Recovering Attorneys' Fees In Texas

As you may know, in 2019, the Texas Supreme Court clarified Texas law on the recovery of attorney’s fees; the Lodestar Method controls the recovery of attorney’s fees in all Texas cases. As a result, the 2020 edition of my book, How to Recover Attorney’s Fees in Texas, includes a significant update. This article is a summary of Rohrmoos Venture v. UTSW DVA Healthcare, LLP, the new Supreme Court case. 

Rohrmoos[1] involved a fee-shifting provision in a lease. The prevailing attorney attempted to prove the reasonableness and necessity of his fees by testifying (1) he had twenty years of litigation experience handing similar cases; (2) his standard rate was $430 per hour; and (3) the reasonable and necessary time on the case was 750 to 1,000 hours. Multiplying his hours times his rate yielded a reasonable and necessary fee between $322,500 and $430,000.

He further testified that because the case had not been “worked up in a reasonable fashion” by his adversary, the fees were much closer to $800,000. This increase was necessary because his adversary made him: (1) search through “millions” of emails, (2) review “hundreds of thousands” of documents during discovery, (3) take over forty depositions, and (4) respond to a forty-page motion for summary judgment. He did not explain, however, how much time he spent on each of those listed tasks. The jury later awarded $1,025,000 in attorney's fees.

On appeal, the Supreme Court of Texas clarified that the lodestar method is the only legal and evidentiary standard to recover attorneys’ fees in Texas. The Arthur Anderson[2] factors are not a separate or alternative legal test for reasonable and necessary fees, but are considerations subsumed within the lodestar method.

The court further detailed how the lodestar method should be applied, aligning Texas law with federal practice:

Step 1 — The “Base Lodestar Calculation”

•  “[T]he fact finder’s starting point for calculating an attorney’s fee award is determining the reasonable hours worked multiplied by a reasonable hourly rate.” The claimant seeking attorneys’ fees bears the burden of proving through sufficient evidence the number of reasonable hours and a reasonable rate.
•  “Sufficient evidence includes, at a minimum, evidence of (1) particular services performed, (2) who performed those services, (3) approximately when the services were performed, (4) the reasonable amount of time required to perform the services, and (5) the reasonable hourly rate for each person performing such services.”
• The base lodestar calculation, thus, typically incorporates the following Arthur Anderson factors: “the time and labor required,” “the novelty and difficulty of the questions involved,” “the skill required to perform the legal service properly,” “the fee customarily charged in the locality for similar legal services,” “the amount involved,” “the experience, reputation, and ability of the lawyer or lawyers performing the services,” “whether the fee is fixed or contingent on results obtained,” “the uncertainty of collection before the legal services have been rendered,” and “results obtained.” Therefore, those factors “may not be used to enhance or reduce the base calculation to the extent that they are already reflected in the reasonable hours worked and reasonable hourly rate.”
• “[T]here is a presumption that the base lodestar calculation, when supported by sufficient evidence, reflects the reasonable and necessary attorney’s fees”

Step 2 — “Enhancement”

• Once sufficient evidence is presented to establish the base lodestar calculation, it may be adjusted up or down based on factors not already considered in the base lodestar calculation.
• “If a fee claimant seeks an enhancement, it must produce specific evidence showing that a higher amount is necessary to achieve a reasonable fee award.”
• “Likewise, if a fee opponent seeks a reduction, it bears the burden of providing specific evidence to overcome the presumptive reasonableness of the base lodestar figure.”
•  “The lodestar method was never intended to be conclusive in all circumstances; rather, there is a strong presumption that the base lodestar figure is reasonable, but that presumption may be overcome in those rare circumstances in which the lodestar does not adequately take into account a factor that may properly be considered in determining a reasonable fee.”[3]

Practically, then, the court explained “An attorney could . . . 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.[4] Accordingly, “billing records are strongly encouraged to prove the reasonableness and necessity of requested fees when those elements are contested.”

Following Rohrmoos, conclusory testimony that “hours worked were reasonable based on [an] evaluation of [the] firm’s bills using the relevant factors” is not sufficient evidence.[5] Testimony must, for example, explain why numerous billing attorneys are not duplicating efforts and explain the amount of money at stake in the dispute.

What is the bottom line for your practice? First, the Lodestar Method is the only methodology to recover your attorneys’ fees in Texas. This calculation aims to produce an objective figure that approximates the fee an attorney would have received had they properly billed a client by the hour in a similar case.   Second, appropriate evidentiary support is required to recover attorneys’ fees. The easiest way to satisfy the evidentiary burden is to admit appropriately redacted fee statements in evidence. Although billing records are nothing new for defense firms, they will likely become the norm for all parties involved in litigation now.

[1] Rohrmoos Venture v. UTSW DVA Healthcare, LLP, No. 16-0006, 2019 Tex. WL 1873428 (April 26, 2019).

[2] Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 818 (Tex. 1997).

[3] Quoting Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 553 (2010). 

[4] Quoting El Apple I, Ltd. v. Olivas, 370 S.W.3d 757, 763 (Tex. 2012).

[5] Toledo v. KBMT Operating Co., LLC, 581 S.W.3d 324, 332 (Tex. App.—Beaumont 2019, no pet. h.).