom Loose of Dallas, who represented the Long Trusts, said he would seek permission from his client to comment, but he did not call back before deadline.