Chapter 31 

Attorney’s Fees

§ 31.1Authorities for Award of Attorney’s Fees

The general rule regarding attorney’s fees is that, absent a contractual or statutory provision to the contrary, each party bears the cost of its own attorney’s fees. Harrison v. Gemdrill Inter­national, Inc., 981 S.W.2d 714, 719 (Tex. App.—Houston [1st Dist.] 1998, pet. denied). This rule is called the “American Rule,” in con­trast to the practice in England, where the loser pays the prevailing party’s attorney’s fees. See Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 310–11 (Tex. 2006).

There are two exceptions to the American Rule. The first is when an award of attorney’s fees is allowed by statute or in equity. Statutes that allow for recovery of attorney’s fees include the following:

1.Tex. Civ. Prac. & Rem. Code ch. 38—recovery of attorney’s fees

2.Tex. Civ. Prac. & Rem. Code § 37.009—declaratory judgments

3.Tex. Bus. & Com. Code § 27.01(e)—statutory fraud

4.Tex. Civ. Prac. & Rem. Code § 31.002(e)—turnover

5.Tex. Bus. & Com. Code § 17.50(c), (d)—the Deceptive Trade Practices–Consumer Protection Act (DTPA)

6.Tex. Fin. Code § 392.403—the Texas Debt Collection Practices Act

7.Tex. Bus. & Com. Code §§ 9.607(d), 9.608—nonjudicial foreclosure of a security interest in personal property

In total, there are more than two hundred statu­tory exceptions that allow attorney’s fees awards to a prevailing party.

Attorney’s fees may also be recovered “in equity,” that is, in certain cases in which there is no statute or contract providing for attorney’s fees. Nationwide Mutual Insurance Co. v. Holmes, 842 S.W.2d 335, 341 (Tex. App.—San Antonio 1992, writ denied). The two equitable grounds for recovery are (1) the common-fund doctrine found in Knebel v. Capital National Bank, 518 S.W.2d 795, 798–99 (Tex. 1974) (dis­tributing burden of expenses among those who share in an accomplished benefit); and (2) attor­ney’s fees as damages, found in Lesikar v. Rap­peport, 33 S.W.3d 282, 306 (Tex. App.—Texarkana 2000, pet. denied) (attorney’s fees available under equity when defendant’s wrong­ful acts made necessary prior litigation with third party).

The second exception allowing for recovery of attorney’s fees is when a contract provides for recovery by a prevailing party. Such provisions are commonly found in promissory notes as well as in invoices and other contracts. To prevail means to “obtain actual and meaningful relief, something that materially alters the parties’ legal relationship.” Rohrmoos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469, 485–86 (Tex. 2019). Where there is a prevailing-party contract clause, a party defending a claim may obtain relief for attorney’s fees for successfully defending against a claim and securing a take-nothing judgment. The party does not necessar­ily need to obtain monetary relief to be a pre­vailing party. See Rohrmoos, 578 S.W.3d at 486. While no monetary relief is required to be a pre­vailing party under a contract with a prevailing-party clause, the law is different with regard to Texas Civil Practice and Remedies Code chapter 38, which requires that money damages be awarded to support a claim for attorney’s fees. Rohrmoos, 578 S.W.3d at 484. See section 31.2:3 below.

§ 31.2Texas Civil Practice and Remedies Code Section 38.001

§ 31.2:1Award of Attorney’s Fees Through Judgment and for Appeals Is Mandatory Under Chapter 38

Practitioners may often encounter a judge who will not grant an attorney’s fees request either for fees through judgment or for appellate fees. However, the law is clear that when presented with evidence of attorney’s fees in a case involving chapter 38, the court cannot deny an award of attorney’s fees for work in the trial court or for future appellate fees. See Ventling v. Johnson, 466 S.W.3d 143, 154 (Tex. 2015); see, e.g., Mulch Matters, Inc. v. Toro Rojo, Inc., No. 01-22-00322-CV, 2024 WL 1862723, at *14–15 (Tex. App.—Houston [1st Dist.] Apr. 30, 2024, no pet. h.) (mem. op.). In fact, there are fifty-five cites to the headnote in Ventling holding that attorney’s fees are mandatory, showing this issue arises frequently despite numerous appel­late opinions holding attorney’s fees are manda­tory under chapter 38. As the supreme court held:

Under section 38.001, the trial court has no discretion to deny attorney’s fees when presented with evidence of the same. Bocquet v. Herring, 972 S.W.2d 19, 20 (Tex. 1998); see also, e.g., Brent v. Field, 275 S.W.3d 611, 622 (Tex. App.—Amarillo 2008, no pet.) (“Under section 38.001, an award of reasonable attorney’s fees is mandatory if there is proof of the rea­sonableness of the fees. A Court pos­sesses discretion to determine the amount of attorney’s fees, but it lacks discretion to deny attorney’s fees if they are proper under section 38.001.”). If trial attorney’s fees are mandatory under section 38.001, the appellate attorney’s fees are also mandatory when proof of reasonable fees is presented. See Gill Sav[ings] Ass’n v. Chair King, Inc., 797 S.W.2d 31, 32 (Tex. 1990) (per curiam).

Ventling, 466 S.W.3d at 154.

§ 31.2:2Defendant’s Offer to Settle Does Not Defeat Creditor’s Right to Attorney’s Fees

A defendant’s offer to settle does not defeat a creditor’s right to attorney’s fees. Commercial Union Insurance Co. v. La Villa Independent School District, 779 S.W.2d 102, 107 (Tex. App.—Corpus Christi–Edinburg 1989, no writ).

§ 31.2:3Permitted Claims Under Section 38.001

An often-used statutory basis for recovery of attorney’s fees is Tex. Civ. Prac. & Rem. Code § 38.001, which specifically allows for recovery of attorney’s fees from individuals and various organizations, not just corporations. Chapter 38 covers the following claims:

1.rendered services;

2.performed labor;

3.furnished materials;

4.freight or express overcharges;

5.lost or damaged freight or express;

6.killed or injured stock;

7.sworn accounts; or

8.oral or written contracts.

See section 31.9 below for information about judicial notice of attorney’s fees in Code chapter 38 claims.

§ 31.2:4Entities Attorney’s Fees May Be Recovered From

Before September 1, 2021, chapter 38 applied to the recovery of attorney’s fees only from indi­viduals and corporations, and not other business entities. First Cash, Ltd. v. JQ-Parkdale, LLC, 538 S.W.3d 189, 194 (Tex. App.—Corpus Christi–Edinburg 2018, no pet.) (citing Alta Mesa Holdings, LP v. Ives, 488 S.W.3d 438, 453–55 (Tex. App.—Houston [14th Dist.] 2016, pet. denied). The legislature amended chapter 38 effective September 1, 2021, to allow for the recovery of attorney’s fees from all entities cov­ered by Texas Business Organizations Code sec­tion 1.002(62). Thus, attorney’s fees may be recovered from individuals, corporations, lim­ited or general partnerships, limited liability companies, business and real estate investment trusts, joint ventures, associations, banks, insur­ance companies, credit unions, savings and loan associations, or other organizations, regardless if the organization is for-profit, nonprofit, domestic, or foreign. See Tex. Civ. Prac. & Rem. Code § 38.001(a); Tex. Bus. Orgs. Code § 1.002(62).

§ 31.2:5Claims Not Permitted

Certain claims for attorney’s fees do not fall within the purview of Tex. Civ. Prac. & Rem. Code ch. 38, and thus cannot serve as a basis for recovering attorney’s fees.

Recovery is not allowed for a defendant who successfully defeats a plaintiff’s claim, because “[c]hapter 38 does not provide for the recovery of attorney’s fees by a defendant who only defends against a plaintiff’s contract claim and presents no contract claim of its own.” Energen Resources Maq v. Dalbosco, 23 S.W.3d 551, 558 (Tex. App.—Houston [1st Dist.] 2000, pet. denied).

Recovery is not allowed in a suit to rescind a contract. See American Apparel Products v. Brabs, 880 S.W.2d 267, 270 (Tex. App.—Hous­ton [14th Dist.] 1994, no writ).

§ 31.2:6Requirements for Seeking Attorney’s Fees Under Section 38.001

To recover attorney’s fees under Tex. Civ. Prac. & Rem. Code § 38.001, three statutory require­ments must be met:

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 thirtieth day after the claim is presented.

Tex. Civ. Prac. & Rem. Code § 38.002; Harri­son v. Gemdrill International, Inc., 981 S.W.2d 714, 719 (Tex. App.—Houston [1st Dist.] 1998, pet. denied); Panizo v. Young Men’s Christian Ass’n, 938 S.W.2d 163, 168 (Tex. App.—Hous­ton [1st Dist.] 1996, no writ).

In addition, any award of attorney’s fees under chapter 38 requires recovery of monetary dam­ages. Rohrmoos Venture v. UTSW DVA Health­care, LLP, 578 S.W.3d 469, 484 (Tex. 2019) (citing Green International, Inc. v. Solis, 951 S.W.2d 384, 390 (Tex. 1997)).

§ 31.2:7Presentment of Claim

Recovery of attorney’s fees under chapter 38 requires that the claim be presented to the opposing party. Tex. Civ. Prac. & Rem. Code § 38.002(2). Oral presentment is acceptable, and the demand need not be sent by an attorney. No particular form of presentment is required. See France v. American Indemnity Co., 648 S.W.2d 283, 285–86 (Tex. 1983) (sending invoices as well as making telephone call sufficient to prove presentment); Jones v. Kelley, 614 S.W.2d 95, 100 (Tex. 1981). An invoice to the debtor before referral to the attorney constitutes presentment. See Adams v. Petrade International, Inc., 754 S.W.2d 696, 719 (Tex. App.—Houston [1st Dist.] 1988, writ denied) (sending invoice suffi­cient); Gensco, Inc. v. Transformaciones Metal­urgicias Especiales, S.A., 666 S.W.2d 549, 554 (Tex. App.—Houston [14th Dist.] 1984, writ dism’d) (sending invoice sufficient). Whatever form it takes, the demand should disclose what is claimed to be owed with reasonable accuracy. See Lewis v. Deaf Smith Electric Cooperative, Inc., 768 S.W.2d 511, 513 (Tex. App.—Ama­rillo 1989, no writ). Furthermore, the present­ment can be made after suit is filed as long as the three requirements of section 38.002 are met. Texas courts have long held that “[p]resent­ment may be made either before or after filing suit, provided it is made at least thirty days before judgment, and no particular form of pre­sentment is required.” McDowell v. Bier, No. 2-09-231-CV, 2010 WL 1427244, at *6 (Tex. App.—Fort Worth Apr. 8, 2010, no pet.) (mem. op.) (citing Harrison v. Gemdrill International, Inc., 981 S.W.2d 714, 719 (Tex. App.—Houston [1st Dist.] 1998, pet. denied)).

There is a split of authority over whether the fil­ing of a lawsuit by itself is sufficient to prove presentment of the claim. See Huff v. Fidelity Union Life Insurance Co., 312 S.W.2d 493, 500 (Tex. 1958); Jim Howe Homes, Inc. v. Rogers, 818 S.W.2d 901, 904 (Tex. App.—Austin 1991, no writ) (filing suit not sufficient). To the con­trary, see K.C. Roofing Co., Inc. v. Abundis, 940 S.W.2d 375, 379 (Tex. App.—San Antonio 1997, writ denied), citing Birdwell v. Texins Credit Union, 843 S.W.2d 246, 251 (Tex. App.—Texarkana 1992, no writ) (only require­ment is that presentment of claim be made at least thirty days before trial).

§ 31.2:8Excessive Demands

Practitioners should be aware that presenting excessive demands can create problems. Gener­ally, “[a] creditor who makes an excessive demand upon a debtor is not entitled to attor­ney’s fees for subsequent litigation required to recover the debt.” Findlay v. Cave, 611 S.W.2d 57, 58 (Tex. 1981); Panizo v. Young Men’s Christian Ass’n, 938 S.W.2d 163, 169 (Tex. App.—Houston [1st Dist.] 1996, no writ). How­ever, Texas courts have held that a demand is not excessive simply because it is greater than the amount later determined to be due by the fact finder. The test for excessiveness is not purely mathematical. For example, in Panizo a demand for $125,000 was not found to be excessive even though the jury awarded only $1,000. According to the Panizo court, the “dispositive inquiry for determining whether a demand is excessive is whether the claimant acted unreasonably or in bad faith.” Panizo, 938 S.W.2d at 169 (citing Findlay, 611 S.W.2d at 58). See also Standard Constructors, Inc. v. Chevron Chemical Co., 101 S.W.3d 619, 627–28 (Tex. App.—Houston [1st Dist.] 2003, pet. denied) (no bad faith when initial demand was $531,424 and amount claimed at trial was only $97,784).

Two cases have been identified where courts found that demands seeking twice the amount actually due were excessive. See Mossler v. Nouri, No. 03-08-00476, 2010 WL 2133940, at *8 (Tex. App.—Austin May 27, 2010, pet. denied) (mem. op.) (plaintiff through attorney demanded twice what plaintiff admitted at trial was owed, and plaintiff’s attorney told defen­dants an amount that would satisfy their pay­ment obligations but plaintiff later refused the tender of that amount by defendants); Wayne v. A.V.A. Vending, Inc., 52 S.W.3d 412, 418 (Tex. App.—Corpus Christi–Edinburg 2001, pet. denied) (demand of double holdover rent exces­sive when contract clause regarding such rent “had been manifestly waived”).

Thus, an attorney should evaluate the documen­tation supporting the claim before sending a demand letter, especially where the amount owed is set forth in a document such as a lease or promissory note. Such evaluation is required for consumer debts covered by the federal Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692–1692p. Clomon v. Jackson, 988 F.2d 1314, 1321 (2d Cir. 1993) (interpreting section 1692e(3) and (10) to require attorney participa­tion). See section 2.19:5 in this manual for addi­tional information regarding attorney participation in debt collection efforts.

§ 31.2:9Pleading and Proof

The plaintiff must plead and prove that present­ment of a contract claim was made to the oppos­ing party and that the party failed to tender performance. Ellis v. Waldrop, 656 S.W.2d 902, 905 (Tex. 1983); see also Paramount Pipe & Supply Co. v. Muhr, 749 S.W.2d 491, 496 (Tex. 1988) (no need to plead particular evidence as long as fair notice is given that plaintiff is seek­ing recovery of attorney’s fees; any defects should be addressed by special exceptions); Panizo v. Young Men’s Christian Ass’n, 938 S.W.2d 163, 168 (Tex. App.—Houston [1st Dist.] 1996, no writ) (burden of proof on claim­ant to plead and prove presentment and failure to tender performance) (citing Ellis, 656 S.W.2d at 905). For a discussion of sufficiency of the evidence, see Aquila Southwest Pipeline, Inc. v. Harmony Exploration, Inc., 48 S.W.3d 225, 240–41 (Tex. App.—San Antonio 2001, pet. denied); see also Svoboda v. Thai, No. 01-17-00584-CV, 2019 WL 1442434, at *7 (Tex. App.—Houston [1st Dist.] Apr. 2, 2019, no pet.) (presentment requirement not met when amount demanded in demand letter included attorney’s fees but did not specify how much of amount was damages and how much was attorney’s fees).

§ 31.2:10Oral and Written Contracts

Statutory attorney’s fees are available for a claim on a contract, either oral or written. Tex. Civ. Prac. & Rem. Code § 38.001(8). There is no need for an attorney’s fee provision in a con­tract to recover attorney’s fees under this statute. First City Bank v. Guex, 677 S.W.2d 25, 30 (Tex. 1984); Dickerson v. DeBarbieris, 964 S.W.2d 680, 687 n.11 (Tex. App.—Houston [14th Dist.] 1998, no pet.).

A “written contract” includes a negotiable instrument. Community National Bank v. Chan­nelview Bank, 814 S.W.2d 424, 427 (Tex. App.—Houston [1st Dist.] 1991, no writ); Bar­ham v. Sugar Creek National Bank, 612 S.W.2d 78, 80–81 (Tex. App.—Houston [14th Dist.] 1981, no writ).

§ 31.2:11Rendered Services

For the purposes of Texas Civil Practice and Remedies Code chapter 38, “rendered services” include generally any act performed for the ben­efit of another under some arrangement or agreement to perform the service. Van Zandt v. Fort Worth Press, 359 S.W.2d 893, 895 (Tex. 1962) (interpreting predecessor statute); Mathews Construction Co. v. Jasper Housing Construction Co., 528 S.W.2d 323, 326–27 (Tex. App.—Beaumont 1975, writ ref’d n.r.e.). Rendered services include the following:

1.Ground preparation work performed by a dirt contractor. Mathews Con­struction Co., 528 S.W.2d at 327.

2.Utility company’s furnishing of elec­tricity to owners of apartment houses. Caston v. Texas Power & Light Co., 501 S.W.2d 472, 473 (Tex. App.—Texarkana 1973, no writ).

3.Advertising and promotional services provided by the plaintiff, including those provided by third parties retained by the plaintiff for the defen­dant’s benefit. Clark Advertising Agency, Inc. v. Tice, 490 F.2d 834, 837–38 (5th Cir. 1974).

4.Architect’s services. Allison v. Doug­las, 531 S.W.2d 445, 447–48 (Tex. App.—Waco 1975, no writ).

5.Engineer’s services. Mitchell v. M.M.M., Inc., 261 S.W.2d 472, 475 (Tex. App.—Galveston 1953), rev’d on other grounds, 265 S.W.2d 584 (Tex. 1954).

6.Accountant’s services. Williams v. Milliger, 352 S.W.2d 794, 796 (Tex. App.—Houston 1961, writ ref’d n.r.e.).

7.Attorney’s services. McLeod, Alexan­der, Powel & Apffel, P.C. v. Quarles, 894 F.2d 1482, 1487–88 (5th Cir. 1990); see also Youngblood v. Wilson & Cureton, 321 S.W.2d 887, 888 (Tex. App.—Fort Worth 1959, writ ref’d n.r.e.) (applying predecessor statute).

§ 31.2:12“Labor Done”

For purposes of Texas Civil Practice and Reme­dies Code chapter 38, a claim for “labor done” is a claim for a physical-exertion type of personal service arising out of toil or manual labor for the direct benefit of the defendant. See Tenneco Oil Co. v. Padre Drilling Co., 453 S.W.2d 814, 819–20 (Tex. 1970) (interpreting predecessor stat­ute). The toil or manual labor may be performed by employees of a business, and the business may bring the action. Maxwell Lumber Co. v. Merle Greer Co., 501 S.W.2d 454, 456–57 (Tex. App.—Tyler 1973, no writ).

There must be a contractual relationship between the person performing the labor (or his employer) and the person against whom the claim is asserted. First National Bank v. Sledge, 653 S.W.2d 283, 288 (Tex. 1983), superseded by statute on other grounds as recognized in Morrell Masonry Supply, Inc. v. Lupe’s Shenan­doah Reserve, LLC, 363 S.W.3d 901, 906 (Tex. App.—Beaumont 2012, no pet.) (subcontractors not entitled to attorney’s fees from property owner).

§ 31.2:13“Material Furnished”

The “material” referred to in Tex. Civ. Prac. & Rem. Code § 38.001 is the substance or sub­stances or the part, goods, stock, or the like of which anything is composed or may be made. Pacific Coast Engineering Co. v. Trinity Con­struction Co., 481 S.W.2d 406, 407 (Tex. 1972); Ferrous Products Co. v. Gulf States Trading Co., 332 S.W.2d 310, 313 (Tex. 1960). If the item furnished is the final or end product, not to be used as a component of a further or larger prod­uct, it is not “material.” See Pacific Coast Engi­neering Co., 481 S.W.2d at 407. Texas courts have held the following to be materials:

1.Water control gates furnished by a subcontractor to a general contractor to be used by the latter in a dam proj­ect. Pacific Coast Engineering Co., 481 S.W.2d at 408.

2.Steel beams. Ferrous Products Co., 332 S.W.2d at 313.

3.Ready-mixed concrete. Page v. Supe­rior Stone Products, Inc., 412 S.W.2d 660, 666 (Tex. App.—Austin 1967, writ ref’d n.r.e.).

4.Fabricated plastic component parts used by the recipient in the assembly of fire extinguishers. Ganda, Inc. v. All Plastics Molding, Inc., 521 S.W.2d 940, 944 (Tex. App.—Waco 1975, writ ref’d n.r.e.).

5.Fabricated metal housing for an elec­trical generator supplied to and used by a general contractor in completing its construction project. Ambox, Inc. v. Stewart & Stevenson Services, Inc., 518 S.W.2d 428, 432–33 (Tex. App.—Houston [14th Dist.] 1975, writ ref’d n.r.e.).

§ 31.3Award of Attorney’s Fees Based on Contract

Contracting parties may include fee-award pro­visions in their agreements. Such provisions need not necessarily comply with Texas Civil Practice and Remedies Code chapter 38’s requirements governing oral and written con­tracts. See Rohrmoos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469, 484–85 (Tex. 2019) (citing Intercontinental Group Partner­ship v. KB Home Lone Star LP, 295 S.W.3d 650, 653 (Tex. 2009)). The main difference is that, under chapter 38, a plaintiff must recover dam­ages, whereas under a contract prevailing-party provision, the party seeking attorney’s fees is not required to prove damages. For example, in Rohrmoos, the parties’ lease agreement allowed for a fee award to the “prevailing party” in “any action to enforce the terms of [the] Lease.” Rohrmoos, 578 S.W.3d at 476. Noting that the lease did not explicitly require the prevailing party to recover damages in order to be awarded attorney’s fees, the court determined that chapter 38’s requirement that a prevailing party recover damages did not control. Rohrmoos, 578 S.W.3d at 484–85 (citing Green International, Inc. v. Solis, 951 S.W.2d 384, 390 (Tex. 1997)).

§ 31.3:1Guarantor Liability Based on Contract

If the underlying contract provides for payment of attorney’s fees by the obligor, the guarantor of the obligation is similarly liable for attorney’s fees. Barclay v. Waxahachie Bank & Trust Co., 568 S.W.2d 721, 724–25 (Tex. App.—Waco 1978, no writ); McGhee v. Wynnewood State Bank, 297 S.W.2d 876, 884 (Tex. App.—Dallas 1956, writ ref’d n.r.e.). If the guaranty agree­ment itself provides for the guarantor’s liability for payment of attorney’s fees, the guarantor is liable. See Beltran v. Groos Bank, N.A., 755 S.W.2d 944, 950–51 (Tex. App.—San Antonio 1988, no writ).

Even without an express agreement to pay attor­ney’s fees, a guarantor is nonetheless liable under an oral or written contract, pursuant to Texas Civil Practice and Remedies Code chapter 38. See Robinson v. Surety Insurance Co. of Cal­ifornia, 688 S.W.2d 705, 711 (Tex. App.—Fort Worth 1985, no writ) (analyzing predecessor statute).

§ 31.3:2Liability of Endorser

The endorser of a note that provides for recov­ery of attorney’s fees is liable for those fees even in the absence of an express agreement by the endorser to pay attorney’s fees. Dewey v. C.I.T. Corp., 374 S.W.2d 298, 299–300 (Tex. App.—Amarillo 1963, writ ref’d n.r.e.).

§ 31.4Proving Attorney’s Fees in State Court

§ 31.4:1Amount Determined by Fact Finder

The Texas Supreme Court has held that “[t]he reasonableness of attorney’s fees is ordinarily left to the factfinder, and a reviewing court may not substitute its judgment for the jury’s.” Smith v. Patrick W.Y. Tam Trust, 296 S.W.3d 545, 547 (Tex. 2009) (remanding for lack of evidence) (citing Ragsdale v. Progressive Voters League, 801 S.W.2d 880, 881 (Tex. 1990) (per curiam) (jury case)).

§ 31.4:2Proof of Reasonableness and Necessity

Any award of attorney’s fees must be supported by evidence that the fees are both reasonable and necessary. Powell Electrical Systems, Inc. v. Hewlett Packard Co., 356 S.W.3d 113, 127–28 (Tex. App.—Houston [1st Dist.] 2011, no pet.) (citing Stewart Title Guaranty Co. v. Sterling, 822 S.W.2d 1, 10 (Tex. 1991)). To prove reason­able attorney’s fees, expert testimony is needed, most often in the form of an interested witness. Powell, 356 S.W.3d at 128 (citing Garcia v. Gomez, 319 S.W.3d 638, 642 (Tex. 2010)). An interested witness can be the attorney seeking the fees or another attorney hired to opine on the reasonableness and necessity of the fees requested. See sections 31.6 and 31.7 below for a detailed discussion about proving the reason­ableness and necessity of attorney’s fees.

§ 31.5Lodestar Method to Prove Up Attorney’s Fees

In 2019, the Texas Supreme Court declared that the lodestar method is the proper way to prove reasonable and necessary attorney’s fees. Rohr­moos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469, 494 (Tex. 2019). In the court’s own words, the lodestar method has “become the guiding light” in fee shifting jurisprudence. Rohrmoos, 578 S.W.3d at 493.

§ 31.5:1Lodestar Method Generally: A Two-Step Analysis

Determining an attorney’s fee award using the lodestar method requires a two-step analysis, first set forth in 2012 by the Texas Supreme Court in El Apple I, Ltd. v. Olivas, 370 S.W.3d 757, 760 (Tex. 2012):

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.

Rohrmoos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469, 494 (Tex. 2019) (citing El Apple I, 370 S.W.3d at 760).

Thus, the lodestar method’s two steps are—

1.multiply the reasonable hours worked by the reasonable hourly rate to calcu­late the “base lodestar figure,” and

2.adjust the base lodestar figure up or down based on relevant factors.

Rohrmoos, 578 S.W.3d at 498–500.

The amount obtained by step 1 is presumptively reasonable because it reflects most of the Arthur Andersen factors. Rohrmoos, 578 S.W.3d at 496. As the court further explained, the “base lodestar figure is presumed reasonable if the claimant ‘has carried his burden of showing that the claimed rate and number of hours are rea­sonable.’” Rohrmoos, 578 S.W.3d at 499 (quot­ing Blum v. Stenson, 465 U.S. 886, 897 (1984)).

§ 31.5:2Possible Additional Requirements

Note that at least one court of appeals has modi­fied the lodestar method since the Rohrmoos opinion by requiring the fees to be “moderate or fair” and to bear some relationship to the amount in controversy. See Toledo v. KBMT Operating Co., LLC, 581 S.W.3d 324, 333 (Tex. App.—Beaumont 2019, pet. denied) (under Texas law, reasonable attorney’s fee calculation results in award that is “not excessive or extreme, but rather moderate or fair”) (quoting Sullivan v. Abraham, 488 S.W.3d 294, 299 (Tex. 2016)); see also Garcia v. Gomez, 319 S.W.3d 638, 642 (Tex. 2010) (“A reasonable fee is one that is not excessive or extreme, but rather mod­erate or fair.”). The Rohrmoos opinion did not address the additional test of whether a reason­able fee is “moderate or fair.” For another case applying the “moderate or fair” test see Iola Barker v. Hurst, 632 S.W.3d 175, 194 (Tex. App.—Houston [1st Dist.] 2021, no pet.).

§ 31.5:3Lodestar Method as Shorthand Version of Arthur Andersen Factors

In Rohrmoos, the supreme court considered the lodestar method to be a “short hand version” of the Arthur Andersen factors. Rohrmoos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469, 496 (Tex. 2019). Some courts, in the past, allowed proof of reasonable and necessary attor­ney’s fees by reference to the eight factors listed in Arthur Andersen & Co. v. Perry Equipment Corp.:

(1)the time and labor required, the novelty and difficulty of the questions involved, and the skill required to perform the legal services properly;

(2)the likelihood . . . 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;

(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.

Arthur Andersen & Co. v. Perry Equipment Corp., 945 S.W.2d 812, 818 (Tex. 1997) (quot­ing Tex. Disciplinary R. Prof’l Conduct R. 1.04(b) (listing these eight factors but not excluding other relevant factors)).

The Rohrmoos opinion discussed these factors but explained that the El Apple I, Ltd. v. Olivas, 370 S.W.3d 757 (Tex. 2012), opinion “provided additional guidelines for determining reason­ableness and necessity by introducing the lode­star calculation to Texas jurisprudence.” Rohrmoos, 578 S.W.3d at 494. Moreover, the court, relying on its federal counterpart, recog­nized “that the base lodestar figure accounts for most of the relevant Arthur Andersen consider­ations.” Rohrmoos, 578 S.W.3d at 500 (citing Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 553 (2010)). In particular, the court wrote that the base lodestar calculation includes consider­ation of factors 1, 3, 4, 7, and 8. Rohrmoos, 578 S.W.3d at 500–01. The court thus referred to the lodestar method as a shorthand version of the Arthur Andersen factors. Rohrmoos, 578 S.W.3d at 496.

§ 31.5:4Terms of Fee Agreement or Amount of Fees Paid Not Relevant

The fee agreement between the client and attor­ney is not controlling. As the supreme court explained, “[A] client’s agreement to a certain fee arrangement or obligation to pay a particular amount does not necessarily establish that fee as reasonable and necessary.” Rohrmoos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469, 488 (Tex. 2019). Furthermore, a client’s testi­mony as to the amount of fees paid is not legally sufficient evidence of reasonable and necessary attorney’s fees. See Jones v. Patterson, No. 11-17-00112-CV, 2019 WL 2051301, at *9 (Tex. App.—Eastland May 9, 2019, no pet.) (mem. op.).

§ 31.6Step One: Determining Lodestar Figure

§ 31.6:1Five Minimum Requirements for Sufficient Evidence of Attorney’s Fees

As noted above, step one of the lodestar method requires the fact finder to multiply the reason­able hours worked by the reasonable hourly rate to calculate the “base lodestar figure.”  Rohr­moos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469, 498 (Tex. 2019).

Evidence sufficient to support the step-one cal­culation includes, at a minimum: (1) what par­ticular services performed, (2) who performed the services, (3) when approximately 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. Rohrmoos, 578 S.W.3d at 498 (citing El Apple I, Ltd. v. Olivas, 370 S.W.3d 757, 762–63 (Tex. 2012)). See, e.g., Air Jireh Service Corp. v. Weaver & Jacobs Constructors, Inc., No. 13-15-00180-CV, 2019 WL 3023315, at *5 (Tex. App.—Corpus Christi–Edinburg July 11, 2019, no pet.) (per curiam) (mem. op.).

For example, the fee application described in Memon v. Pinnacle Credit Services, LLC, fared well under the lodestar method. No. 4:07-cv-3533, 2009 WL 6825243, at *2–4 (S.D. Tex. May 21, 2009). The court methodically exam­ined all aspects of the application, including whether it met the billing judgment rule (i.e., did not include unproductive, excessive, or redun­dant hours) and whether the hourly rates were in line with market rates.

Two examples of collection cases where courts applied the lodestar method and where proper billing methods were introduced into evidence to justify awards exceeding the amount in con­troversy are Cordova v. Southwestern Bell Yel­low Pages, Inc., 148 S.W.3d 441, 448–49 (Tex. App.—El Paso 2004, no pet.) ($7,092.18 in damages with a $20,885 attorney’s fee award), and Sibley v. RMA Partners, L.P./Sixth RMA Partners, L.P., 138 S.W.3d 455, 458–59 (Tex. App.—Beaumont 2004, no pet.) (per curiam) ($19,342.82 in principal debt with an $82,748.50 attorney’s fee award). In both cases the defendants mounted significant defenses that caused the attorney’s fees to exceed the amount in controversy. Even so, the billing records were legally sufficient to show the fees were justified under Texas law.

§ 31.6:2Use of Contemporaneous Billing Records Strongly Encouraged

In regard to billing records, the Rohrmoos opin­ion initially states that contemporaneous time records “are not required to prove that the requested fees are reasonable and necessary.” Rohrmoos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469, 502 (Tex. 2019). But the court goes on to strongly encourage the use of time records and billing records:

Nevertheless, billing records are strongly encouraged to prove the rea­sonableness and necessity of requested fees when those elements are contested. In El Apple, we acknowledged the value of contem­poraneous records for lodestar calcu­lations: “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.”

Rohrmoos, 578 S.W.3d at 502 (quoting El Apple I, Ltd. v. Olivas, 370 S.W.3d 757, 763 (Tex. 2012)). The court also explained that “creating the documents makes them available for produc­tion, provides a basis for testifying as to the rea­sonableness and necessity of the requested fees, and permits cross-examination.” Rohrmoos, 578 S.W.3d at 502. This follows the practice in fed­eral courts, which require fee applications to include “contemporaneously created time records that specify, for each attorney, the date, the hours expended, and the nature of the work done.” Kirsch v. Fleet Street, Ltd., 148 F.3d 149, 173 (2d Cir. 1998).

§ 31.6:3Excessive Redaction of Billing Records

Practice Tip:      Client billing records should be either initially created in a way that protects cli­ent confidentiality and attorney-client privilege or redacted appropriately before submission in support of a claim for attorney’s fees. See gener­ally Tex. Disciplinary Rules Prof’l Conduct R. 1.05, reprinted in Tex. Gov’t Code Ann., tit. 2, subtit. G, app. A (Tex. State Bar R. art X, § 9). Please note there is a danger in excessive redac­tion of billing records, as explained below.

Lawyers should know that excessive redaction of billing records can make the records unac­ceptable under judicial scrutiny. See Person v. MC-Simpsonville, SC-1-UT, LLC, No. 03-20-00560-CV, 2021 WL 3816332, at *9 (Tex. App.—Austin Aug. 27, 2021, no pet.). MC-Simpsonville, LLC submitted extensive billing records from three law firms. However, every bill was heavily redacted “to the point that it was difficult if not impossible to discern what spe­cific tasks had been done.” The court applied the law to the facts, explaining:

An entry on a particular date might, for example, read something like “telephone call with [redacted] regarding [redacted].” Such redacted billing records do contain some important information, such as the identity of the legal professional who did the work, the date the work was done, the billing rate charged for the work, and the number of hours worked. But it is essentially impossi­ble for a finder of fact to determine whether the work done was reason­able and necessary without knowing what the specific tasks were.

Person, WL 3816332, at *8.

Consequently, billing records cannot simply show that an attorney had a conference with somebody about something, researched some­thing, discussed something with somebody, coordinated with somebody on something, or drafted or researched something. Person, WL 3816332, at *9. There must be enough detail for the court to make a “meaningful review of the fee application.” Person, WL 3816332, at *9.

Other cases finding the billing records overre­dacted include McGibney v. Rauhauser, 549 S.W.3d 816, 821 (Tex. App.—Fort Worth 2018, pet. denied), and In re Estate of Poe, 591 S.W.3d 607, 653 (Tex. App.—El Paso 2019), rev’d on other grounds, No. 20-0178, 2022 WL 2183306 (Tex. June 17, 2022).

For a case showing examples of both proper and improper billing entries, see Fiamma Statler, L.P. v. Challis, No. 02-18-00374-CV, 2020 WL 6334470, at *5–6 (Tex. App.—Fort Worth Oct. 29, 2020, pet. denied) (mem. op.).

§ 31.6:4Step One of Lodestar Method: The Billing Judgment Rule

The “billing judgment rule” requires the fact finder to exclude from a fee request hours that are excessive, redundant, or otherwise unneces­sary, “just as a lawyer in private practice ethi­cally is obligated to exclude such hours from his fee submission.” Rohrmoos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469, 498–99 (Tex. 2019); see also Toledo v. KBMT Operating Co., LLC, 581 S.W.3d 324, 329 (Tex. App.—Beaumont 2019, pet. denied) (fact finder should exclude “[c]harges for duplicative, excessive, or inadequately documented work”) (quoting El Apple I, Ltd. v. Olivas, 370 S.W.3d 757, 762 (Tex. 2012)).

Federal courts have for years applied the billing judgment rule. In determining whether an attor­ney’s fee is reasonable, a federal court will con­sider (1) whether the hourly rate is reasonable, and (2) whether the hours worked were exces­sive, redundant, or otherwise unnecessary. See, e.g., Vanderbilt Mortgage & Finance, Inc. v. Flores, No. C-09-312, 2011 WL 2160928, at *3 (S.D. Tex. May 27, 2011) (citing Hensley v. Eck­erhart, 461 U.S. 424, 433–34 (1983)).

Factor One: Is the Hourly Rate Reason­able?In Vanderbilt, lead counsel charged $800 per hour and cocounsel charged $200 per hour. Relying on Memon v. Pinnacle Credit Services, LLC, No. 4:07-CV-3533, 2009 WL 6825243 (S.D. Tex. May 21, 2009), the court found that the $800 rate exceeded the prevailing market rate. Vanderbilt, 2011 WL 2160928, at *3. In reducing lead counsel’s hourly rate to $350, the court took judicial notice of—

[T]he Texas State Bar’s “Hourly Rates in 2009 Report,” the most recent such report. This report states that the median hourly rate for Credi­tor-Debtor attorneys in Texas was $197 per hour. For Securities Law attorneys, the median is $309 per hour. The median hourly rate for attorneys in the Corpus Christi region was $198 per hour. The high and low rates are not provided in the 2009 report, but in the 2005 report, the high for Creditor-Debtor attorneys was $350 per hour.

Vanderbilt, 2011 WL 2160928, at *3 n.4. (Note that the last State Bar report on attorney’s fees was published in 2015 and is no longer pub­lished.) Thus, one can see that judges may look at objective data to determine what fees are usual and customary. Therefore, a testifying attorney may have to conduct independent research, such as looking at recent cases, to opine on reasonable rates. Having this case law and other objective data may help one prove up attorney’s fees or, conversely, provide a solid basis to attack a requested award. See, e.g., In re Rose, No. 4:19-CV-98, 2021 WL 4307113, at *5, *9 (E.D. Tex. Sept. 22, 2021) (court rejected large firm’s high fees as excessive but approved smaller firm’s fees at $350 and $275 per hour).

Factor Two: Were Hours Worked Excessive or Redundant?      In Kirsch v. Fleet Street, Ltd., 148 F.3d 149, 173 (2d Cir. 1998), the Second Circuit, following the U.S. Supreme Court’s 1983 Hensley opinion, addressed the issue of excessive hours as well as redundant and unnec­essary hours. See Hensley, 461 U.S. at 433–34. Such hours are to be deducted by, among other methods, calculating “a reasonable percentage of the number of hours claimed ‘as a practical means of trimming fat from a fee application.’” Kirsch, 148 F.3d at 173 (quoting New York Ass’n for Retarded Children v. Carey, 711 F.2d 1136, 1146 (2d Cir. 1983)).

Hours not properly documented may be deducted. See Kirsch, 148 F.3d at 172; see also Louisiana Power & Light Co. v. Kellstrom, 50 F.3d 319, 324 (5th Cir. 1995) (per curiam) (attorneys were required to provide contempora­neous time and billing records or other docu­ments for the court to examine to determine which hours are compensable and which are not). See sections 31.6:5 and 31.6:6 below dis­cussing Texas courts striking fee requests with­out proper documentation and section 31.6:3 above on how excessive redaction can make billing records insufficient.

§ 31.6:5Examples of Proper and Improper Billing; Federal and State Cases Employing Lodestar Method

In words with profound consequences, the Van­derbilt opinion warned attorneys what was not acceptable documentation in a fee application:

Litigants “take their chances” in sub­mitting fee applications without ade­quate information for the court to determine the reasonableness of the hours expended or with vaguely described tasks such as “review pleadings,” “correspondence,” or documents [sic].

Vanderbilt Mortgage & Finance, Inc. v. Flores, No. C-09-312, 2011 WL 2160928, at *5 (S.D. Tex. May 27, 2011) (citing Louisiana Power & Light Co. v. Kellstrom, 50 F.3d 319, 327 (5th Cir. 1995).

The items criticized by the court included—

1.sending on one day no fewer than six consecutive emails to opposing coun­sel regarding “discovery”;

2.having each email take twelve min­utes, costing $160 each;

3.sending on one day seven consecutive emails regarding the deposition of the same individual; and

4.billing the full fee of $800 per hour for travel (billing at half the hourly rate would be better).

Vanderbilt, 2011 WL 2160928, at *5. The court, relying on multiple authorities, noted that—

1.repetitive billing is an example of a lack of billing judgment. Vanderbilt, 2011 WL 2160928, at *5 (citing Mis­sissippi State Chapter Operation Push v. Mabus, 788 F. Supp. 1406, 1416 n.22 (N.D. Miss. 1992)); and

2.attorney travel time should be at fifty percent of an attorney’s rate in the absence of documentation showing actual legal work done. Vanderbilt, 2011 WL 2160928, at *6 (citing Wat­kins v. Fordice, 7 F.3d 453, 459 (5th Cir. 1993), and other opinions).

For such improper billing judgment, courts have imposed reductions from 10 percent (see Saizan v. Delta Concrete Products, Co., Inc., 448 F.3d 795, 801 (5th Cir. 2006)) to 30 percent (Leroy v. City of Houston, 831 F.2d 576, 586 (5th Cir. 1987)). In Vanderbilt, the court lowered the requested fees by 10 percent for poor billing judgment. Vanderbilt, 2011 WL 2160928, at *6.

§ 31.6:6State Cases Finding Improper Billing Methods after Rohrmoos: Texas Courts’ Analysis of Step One of Lodestar Method

Rohrmoos makes clear that the lodestar method is the preferred method for proving up attorney’s fees in any fee-shifting case. Rohrmoos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469, 495–96 (Tex. 2019). See section 31.9 below for a discussion of the judicial-notice exception to this rule for claims made under Tex. Civ. Prac. & Rem. Code § 38.001.

It is instructive to look at an early case applying Rohrmoos to a fee request. In Toledo v. KBMT Operating Co., LLC, 581 S.W.3d 324, 333 (Tex. App.—Beaumont 2019, pet. denied), the party seeking attorney’s fees supplied billing records, yet the court of appeals reversed the award of $256,689 because the billing records failed to pass the billing judgment rule and the scrutiny that rule brings to all fee requests. See section 31.6:4 above. The court warned that trial judges are not mere rubber stamps and must not accept “carte blanche the amount appearing on the bill.” Toledo, 581 S.W.3d at 330.

The court noted many improper billing practices in reversing the attorney’s fee award. Among them were (1) a duplication of work by attor­neys (sometimes called “wolf packing”); (2) over-researching legal issues by having mul­tiple attorneys do research on the same topic, thus performing essentially the same legal research (for example, the law firm conducted research on issues already argued in prior motions); (3) billing paralegal and attorney rates for clerical and ministerial work (copying, mail­ing, and organizing files do not justify attorney billing rates); and (4) inadequate or vague descriptions that did not adequately describe the tasks performed. Toledo, 581 S.W.3d at 331. For specific examples of improper or vague descrip­tions, see the discussion of the Vanderbilt case at section 31.6:5 above. In reversing the attorney’s fee award, the Toledo court emphasized that counsel had failed to adequately explain why so many attorneys on the case appeared to work on the same documents and briefs. Toledo, 581 S.W.3d at 331.

For a case distinguishing the facts found in Toledo and upholding a trial court award of fees that only reduced the award by seventeen hours because the “associate spent considerable hours drafting certain pleadings that were then reviewed and reworked by the more senior attor­neys,” see Broder v. Nexstar Broadcast Group, Inc., No. 03-19-00484-CV, 2021 WL 2273470, at *17 (Tex. App.—Austin June 4, 2021, no pet.) (mem. op.).

§ 31.7Step Two of Lodestar Method: Adjustments to Lodestar Figure

Once the lodestar calculation is determined, a court must still consider adjusting the calculated amount based on other considerations.

§ 31.7:1Results Obtained

The “amount involved and result obtained” fac­tor was key to the Vanderbilt court’s decision to reduce the fee award. See section 31.6:5 above. The district court, citing the U.S. Supreme Court, wrote that the most important consider­ation in determining the propriety of an attor­ney’s fee award is the degree of success obtained. Vanderbilt Mortgage & Finance, Inc. v. Flores, No. C-09-312, 2011 WL 2160928, at *4 (S.D. Tex. May 27, 2011) (citing Farrar v. Hobby, 506 U.S. 103, 114 (1992) (if only partial or limited success is achieved, lodestar calcula­tion may be excessive)). See also Gurule v. Land Guardian, Inc., 912 F.3d 252, 257–58 (5th Cir. 2018) (emphasizing results-obtained factor).

In Vanderbilt, one party to the suit recovered only $120,000, but the requested legal fees exceeded $1,500,000. With little discussion, the court found this request excessive. Vanderbilt, 2011 WL 2160928, at *4 (citing Barker v. Eck­man, 213 S.W.3d 306, 313–14 (Tex. 2006) (holding when damages award reduced to one-seventh of original amount, remand of attorney’s fees request required)). In short order, the court reduced the lodestar calculation by 60 percent. Vanderbilt, 2011 WL 2160928, at *4. (Note that the ratio of attorney’s fees to damages in Van­derbilt was more than twelve to one. The practi­tioner should be aware that since El Apple I, Ltd. v. Olivas, 370 S.W.3d 757 (Tex. 2012), courts have scrutinized attorney’s fee awards that are greater than a two-to-one ratio of fees to dam­ages.)

Texas courts have also considered the result obtained in determining whether a fee request is reasonable. See Smith v. Patrick W.Y. Tam Trust, 296 S.W.3d 545, 548 (Tex. 2009); Ware v. United Fire Lloyds, No. 09-12-00061-CV, 2013 WL 1932812, at *3 (Tex. App.—Beaumont May 9, 2013, no pet.) (mem. op.). Other courts have said the award must be fair or moderate, suggesting that fees cannot be excessive com­pared to the result obtained.

Before 2019, the Texas Supreme Court held that a reasonable fee is “not excessive or extreme, but rather moderate or fair.” Sullivan v. Abra­ham, 488 S.W.3d 294, 299 (Tex. 2016). See also Garcia v. Gomez, 319 S.W.3d 638, 642 (Tex. 2010). While Rohrmoos did not state this test or factor, subsequent courts of appeals have applied this test. See Toledo v. KBMT Operating Co., LLC, 581 S.W.3d 324, 333 (Tex. App.—Beaumont 2019, pet. denied); Iola Barker v. Hurst, 632 S.W.3d 175, 194 (Tex. App.—Hous­ton [1st Dist.] 2021, no pet.) (noting that a rea­sonable fee “is not excessive or extreme, but rather moderate or fair” but finding an 83 per­cent reduction error by the trial court). The Rohrmoos opinion was concerned with “grossly excessive” fee awards, but did not mention mod­erate or fair awards.

So while Rohrmoos attempted to make clear the lodestar method is to be followed except in the simplest of cases, some courts are also requiring the fee request to be not only not excessive, but also moderate or fair.

§ 31.7:2Awards in Similar Cases

Although federal courts have superior staffing and thus are able to research similar cases, a dil­igent attorney may be able to find useful analo­gous fee-award cases. In Vanderbilt, the court reviewed various Texas cases regarding the fraudulent lien statute. Vanderbilt Mortgage & Finance, Inc. v. Flores, No. C-09-312, 2011 WL 2160928, at *4–5 (S.D. Tex. May 27, 2011). The range of awards for a fraudulent lien violation was from $655 to $132,000. Because the court could find only two cases that awarded more than $50,000, it reduced the lodestar by 20 per­cent. Vanderbilt, 2011 WL 2160928, at *5.

For a debt collection type case applying both step one and step two of the lodestar method, see Memon v. Pinnacle Credit Services, LLC, No. 4:07-CV-3533, 2009 WL 6825243, at *2 (S.D. Tex. May 21, 2009) (debtor’s attorney required to use lodestar method to prove fees on claims against creditors). Thus, looking at recent case law will show rates acceptable to the courts.

§ 31.8Contingent Fee Method After Rohrmoos

Citing numerous U.S. Supreme Court holdings, the court in Rohrmoos rejected any adjustment to the lodestar calculation for results obtained or even the contingent nature of the attorney’s fee agreement. See Rohrmoos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469, 492–93, 500 n.12 (Tex. 2019). The opinion quotes the U.S. Supreme Court:

We note at the outset that an enhance­ment for contingency would likely duplicate in substantial part factors already subsumed in the [base] lode­star. The risk of loss in a particular case (and, therefore, the attorney’s contingent risk) is the product of two factors: (1) the legal and factual mer­its of the claim, and (2) the difficulty of establishing those merits. The sec­ond factor, however, is ordinarily reflected in the lodestar—either in higher number of hours expended to overcome the difficulty, or in the higher hourly rate of the attorney skilled and experienced enough to do so. Taking account of it again through lodestar enhancement amounts to double counting.

The first factor (relative merits of the claim) is reflected in the [base] lode­star, but there are good reasons why it should play no part in the calculation of the award. It is, of course, a factor that always exists (no claim has 100% chance of success), so that computation of the lodestar would never end the court’s inquiry in con­tingent-fee cases.

Rohrmoos, 578 S.W.3d at 492–93 (quoting City of Burlington v. Dague, 505 U.S. 557, 562–63 (1992) (citations omitted)).

§ 31.8:1Contingent Fee Arrangement and Rohrmoos: An Area of Ambiguity

As noted above, the Texas Supreme Court has clearly adopted the lodestar method in fee-shift­ing cases. Rohrmoos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469, 501 (Tex. 2019) (“To summarize, the lodestar method as we presented it in El Apple applies for determin­ing the reasonableness and necessity of attor­ney’s fees . . . .”) (quoting El Apple I, Ltd. v. Olivas, 370 S.W.3d 757, 760 (Tex. 2012)). The court rejected any reliance on a fee agreement between a client and attorney to prove what are reasonable and necessary legal fees. Rohrmoos, 578 S.W.3d at 498. In dicta, the court also rejected reliance on a contingent fee arrange­ment, quoting Arthur Andersen:

[A]lthough “[a] contingent fee may indeed be a reasonable fee from the standpoint of the parties to the con­tract,” it is not “in and of itself rea­sonable for purposes of shifting that fee to the defendant”; the fact finder is still required to “decide the ques­tion of attorney’s fees specifically in light of the work performed in the very case for which the fee is sought.”

Rohrmoos, 578 S.W.3d at 498 (quoting Arthur Andersen & Co. v. Perry Equipment Corp., 945 S.W.2d 812, 818–19 (Tex. 1997)). “Therefore, the base lodestar calculation should reflect hours reasonably expended for services necessary to the litigation.” Rohrmoos, 578 S.W.3d at 498 (citing Hensley v. Eckerhart, 461 U.S. 424, 434 (1983)).

The above statements seemingly dismiss contin­gent fee arrangements entirely and require the fact finder to determine the attorney’s fee issue “specifically in light of the work performed in the very case.” Rohrmoos, 578 S.W.3d at 498 (quoting Arthur Andersen, 945 S.W.2d at 818). The court would not allow any adjustment in step two of the lodestar method for any factor that is subsumed in the lodestar calculation, such as the contingent compensation arrangement. Rohrmoos, 578 S.W.3d at 500–01. The court found that the risk of loss in a lawsuit, such as the contingent risk, is ordinarily reflected in the lodestar—either in a higher number of hours worked or in a higher hourly rate for the attor­ney. Rohrmoos, 578 S.W.3d at 501 (citing City of Burlington v. Dague, 505 U.S. 557, 562–63 (1992)). See also Sharma v. Khan, No. 14-17-00322-CV, 2018 WL 3911180, at *8 (Tex. App.—Houston [14th Dist.] Aug. 16, 2018, no pet.) (mem. op.) (closely examining evidence of work performed and upholding trial court’s award of fees that were less than 10 percent of contracted contingent fee).

Although this analysis appears to completely preclude contingency arrangements as a method to prove that a request for attorney’s fees is rea­sonable and necessary, footnote 10 in the opin­ion suggests, in an awkward fashion, that contingent fee arrangements could possibly be relevant in establishing the reasonableness of the requested fees:

We recognize that when fee agree­ments provide for arrangements other than hourly billing, the attorney will not be able to present evidence of a particular hourly rate billed or paid for the services performed. In those instances, the fee claimant, through its expert, has the burden of showing that the rate claimed for purposes of the base lodestar calculation reflects a reasonable market rate given con­siderations in Arthur Andersen, including the attorney’s experience and expertise, the novelty and com­plexity of the questions involved, any special skill required for the repre­sentation, the attorney’s risk in accepting such representation, which may be reflected in a contingent fee agreement, and any other consider­ations that would factor into an attor­ney’s fee negotiations if the attorney were to bill hourly. See Burlington, 505 U.S. at 566 (noting that “attor­neys factor in the particular risks of a case in negotiating their fee”); [Penn­sylvania v. Delaware Valley Citizens’ Council for Clean Air, 478 U.S. 546, 566 (1986)] (recognizing that “con­siderations concerning the quality of a prevailing party’s counsel’s repre­sentation normally are reflected in the reasonable hourly rate”); Arthur Andersen, 945 S.W.2d at 818–19 (explaining that for contingent fee cases, the jury must decide reason­able and necessary fees in light of the work performed in that case, and reflecting the non-exclusive list of factors, arriving at a specific dollar amount). In this way, the contingent nature of a fee agreement, or the nature of an alternative fee arrange­ment, is taken into account in calcu­lating the presumptively reasonable fee in the first step of the analysis, prior to any potential adjustments for Arthur Andersen factors that have not yet been considered, as discussed [further in the opinion].

Rohrmoos, 578 S.W.3d at 499 n.10. Thus, it appears that it may be possible to adjust one’s hourly rate based on a contingent fee arrange­ment. But the court gave no guidance about how this should be done, therefore reference to fed­eral jurisprudence will likely be necessary until Texas courts address this issue in detail. Nota­bly, in a contingent fee case that reversed the enhancement of attorney’s fees for the straight­forward but time-consuming enforcement of a settlement where no new and novel issues or similar factors were identified, the U.S. Supreme Court commented that “[t]he risk of nonpayment should be determined at the begin­ning of the litigation.” Pennsylvania v. Dela­ware Valley Citizens’ Council for Clean Air, 483 U.S. 711, 729–30 (1987).

§ 31.8:2Options for Proving Attorney’s Fees When Arrangement Is Contingent

If an attorney has a contingent fee agreement, it is recommended that the attorney keep proper and complete contemporaneous time records and exercise good billing judgment (i.e., avoid excessive, redundant, duplicative, and unneces­sary work or hours). In other words, always fol­low the lodestar method and the billing judgment rule. See section 31.6:4 above. How­ever, while not recommended, the attorney may also rely on the Texas Supreme Court’s lan­guage in footnote 10 of Rohrmoos and provide testimony of the risk factor associated with the stated hourly rate as well as the results-obtained factor. Rohrmoos Venture v. UTSW DVA Health­care, LLP, 578 S.W.3d 469, 499 n.10 (Tex. 2019). See section 31.8:1 above. Likewise, if possible, the attorney can classify the case as one of “the simplest cases,” in which documen­tation of fees is not required, as mentioned in the Rohrmoos opinion’s discussion of billing records. Rohrmoos, 578 S.W.3d at 502 (quoting El Apple I, Ltd. v. Olivas, 370 S.W.3d 757, 763 (Tex. 2012)). But see Ramirez v. Coca-Cola, No. 01-13-00278-CV, 2013 WL 5761315, at *4 (Tex. App.—Houston [1st Dist.] Oct. 22, 2013, no pet.) (mem. op.) (summary judgment reversed on attorney’s fees; issue of fact raised in “simple” suit on sworn account, where plain­tiff’s summary judgment affidavit did not item­ize hours worked or describe time case took or whether it prevented attorney from taking other cases). The Rohrmoos court specifically noted that, although contemporaneous billing records are not required, they are strongly encouraged. In the event the attorney has not kept time records, the court may allow the attorney to “recreate” the billing records based on repeated experience with similar cases. See Rohrmoos, 578 S.W.3d at 502.

Practice Tip:      If the attorney is performing work for a client on a volume basis that consists of repeated, identical tasks, consider creating a form affidavit that outlines the steps undertaken to fulfill each task and, when preparing for prove up, fill in the dates and amount of time spent on each task from the attorney’s records.

§ 31.9One Exception to Rohrmoos: Judicial Notice Under Texas Civil Practice and Remedies Code Chapter 38

Section 38.004 of the Texas Civil Practice and Remedies Code, which allows a court to take judicial notice of reasonable and necessary legal fees, is still alive under Rohrmoos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469 (Tex. 2019). However, courts strictly limit the application of section 38.004 to cases in which attorney’s fees are properly sought under chap­ter 38, that is, where the claims are for services rendered, labor performed, materials furnished, sworn accounts, and oral or written contracts. See Jones v. Patterson, No. 11-17-00112-CV, 2019 WL 2051301, at *9–10 (Tex. App.—East­land May 9, 2019, no pet.) (mem. op.) (courts may not take judicial notice that usual and cus­tomary fees are reasonable unless the claim is enumerated in Tex. Civ. Prac. & Rem. Code § 38.001) (citing Scott v. Spalding, No. 11-07-00264-CV, 2009 WL 223459, at *5 (Tex. App.—Eastland Jan. 30, 2009, no pet. (mem. op.)). See section 31.2 above for further general discussion of chapter 38 claims. See sections 6.31, 7.1:6, 14.29:3, 19.52, and 28.28:3 in this manual for discussions of judicial notice and various section 38.001 claims.

In a case in which recovery of attorney’s fees is allowed by Tex. Civ. Prac. & Rem. Code § 38.001, the court may take judicial notice of the usual and customary attorney’s fees and the contents of the case file without receiving fur­ther evidence, in either a proceeding before the court or in a jury trial in which the amount of attorney’s fees is submitted to the court by agreement. Tex. Civ. Prac. & Rem. Code § 38.004. If the court makes a determination under section 38.004, there is a rebuttable pre­sumption that the usual and customary fees are reasonable and necessary. Rohrmoos, 578 S.W.3d at 490 n.9.

Note that, while a trial court may take judicial notice of reasonable and necessary legal fees, the court may not act as a rubber stamp for what an attorney requests in fees. Toledo v. KBMT Operating Co., LLC, 581 S.W.3d 324, 330 (Tex. App.—Beaumont 2019, pet. denied). As noted at section 31.2:8 above, the fees cannot be excessive but must be fair and moderate in light of the amount in controversy.

Statutes providing for claims other than those enumerated in Tex. Civ. Prac. & Rem. Code § 38.001, such as the Texas Deceptive Trade Practices–Consumer Protection Act (DTPA), the Texas Declaratory Judgment Act (TDJA), or the Texas Theft Liability Act (TTLA), are not gov­erned by Tex. Civ. Prac. & Rem. Code § 38.004. Consequently, courts may not take judicial notice of reasonable and necessary attorney’s fees for those claims. See Rohrmoos, 578 S.W.3d at 490 n.9.

Practice Note:      Do not rely on a judge’s dis­cretion in cases governed by Tex. Civ. Prac. & Rem. Code § 38.004, because the court could choose to lower fees significantly. See Scott Pel­ley P.C. v. Wynne, 578 S.W.3d 694, 702 (Tex. App.—Dallas 2019, no pet.) (reduction of 50 percent of appellate fees as case was on remand upheld even when billing records existed, not abuse of discretion under chapter 38 of the Texas Civil Practice and Remedies Code). The trial court may take judicial notice of usual and customary fees and the contents of the file and “set the fees based on such judicial notice with­out receiving further evidence.” Scott Pelley P.C., 578 S.W.3d at 705 (citing Tex. Civ. Prac. & Rem. Code §§ 38.003–.004). Please note low attorney’s fee awards can be reversed (see sec­tion 31.15 below).

§ 31.10Controverting Attorney’s Fees Evidence

§ 31.10:1Need to Controvert

When defending against a claim for attorney’s fees, it is good practice to show contrary evi­dence or show contradictions within the movant’s evidence. See Haden v. David J. Sacks, P.C., 332 S.W.3d 503, 512 (Tex. App.—Hous­ton [1st Dist.] 2009, pet. denied) (“Conse­quences follow from Haden’s and the company’s lack of response to Sacks’s motion for traditional summary judgment seeking attor­ney’s fees pursuant to chapter 38 of the Civil Practice and Remedies Code.”).

In Haden, counsel requesting fees provided no information about hours worked or hourly rate but gave the court only a list of certain tasks per­formed. Haden, 332 S.W.3d at 510–11. The court held that counsel’s affidavit complied with the requirements of Tex. R. Civ. P. 166a(c), because although the facts in the affidavit “could have been readily controverted, but were not, . . . we conclude that the affidavit constitutes legally competent evidence that the $75,887.50 sought . . . was both reasonable and necessary.” Haden, 332 S.W.3d at 514–15.

As noted in Haden:

Well-settled law recognizes that the affidavit of the attorney representing a claimant constitutes expert testi­mony that will support an award of attorney’s fees in a summary judg­ment proceeding. See [Tesoro Petro­leum Corp. v. Coastal Refining & Marketing, Inc., 754 S.W.2d 764, 767 (Tex. App.—Houston [1st Dist.] 1988, writ denied)]. Sacks is an inter­ested party in this lawsuit, but that status does not defeat his affidavit. See TEX. R. CIV. P. 166a(c) (“A summary judgment may be based on uncontroverted testimonial evidence of an interested witness, or of an expert witness . . . if the evidence is clear, positive, direct, otherwise cred­ible and free from contradictions and inconsistencies, and could have been readily controverted.”) (emphasis added); see [Burrow v. Arce, 997 S.W.2d 229, 235 (Tex. 1999)].

Haden, 332 S.W.3d at 513.

In 2017 the Fort Worth court of appeals simi­larly found the failure to controvert fatal to the defendant’s attack on the attorney’s fee award. Huey-You v. Huey-You, No. 02-16-00332-CV, 2017 WL 4053943, at *3 (Tex. App.—Fort Worth Sept. 14, 2017, no pet.) (mem. op.). But at least one court has held that a party may attack the legal sufficiency of the attorney’s fee evidence for the first time on appeal without having filed a controverting affidavit. See Auz v. Cisneros, 477 S.W.3d 355, 359 (Tex. App.—Houston [14th Dist.] 2015, no pet.).

§ 31.10:2How to Controvert

Tesoro Petroleum Corp. v. Coastal Refining & Marketing, Inc., demonstrates the proper way to controvert or contest a fee request. 754 S.W.2d 764, 766–67 (Tex. App.—Houston [1st Dist.] 1988, no writ). When attacking a fee request as unreasonable, one must establish a firm basis for the controverting opinion. In Tesoro Petroleum, the nonmovant’s counsel testified—

1.as to his own experience as an attor­ney;

2.that he was personally involved in the case and knew what had happened in the case;

3.that there was no itemized bill to reflect the work done;

4.that the hours worked were not shown;

5.that the movant’s hourly rate was not shown; and

6.that the movant’s fees were unreason­able under the circumstances.

Tesoro Petroleum, 754 S.W.2d at 766. When possible, controverting testimony should also include evidence as to a contrary reasonable number of hours worked and contrary reason­able rates, as well as show redundancies, “wolf packing,” or other examples of poor billing practices. It is best for the nonmovant to be as specific as possible in opposing the movant’s fee application. The attorney must describe the basis for the contrary opinion and not merely testify that the movant’s requested fees are unreason­able. See Basin Credit Consultants, Inc. v. Obre­gon, 2 S.W.3d 372, 373 (Tex. App.—San Antonio 1999, pet denied).

Showing inconsistencies in billing records or examples of overbilling or unnecessary billings, such as having two or more attorneys attend a hearing or deposition, is another way to attack a movant’s affidavit. See Pavlow v. Jensen, No. 14-04-00750-CV, 2005 WL 3310015, at *6 (Tex. App.—Houston [14th Dist.] Dec. 8, 2005, no pet.) (mem. op.) (controverting affidavit alleging unreasonableness of movant’s fee request not competent summary judgment evi­dence because it contained no factual support) (citing Houston v. Houston, No. 13-02-00142-CV, 2004 WL 351850, at *5 (Tex. App.—Cor­pus Christi–Edinburg Feb. 26, 2004, no pet.) (mem. op.) (nonmovant failed to state that movant’s hourly fee was unreasonable and did not identify unnecessary billable time)). Oppos­ing counsel may use his own time records as a basis to contest the attorney’s fee request. See El Apple I, Ltd. v. Olivas, 370 S.W.3d 757, 766 (Tex. 2012) (Hecht, J., concurring). For a recent case setting forth the proper way to controvert, see Person v. MC-Simpsonville, SC-1-UT, LLC, No. 03-20-00560-CV, 2021 WL 3816332, at *7 (Tex. App.—Austin Aug. 27, 2021, no pet.) (opposing counsel should testify “in some detail” that other side’s fees are not reasonable or necessary, but that testimony cannot be con­clusory or consist of generalities).

§ 31.10:3How Not to Controvert

The court in Pavlow found the following affida­vit inadequate to controvert the plaintiff’s evi­dence. The affidavit, in its entirety, read:

I, [attorney’s name], am a capable person to make this affidavit. I have never been convicted of a felony in Texas or in any other state. I am licensed to practice law in the state of Texas. I am in good standing with the State Bar. I have reviewed the Plain­tiff’s pleadings and request for attor­ney[’]s fees. The attorney[’]s fees requested are not reasonable nor [sic] necessary.

Pavlow v. Jensen, No. 14-04-00750-CV, 2005 WL 3310015, at *5 (Tex. App.—Houston [14th Dist.] Dec. 8, 2005, no pet.) (mem. op.). The court found this affidavit to be a mere legal con­clusion because it contained no factual basis for the attorney’s opinion. Pavlow, 2005 WL 3310015, at *6 (citing Basin Credit Consultants, Inc. v. Obregon, 2 S.W.3d 372, 373 (Tex. App.—San Antonio 1999, pet. denied) (“An affidavit filed by non-movant’s counsel that sim­ply criticizes the fees sought by the movant as unreasonable without setting forth the affiant’s qualifications or the basis for his opinion will not be sufficient to defeat summary judg­ment.”)).

§ 31.11Duty to Segregate Fees

If multiple causes of action are brought, some of which permit recovery of attorney’s fees while others do not (e.g., breach of contract versus fraud), the attorney must be cognizant of the duty to segregate the attorney’s fees related to the causes of action for which attorney’s fees are recoverable from those in which fees are not recoverable. Evidence of segregation may be presented by specifying on the attorney’s invoices which times were attributable to which causes of action. State Farm Lloyds v. Hanson, 500 S.W.3d 84, 102 (Tex. App.—Houston [14th Dist.] 2016, pet. denied); see also Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 314 (Tex. 2006) (detailing evidence sufficient to show segregation). Alternatively, the attorney may testify as to what percentage of the time worked on the case would have been necessary even if the nonrecoverable claim had not been asserted. Chapa, 212 S.W.3d at 314. This latter approach is a more efficient way to segregate.

In 1991, the Texas Supreme Court recognized an exception to the requirement to segregate fees in Stewart Title Guaranty Co. v. Sterling, 822 S.W.2d 1 (Tex. 1991). The court held that fees do not need to be segregated if the claims arose from the same transaction and were “so interrelated that their prosecution or defense entails proof or denial of essentially the same facts.” Stewart Title Guaranty Co., 822 S.W.2d at 11–12.

The supreme court modified the “interrelated rule” significantly in Chapa, stating:

Accordingly, we reaffirm the rule that if any attorney’s fees relate solely to a claim for which such fees are unre­coverable, a claimant must segregate recoverable from unrecoverable fees. Intertwined facts do not make tort fees recoverable; it is only when dis­crete legal services advance both a recoverable and unrecoverable claim that they are so intertwined that they need not be segregated. We modify Sterling to that extent.

Chapa, 212 S.W.3d at 313–14. This new requirement emphasizes that segregation must be based on the legal services provided or work done, not the facts of the case. Furthermore, the duty to segregate relates “solely to a claim for which . . . fees are unrecoverable.” Chapa, 212 S.W.3d at 313–14.

Further, the court explained:

Requests for standard disclosures, proof of background facts, deposi­tions of the primary actors, discovery motions and hearings, voir dire of the jury, and a host of other services may be necessary whether a claim is filed alone or with others. To the extent such services would have been incurred on a recoverable claim alone, they are not disallowed simply because they do double service.

Chapa, 212 S.W.3d at 313.

The attorney is not required to keep two sets of time records. As noted, the attorney may pro­vide a percentage of the hours worked advanc­ing the claim on which attorney’s fees may be recovered. Chapa, 212 S.W.3d at 314.

The court in Chapa also clarified that the work performed to overcome affirmative defenses on a recoverable claim does not need to be segre­gated. “To prevail on a contract claim,” wrote the court, “a party must overcome any and all affirmative defenses (such as limitations, res judicata, or prior material breach), and the opposing party who raises them should not be allowed to suggest to the jury that overcoming those defenses was unnecessary.” Finally, if seg­regation is not properly made, the proper rem­edy is remand, not a denial of attorney’s fees completely. Chapa, 212 S.W.3d at 314.

Courts have also permitted evidence of segrega­tion based on testimony as to a percentage or dollar amount for work done on claims for which attorney’s fees are not recoverable. See Gluck v. Hadlock, No. 02-09-00411-CV, 2011 WL 944439, at *6 (Tex. App.—Fort Worth Mar. 17, 2011, no pet.).

§ 31.12Applying the Law to Claims Where Attorney’s Fees Are Recoverable vs. Nonrecoverable

§ 31.12:1Claims Where Attorney’s Fees Were Recoverable

For an excellent summation of the law on segre­gation of attorney’s fees where attorney’s fees were recoverable, see AMX Enterprises, L.L.P. v. Master Realty Corp., 283 S.W.3d 506, 521–52 (Tex. App.—Fort Worth 2009, no pet.). AMX in its original and first and second amended plead­ings made claims for breach of contract, viola­tion of the Prompt Payment to Contractors Act, and foreclosure of its mechanic’s lien. The mechanic’s lien claim does not allow for recov­ery of attorney’s fees. However, the proof for a Prompt Pay Act claim, contract claim, and the mechanic’s lien claim were nearly identical. The court found segregation was not required for these three claims because the “discrete legal services needed to advance and prove” these claims were “so intertwined that they need not be segregated.” AMX Enterprises, 283 S.W.3d at 521 (citing Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 313–14 (Tex. 2006)).

Moreover, as with Chapa, the court found there was no need to segregate fees which were incurred to overcome affirmative defenses. AMX Enterprises, 283 S.W.3d at 522.

§ 31.12:2Claims Where Attorney’s Fees Were Not Recoverable

However, AMX filed a third amended petition, which included a plethora of claims: conversion, violation of the Texas Theft Liability Act, breach of fiduciary duty, and money had and received, to name just a few. AMX Enterprises, L.L.P. v. Master Realty Corp., 283 S.W.3d 506, 522 (Tex. App.—Fort Worth 2009, no pet.). None of these claims were submitted to the jury. Consequently, AMX could not prevail on any of these claims. AMX did not segregate its fees for these claims. The result was a remand on the issue of attorney’s fees. AMX Enterprises, 283 S.W.3d at 522–23. Counsel did not offer a per­centage reduction for the nonrecoverable claims as was done in Gluck v. Hadlock, No. 02-09-00411-CV, 2011 WL 944439 (Tex. App.—Fort Worth Mar. 17, 2011, no pet.), where counsel decreased his fee request by 10 percent to account for work on nonrecoverable claims.

§ 31.12:3When to Object on Lack of Segregation

The law regarding when to object is inconsis­tent. A docket control order may set a deadline to designate expert witnesses, produce expert reports, and object to expert witnesses. See also Tex. R. Civ. P. 194. Absent a docket control order, opportunities to object to the lack of seg­regation include—

1.when the attorney’s fees evidence is offered;

2.at a jury charge conference;

3.before the trial court rules or the issue is presented to the trier of fact; and

4.in a postjudgment motion.

The best practice is to object timely pursuant to a docket control order or otherwise before the case is submitted to the fact finder. See Home Comfortable Supplies, Inc. v. Cooper, 544 S.W.3d 899, 908–11 (Tex. App.—Houston [14th Dist.] 2018, no pet.) (citing various cases but concluding that objecting before the case is sub­mitted to the fact finder preserves the error of failing to segregate).

§ 31.13Discovery Sanctions

Awards of attorney’s fees for discovery abuse are discussed at sections 18.83 and 18.84 in this manual.

§ 31.14Attorney’s Fees for Postjudgment Collection Efforts

The availability of attorney’s fees for postjudg­ment collection efforts depends on the type of action. See section 27.66 in this manual regard­ing attorney’s fees awarded to the garnishee’s counsel in postjudgment garnishment and sec­tion 27.92 regarding attorney’s fees in turnover actions.

§ 31.15The Opposite of Excessive Fees—Inadequate Fee Awards

In certain cases, appellate courts have reversed low attorney’s fee awards. See, e.g., Iola Barker v. Hurst, 632 S.W.3d 175, 194 (Tex. App.—Houston [1st Dist.] 2021, no pet.). In Iola Barker, the trial court awarded only 17 percent of the requested fees which were supported by the evidence. Iola Barker, 632 S.W.3d at 190. After noting fees must be reasonable and not excessive or extreme, the court found the lode­star evidence was reasonable and that the trial court’s award of trial fees was “arbitrary, unrea­sonable and without reference to guiding princi­ples, because it bears no relationship to the uncontroverted evidence of attorney’s fees incurred.” Iola Barker, 632 S.W.3d at 194–95. Other cases reversing low fee awards include Mogged v. Lindamood, No. 02-18-00126-CV, 2020 WL 7074390, at *7–8, 19 (Tex. App.—Fort Worth Dec. 3, 2020, pet. denied) (mem. op.) (award of 22 percent of requested fees reversed) and Fiamma Statler, LP v. Challis, No. 02-18-00374-CV, 2020 WL 6334470, at *18 (Tex. App.—Fort Worth Oct. 29, 2020, pet. denied) (mem. op.) (award of only 5 percent of fees was against the great weight and preponder­ance of the evidence presented and was reversed).

For a contrary case upholding a fee reduction of over 50 percent, despite billing records evi­dence, see Scott Pelley P.C. v. Wynne, 578 S.W.3d 694, 705 (Tex. App.—Dallas 2019, no pet.) (reduction from $76,387 to $31,200 approved because trial court could take judicial notice pursuant to Tex. Civ. Prac. & Rem. Code §§ 38.003–.004, and even though billing records submitted in compliance with Rohrmoos, court’s judicial notice of case file constituted some evi­dence in support of the award and no further evi­dence needed).

§ 31.16Attorney’s Fees and Sanctions

The Texas Supreme Court applied the Rohrmoos opinion’s requirement for time records and com­pliance with the lodestar method in the sanctions context in Nath v. Texas Children’s Hospital, 576 S.W.3d 707, 710 (Tex. 2019) (per curiam). Citing Rohrmoos, the court pointed out that a party seeking a fee award must prove the rea­sonableness and necessity of the requested fees in all fee-shifting situations. Nath, 576 S.W.3d at 710 (citing Rohrmoos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469, 492 (Tex. 2019)).

§ 31.17Appellate Fees

The trial court’s award of attorney’s fees must include appellate attorney’s fees if there is evi­dence of the reasonableness of fees for appellate work. See Ventling v. Johnson, 466 S.W.3d 143, 154 (Tex. 2015), and section 31.2:1 above. The reasonableness of attorney’s fees is a fact issue that must be passed on by the trier of fact. The appellate court may not initiate an award for work done in the appellate process, because doing so would involve the exercise of original rather than appellate jurisdiction. International Security Life Insurance Co. v. Spray, 468 S.W.2d 347, 349 (Tex. 1971). An award of appellate fees outside chapter 38 is a matter of discretion for the trier of fact, not a requirement. Hunsucker v. Fustock, 238 S.W.3d 421, 431 (Tex. App.—Houston [1st Dist.] 2007, no pet.) (citing Neal v. SMC Corp., 99 S.W.3d 813, 818 (Tex. App.—Dallas 2003, no pet.)). But see sec­tion 31.15 above, explaining that excessive reductions in attorney’s fee requests can be reversible error as an abuse of discretion.

If the testimony for attorney’s fees is uncontro­verted and the opposing party had “the means and opportunity of disproving the testimony and fails to do so, the testimony will be taken as true as a matter of law.” Hunsucker, 238 S.W.3d at 431 (citing Ragsdale v. Progressive Voters League, 801 S.W.2d 880, 882 (Tex. 1990) (per curiam)). Furthermore, in the face of uncontro­verted evidence, an award of zero fees on appeal is an abuse of discretion. Hunsucker, 238 S.W.3d at 431–32 (citing Ragsdale, 801 S.W.2d at 882); Lee v. Perez, 120 S.W.3d 463, 469–70 (Tex. App.—Houston [14th Dist.] 2003, no pet.).

§ 31.17:1How to Plead for Appellate Fees—Beware of Not Pleading Correctly

The trial court’s award of attorney’s fees must include appellate attorney’s fees if there is proper pleading and evidence of the reasonable­ness of fees for appellate work in cases involv­ing chapter 38. Tex. Civ. Prac. & Rem. Code § 38.001.

In the past a general pleading seeking recovery of “reasonable attorney’s fees” has been held to authorize the award of appellate attorney’s fees. Superior Ironworks, Inc. v. Roll Form Products, Inc., 789 S.W.2d 430, 431 (Tex. App.—Houston [1st Dist.] 1990, no writ); Ledisco Financial Services, Inc. v. Viracola, 533 S.W.2d 951, 958 (Tex. App.—Texarkana 1976, no writ). How­ever, best practice is to specifically request appellate fees in a petition or counterclaim espe­cially in light of the Nath case discussed in the practice note below. In addition, a plea for appellate fees should explicitly cover both fees for pursuing an appeal as the appellant and/or defending an appeal as the appellee as explained below.

Practice Note:      First, in Nath v. Texas Chil­dren’s Hospital, the court noted that there should be a pleading for future appellate fees. Nath v. Texas Children’s Hospital, No. 14-19-00967-CV, 2021 WL 451041, at *12–13 (Tex. App.—Houston [14th Dist.] Feb. 9, 2021, pet. denied.) (mem. op.) (noting there was no plead­ing for future appellate fees, but no objection was made to the lack of a proper pleading, and so the issue was tried by consent).

Second, a pleading for fees to defend a judgment is not sufficient to cover appellate fees if the party is pursuing the appeal. In other words, Texas differentiates appellate fees into two cate­gories: (1) defending an appeal taken by the other side, i.e., being the appellee, and (2) purs­ing an appeal as the appellant. See Iola Barker v. Hurst, 632 S.W.3d 175, 196 (Tex. App.—Hous­ton [1st Dist.] 2021, no pet.).

Consequently, counsel should plead for appel­late fees for pursing or defending an appeal, whether as the appellant or the appellee. In Iola Barker the appellant requested fees only if there was an unsuccessful appeal by the other side but not for pursuing an appeal. Iola Barker, 632 S.W.3d at 196. As a result, the court held that based on the appellant’s request and evidence, appellate fees for pursuing the appeal were not recoverable. Iola Barker, 632 S.W.3d at 196.

§ 31.17:2Proving Appellate Attorney’s Fees Not Resolved by Rohrmoos

The Rohrmoos opinion did not address the issue of appellate fees. See Rohrmoos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469 (Tex. 2019). Earlier opinions have been incon­sistent. For example, in 2013, one court applied El Apple I, Ltd. v. Olivas, 370 S.W.3d 757 (Tex. 2012), to overturn a conditional appellate attor­ney’s fee award for not being supported by the lodestar method. Sentinel Integrity Solutions, Inc. v. Mistras Group, Inc., 414 S.W.3d 911, 930 (Tex. App.—Houston [1st Dist.] 2013, pet. denied). In 2016, the lump-sum method of prov­ing appellate fees by stating a dollar amount for each appellate stage was approved. See Lawry v. Pecan Plantation Owners Ass’n, No. 02-15-00079-CV, 2016 WL 4395777, at *8–9 (Tex. App.—Fort Worth Aug. 18, 2016, no pet.) (mem. op.).

§ 31.17:3Texas Supreme Court Rejects Lodestar Method on Appellate Attorney’s Fees, Provides Two-Part Test

In 2020 the Texas Supreme Court addressed the issue of conditional appellate attorney’s fees in Yowell v. Granite Operating Co., 620 S.W.3d 335 (Tex. 2020). In Yowell, one party was granted a summary judgment. The trial court then held an evidentiary hearing and awarded $43,500 in contingent appellate attorney’s fees. Yowell, 620 S.W.3d at 354. The court stated the reviewing court “must ensure the record con­tains sufficient evidence to support such an award.” Yowell, 620 S.W.3d at 354 (citing Rohr­moos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469, 505 (Tex. 2019)). The court further explained the party seeking attorney’s fees “must supply enough facts to support the reasonableness of the amount awarded.” Yowell, 620 S.W.3d at 354 (citing El Apple I, Ltd. v. Oli­vas, 370 S.W.3d 757, 762–63 (Tex. 2012)).

The court chose not to follow Rohrmoos or Sen­tinel Integrity Solutions, Inc. v. Mistras Group, Inc., 414 S.W.3d 911 (Tex. App.—Houston [1st Dist.] 2013, pet. denied). Those cases required compliance with the lodestar method. In refus­ing to apply the lodestar method, the court found the objective data of hours worked does not exist with respect to appellate fees, which have not yet been incurred. Yowell, 620 S.W.3d at 355. The court recognized the lack of objective facts regarding the hours worked because there is no certainty of what lawyers will be involved, what the hourly rates will be, or what services will be required in the appellate court. Yowell, 620 S.W.3d at 355.

Next, the supreme court approved a two-step method of proving appellate fees. The court held that opinion testimony was still required about (1) the services reasonably necessary to defend or pursue the appeal and (2) the reasonable hourly rate for those services. Yowell, 620 S.W.3d at 355. The court upheld the award not­ing that the evidence regarding appellate fees was uncontroverted. Yowell, 620 S.W.3d at 355.

The evidence approved by the supreme court is found in Yowell v. Granite Operating Co., 557 S.W.3d 794, 808 (Tex. App.—Amarillo 2018), rev’d in part, 620 S.W.3d. 335 (Tex. 2020). The sufficient evidence was the lawyer testifying that in his opinion (1) $22,000 would be reason­able for handling the appeal through the court of appeals, (2) $7,500 would be reasonable for handling a petition for review, (3) $9,000 would be reasonable for the written briefing on the merits to the Texas Supreme Court, and (4) $5,000 would be reasonable for oral argument and completion of proceedings in the Texas Supreme Court. Yowell, 557 S.W.3d at 808.

The appellate court found this testimony legally sufficient because it was “clear, direct, and posi­tive, and not contradicted by any other witness, other evidence, or attendant circumstances.” Yowell, 557 S.W.3d at 808–09. The Texas Supreme Court affirmed this analysis, holding this “uncontroverted evidence” was legally suf­ficient. Yowell, 620 S.W.3d at 355.

§ 31.17:4An Alternative Method to Proving Appellate Attorney’s Fees

An alternative way to prove appellate fees is found in Nath v. Texas Children’s Hospital, No. 14-19-00967-CV, 2021 WL 451041, at *13–14 (Tex. App.—Houston [14th Dist.] Feb. 9, 2021, pet. denied) (mem. op.) (approving appellate attorney’s fees where attorney opined a total dollar amount for each stage of the appellate process and then gave the name of each attorney who would work on the appeal and that attor­ney’s hourly rate—i.e., appeal to the intermedi­ate court of appeals totaling $196,700 with the following estimate: (1) attorney number one working 70 hours at $850 per hour, (2) attorney number two working 70 hours at $760 per hour, and (3) attorney number three working 135 hours at $420 per hour).

In this case such evidence was provided for each stage of the appellate process.

§ 31.18Proper Statement of Award of Appellate Attorney’s Fees in Judgment

Appellate fee awards should be conditioned on success at the appellate level, though if they are not, courts may reform a judgment to make them conditional on success, so this is not the basis for a reversible error. An award of appellate attorney’s fees may be couched in remittitur lan­guage to avoid objections of lack of finality, lack of definiteness, and the existence of a con­ditional judgment. Failing v. Equity Manage­ment Corp., 674 S.W.2d 906, 909 (Tex. App.—Houston [1st Dist.] 1984, no writ); see also Goebel v. Brandley, 76 S.W.3d 652, 658–59 (Tex. App.—Houston [14th Dist.] 2002, no pet.), disapproved on other grounds, Martin v. Amerman, 133 S.W.3d 262 (Tex. 2004) (remitti­tur language permissible).

Further, as a result of Iola Barker, the judgment should clearly state that appellate fees are to be awarded to the client, for pursuing an appeal or defending an appeal, whether the party is the appellant or appellee. Iola Barker v. Hurst, 632 S.W.3d 175, 196 (Tex. App.—Houston [1st Dist.] 2021, no pet.).

§ 31.19Award of Zero Appellate Attorney’s Fees Abuse of Discretion

Texas courts, including the Texas Supreme Court, have held that under Texas Civil Practice and Remedies Code section 38.001, an award of reasonable attorney’s fees is mandatory if there is proof of reasonable fees. Ventling v. Johnson, 466 S.W.3d 143, 154 (Tex. 2015). While a “trial court has discretion as to the amount of reason­able and necessary appellate attorney’s fees, it had no discretion to award Johnson no fees.” Ventling, 466 S.W.3d at 155. The public policy behind this holding is to “encourage contracting parties to pay their just debts and discourage . . . vexations, time-consuming and unnecessary liti­gation.” Ventling, 466 S.W.3d at 155 (quoting Gates v. City of Dallas, 704 S.W.2d 737, 740 (Tex. 1986)). In other words, chapter 38 is to put the aggrieved party in as good a position as if the other party had fully performed. Ventling, 466 S.W.3d at 155. As the court held, “appellate attorney’s fees are also mandatory when proof of reasonable fees is presented.” Ventling, 466 S.W.3d at 155; see also Mulch Matters, Inc. v. Toro Rojo, Inc., No. 01-22-00322-CV, 2024 WL 1862723, at *14–15 (Tex. App.—Houston [1st Dist.] Apr. 30, 2024, no pet. h.) (mem. op.).

§ 31.20Paralegal Fees

Texas law allows for recovery of paralegal fees, but the tasks must be described in sufficient detail for a court to determine if the work is sub­stantive legal work or clerical work. See El Apple I, Ltd. v. Olivas, 370 S.W.3d 757, 763 (Tex. 2012); Gill Savings Ass’n v. International Supply Co., 759 S.W.2d 697, 705 (Tex. App.—Dallas 1988, writ denied); Clary Corp. v. Smith, 949 S.W.2d 452, 469–70 (Tex. App.—Forth Worth 1997, pet. denied). According to El Apple I, an award for paralegal or legal-assistant work requires testimony of (1) the qualifications of the legal assistant to perform substantive legal work; (2) that the legal assistant performed sub­stantive legal work under the direction and supervision of an attorney; (3) the nature of the legal work performed; (4) the legal assistant’s hourly rate; and (5) the number of hours expended by the legal assistant. El Apple I, 370 S.W.3d at 763.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Chapters 32–34 are reserved for expansion.]