A recent Texas Lawyer story by Angela Morris, “Fifth Circuit Revives Plaintiffs Lawyer’s Claim Over His Share in $10 Fee Fight,” reports that a Houston attorney who couldn’t practice on a class action due to treatment for alcoholism has won a second chance to argue he deserves a larger cut of attorney fees in the case. The U.S. Court of Appeals for the Fifth Circuit ruled that a district court erred when it split $10 million in attorney fees among a gaggle of lawyers and firms. The court should have considered and explained all of the factors that case law requires when determining the reasonableness and allocation of fees, the court ruled.
That’s just the outcome that Houston litigator Scott Clearman wanted, said his attorney, DJ Healey, senior principal at Fish & Richardson in Houston. Healey said she will ask the district court for an evidentiary hearing in the fee allocation dispute. She said that Clearman went through successful treatment and has been sober ever since. He’s practicing law “full blast” and went on to make positive contributions to the underlying class action and shouldn’t face a penalty in the form of a lower attorney fee, Healey said.
“A lot of lawyers have suffered from the same illness. We want lawyers who suffer from the illness to get treatment for it,” said Healey. “With all the realization going on now that mental health issues and substance abuse issues plague the trial bar, we need to encourage people to get the treatment they need and not penalize them for getting treated.”
The dispute arises from an underlying class action that settled, according to the opinion written by Judge Patrick E. Higginbotham, and joined by Judges Carl Stewart and Kurt Engelhardt. The district court awarded $10 million in fees to the plaintiffs attorneys, who then went on to litigate how the trial court allocated the fees among them.
The trial court used the “spirit” of unconsummated or outdated contracts among the lawyers to split the fees. The Fifth Circuit didn’t determine if the split was fair, because it found a problem in how the trial court assessed whether the fees were reasonable. The ruling vacates the fee allocation and sends the dispute back to the trial court. Clearman sought half of the $10 million award, but he only got $1.5 million, and he challenged the allocation.
The other attorneys alleged that Clearman’s involvement waned in 2011 because he was struggling with substance abuse and mental health issues. The other attorneys had to monitor his work product to protect the clients’ interest and reduce the potential for liability, the opinion said. When Clearman entered treatment for alcoholism, his partner became the attorney-in-charge in 2013. Their firm wound down, and the three remaining partners started a new law firm. Another firm was brought in to defend the class certification on appeal. All the attorneys and firms, but Clearman then signed a new fee allocation agreement.