Supreme Court of Texas Recommends Trial Lawyers Provide More Accounting Records to Prove Fees

“General, conclusory testimony devoid of any real substance will not support a fee award,” said the April 26 opinion in Rohrmoos Venture v. UTSA DVA Healthcare. “Billing records are strongly encouraged to prove the reasonableness and necessity of requested fees.”

In a detailed 56-page opinion Friday, the Texas Supreme Court has clarified state law regarding evidence required to prove up attorney billing under a fee-shifting agreement.

“General, conclusory testimony devoid of any real substance will not support a fee award,” said the April 26 opinion in Rohrmoos Venture v. UTSA DVA Healthcare. “Billing records are strongly encouraged to prove the reasonableness and necessity of requested fees.”

The underlying case involved a landlord-tenant dispute between UT Southwestern DVA Healthcare LLP, which ran a dialysis clinic in a Dallas building, where the landlord was Rohrmoos Venture. UTSA had won a jury verdict in the trial court that found both parties failed to comply with the lease, but Rohrmoos failed first, and it breached the implied warranty of suitability. The jury found that Rohrmoos should take nothing, while UTSA won a $1,025,000 attorney fee award.

The Texas Supreme Court dismissed Rohrmoos’s arguments about the lease breaches and upheld the trial court’s ruling. But it found that UTSA lawyer Wade Howard’s testimony was too general and he would need details about the work he did, how much time he spent on the tasks, and how he figured the fee amount. The court sent the case back to the trial court to redetermine the fees.

Scheef & Stone partner James Pikl of Frisco, who represented Rohrmoos, said the ruling lays out a blueprint for how to prove up attorney fees in Texas.

“It’s going to be the case everyone cites from now on,” he said. “it does encapsulate and bring together all the law over the last 40 years into one place.”

Liskow & Lewis shareholder Wade Thomas of Houston, who represented UTSA, said the opinion might require a new billing procedure for many plaintiffs lawyers who work on a contingency basis and don’t currently keep track of every minute of work.

“It could put a significantly greater burden on them to prove up their attorney fees,” he said. “For any complex litigation, I think you are going to need billing records.”

On page 17 of the opinion, Justice Paul Green begins a detailed explanation of each side’s arguments over attorney fees and lists exactly what evidence parties must show in court to prove up their attorney fees under a fee-shifting agreement.

The court noted that fees must be reasonable and necessary, and they’re meant to compensate the prevailing party from the losses from the litigation process. Courts have used two methods: the lodestar method and the Arthur Andersen method.

“These two seemingly different methods for evaluating claims for attorney’s fees have created confusion for practitioners and courts alike,” Green wrote.

Generalities in testimony are not enough to support fees in fee-shifting situations, he wrote.

“The fact finder’s starting point for calculating an attorney’s fee award is determining the reasonable hours worked multiplied by a reasonable hourly rate, and the fee claimant bears the burden of providing sufficient evidence on both counts,” Green wrote. “We clarify today that there is a presumption that the base lodestar calculation, when supported by sufficient evidence, reflects the reasonable and necessary attorney’s fees that can be shifted to the non-prevailing party.”

Sufficient evidence must include details of particular services performed, who performed them, when they performed the services, the reasonable amount of time it took, and the reasonable hourly charge for each person who performed services, the opinion said. If a fee claimant seeks an enhancement, or a fee opponent seeks a reduction, it must have specific evidence of Arthur Andersen considerations to show why a higher or lower amount is necessary.

Read Opinion from the Justices of the Supreme Court of Texas