A recent Law 360 story, “Texas House Floats 2 Bills Over Atty, Contingency Fees,” reports that two bills proposed in the Texas House would change the way litigants can recover attorneys’ fees from opposing parties and the way clients can challenge contingency fee agreements in court.
HB 230 would expand the possibility of recovering attorneys’ fees to include legal entities other than individuals and corporations, in reaction to a 2014 intermediate appellate ruling that barred recovery of fees from a partnership.
This bill is in reaction to a February 2014 ruling from the 14th Court of Appeals in a referral fee dispute between Fleming Nolen & Jez LLP and The Burton Law Firm. The ruling, currently on appeal to the Texas Supreme Court, narrowly construed the statute governing attorneys’ fees to eliminate a fee award against the Fleming firm because it was organized as an LLP, not a corporation.
HB 247 would limit contingent attorney fee agreement disputes such that a party may bring an action on a claim the agreement was obtained by corruption, coercion, force, fraud or other undue means or that the agreement was forged.
And in HB 247, lawmakers have been asked to limit claims against attorneys over contingency fee agreements unless a party to the agreement is asserting it was signed because of fraudulent or criminal conduct. The bill provides that a claim arising out of a qualified contingency agreement or the representation that is the subject of the agreement “shall be dismissed with prejudice” if the suit was brought on grounds other than the fraudulent conduct laid out in its subsection (d).
The bill would also provide that for aggregate settlements of multiple clients that meet certain disclosure requirements outlined in the statute, the settlement is irrebuttably presumed to be fully disclosed, read, understood and voluntarily entered into by all parties to the agreement, presumed to be fair, accepted, reasonable and made in the best interests of the parties by the parties or through their attorneys and presumed to be final and not subject to subsequent litigation.