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Texas Tort Reform Group Pushes Legislation to Curb Attorney Fees

January 24, 2017 | Posted in : Contingency Fees / POF, Fee Agreement, Legislation / Politics

A recent Texas Lawyer story, “Tort Reform Group Aims New Push to Get Legislation to Curb Fees of ‘Storm-Chasing’ Lawyers,” by Miriam Rozen reports that the advocacy group Texans for Lawsuit Reform (TLR), after failing in previous sessions of the Texas Legislature to get state lawmakers to pass bills aimed at curtailing what its lobbyists characterize as "storm-chasing lawyers," defined as plaintiffs counsel pursuing hail-related claims against insurers, is planning a new push for such a measure during the new legislative session in Austin.

Even lawyers without a dog in the hail-litigation fight may want to pay attention to the TLR proposals because they target attorney fees.  Specifically, TLR talking points about the proposed bill call for a state law that limits attorney fees in property claim litigation if a plaintiff's demand is excessive.  As defined by the TLR proposal, such a demand would be deemed excessive if claims overstate by a multiple of five the damages, including attorney fees, a court ultimately rules is owed.

But critics complain that TLR's proposal dramatically overreaches and threatens contingency fee arrangements.  Those critics include well-known Houston plaintiff lawyer Steve Mostyn, but also, less predictably, counsel to Fortune 500 companies.  "I'm asking myself what is the purpose of this bill," said Ernest Martin, a partner in Haynes and Boone in Dallas, who has represented La Quinta Inn & Suites, Sovereign Bank, Centex Homes, NCH Corp., and Ericsson.

The proposal has identified not just homeowner and consumer claims, but all property claims, Martin noted.  Although TLR advocates purport to be focusing on curbing litigation abuse in connection with a hailstorm in South Texas, "Nothing in the bill has anything to do with homeowners' policies.  If that's the purpose, this is not the way to do it," Martin said.

Mostyn of Mostyn Law, with offices in Beaumont, Galveston, Houston and Austin, welcomes lawyers representing corporations in objecting to the TLR proposal.  A fight that pits Mostyn against tort reformers is much less winnable than a battle between TLR and corporate interests, he said.

Mostyn who has won millions for hundreds of homeowners whose property suffered hail damage plans to keep a low profile in the legislative battle.  He noted that his practice has recently shifted focus from hail litigation to transvaginal mesh litigation.

But he still voices opposition to the proposals.  The new proposal is "just as bad or worse" than what TLR previously attempted to get past the lawmakers, Mostyn said.  Both Martin and Mostyn agree that the TLR proposal threatens contingency fee arrangements.  "Reading between the lines, the new proposal makes no room for contingency fees," Martin noted.

"I'm not sure why other than tort-reform advocates running out of things to focus [on] why they are picking contingency fees," said Chuck Herring, an Austin attorney and a partner in Herring & Panzer, who follows fee dispute issues.