Regarding the element that Plaintiff must prevail, Plaintiff must secure favorable findings on both liability and damages. If Plaintiff secures a favorable finding on liability, but with no damage award, Plaintiff has not been considered to prevail and it not entitled to attorney’s fees. Plaintiff is not required to obtain a net recovery, however, before recovering attorney’s fees. On this point, the successful Plaintiff is entitled to attorney’s fees even when the entire amount the Plaintiff is awarded is entirely offset by damages awarded to Defendant.
For recovery, Plaintiff must have incurred reasonable attorney’s fees, and the fees must be reasonable. The general rule is for Plaintiff to prove the usual and customary attorney’s fees for the claim and once proved; the fees are presumed to be reasonable under Chapter 38. This presumption can be rebutted by competent evidence. In 1997, the Texas Supreme Court decided Arthur Anderson v. Perry Equipment, 945 S.W.2d 812 (Tex. 1997), and adopted eight (8) factors to be used to determine the reasonableness of attorney’s fees. These factors have been taken from the Texas Disciplinary Rule of Professional Conduct which states that the list is not exclusive. The eight factors used by Anderson are as follows:
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 acceptance of the particular employment will preclude other employment by the attorney
3. The fee customarily charged in the locality for similar legal services
4. The amount involved and results obtained
5. The time limitations imposed by the client or circumstances
6. The nature and length of the professional relationship with the client
7. The experience, reputation and ability of the attorney performing the services
8. Whether the fee is fixed or contingent on results obtained, i.e. the uncertainty of collection before the legal services are rendered
The Anderson factors are not exclusive, however, and other matters may be considered including the entire record, evidence presented on reasonableness, the common knowledge of attorneys and judges, the relative success of the parties, the client’s interest at stake, and the responsibility imposed upon the attorney. Also, a Chapter 38 claim, a trial court without receiving evidence, can take judicial notice of the usual and customary fees for the claim in the content of the file, assuming again that recovery is based upon a Chapter 38 claim.
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*The foregoing is not intended to provide specific legal advice, but instead only as a generalized discussion
Sam Emerick has over 35 years
experience in Commercial Collections Law,
Factoring Litigation and Wills, Trusts & Probate