The Texas Supreme Court recently laid out what evidence is needed to prove up attorneys fees at trial. This case has been lauded as one of the most important cases to come out of the Texas Supreme Court. In Rohrmoos Venture v. UTSW DVA Healthcare LLP (578 S.W.3d 469), the Court addressed two different methods of calculating fees – the 8-factor test from the Arthur Andersen case (945 S.W.2d 812) versus the lodestar method – concluding that the lodestar method is the right place to start in calculating fees.
The lodestar method means that the court determines the attorneys fees to be awarded by multiplying the number of necessary hours reasonably spent by the trial attorney by the reasonable hourly rate.
The Rohrmoos opinion suggested that detailed billing records are strongly encouraged to prove up the elements of attorneys fees. This ruling will likely affect lawyers with alternative billing (like flat fee) arrangements. Further, this opinion suggests that lawyers could be subjected to thorough cross-examination on the fees expended. Opposing counsel could use the billing records as an opportunity to prod over work performed. Many cases will bring in outside experts on fee issues to offer testimony as to the reasonableness or necessity of the fees.
The Court hinted that agreement between attorneys in advance of trial as to the amount of fees would avoid contentious fee fights. But, without such agreement, the litigation will be more complex and lengthy.
A few weeks after the Rohrmoos case came down, the Texas Supreme Court reiterated its decision in Nath v. Texas Children’s Hospital (446 S.W.3d 355) where it applied the same requirements to attorney’s fees when awarded as a sanction as opposed to damages.
Here are some practice pointers based on Rohrmoos:
- Keep contemporaneous billing records in all cases, including hybrid and contingent fee cases;
- Try to stipulate to the fee award prior to trial;
- Enter your fee agreement and billing records into evidence at trial;
- Be careful about redacting your entries in the fee agreement;
- Introduce evidence to explain why all entries included were reasonable and necessary;
- Consider getting an outside expert to support or challenge the fee request.
Certain questions appear to remain open even after the Rohrmoos opinion, including:
- How to calculate appellate attorney fees, which must be estimated in advance?
- Whether the lodestar approach applies in a contract dispute between client and attorney where the question involves enforcement of a contingent fee contract?
- Under what circumstances the amount of attorney’s fees should be decided by the jury or the judge and whether live testimony is required or may the evidence be established by affidavit?
- May a lay witness law the factual elements of the lodestar method, or is expert testimony required?
- What is the proper remedy when reverse – remand or rendition?