Dividing the Spoils: Multilateral Contingent Fee Fights in Texas (Amicus Curiae Brief in Garza v. The Pruneda Law Firm)

Abstract

When the American Bar Association's Standing Committee on Ethics and Professional Responsibility released its Formal Opinion No. 487 on contingent-fee splitting in June 2019, it was already a hot topic in Texas, with several recent cases in the courts of appeals presenting variations on the theme of multiple attorneys fighting over the spoils of successful litigation pursued on behalf of the same client.

The factual scenarios run the gamut:

– An attorney leaves his law firm and takes the contingent-fee client with him: Law Office of Thomas J. Henry v. Cavanaugh, No. 05-17-00849-CV, 2018 WL 2126936 (Tex. App.-Dallas May 7, 2018, pet. denied); Law Office of Thomas J. Henry v. Priscilla Ann Garcia, No. 13-18-00275-CV (Tex.App.-Corpus Christi, Feb. 21, 2019, no pet.).

– Two attorneys in different law firms both work on a wrongful death case, and then have a falling out over who gets how much of the spoils: Alejandro L. Padua and The Padua Law Firm, P.L.L.C v. Jason A. Gibson, P.C. d/b/a The Gibson Law Firm and Jason A. Gibson, pending in the Fourteenth Court of Appeals under appellate case no. 14-17-00379-CV.

– An out-of-state attorney and Texas attorney quarrel over fee sharing where out-of-state attorney was not authorized to practice law in Texas and the shared client had not consented in writing to fee sharing as required under Texas law: Dickens v. Jason C. Webster, P.C., No. 05-17-00423-CV (Tex.App.- Dallas, Dec. 31, 2018, no pet.).

– A different attorney takes over to handle the appeal of a wrongful termination case that had resulted in a money judgment for the client, where the original attorney lacked appellate litigation capability, and the outcome is even more favorable to the shared client as a result of the appeal. Hilda Gonzalez Garza v. The Pruneda Law Firm, PLLC, No. 13-18-00222-CV (Tex.App.- Corpus Christi/Edinburg, June 6, 2019, motion for rehearing filed).

The author’s amicus curiae letter brief in Garza v. Pruneda presents arguments why the Thirteenth Court of Appeals should grant rehearing en banc to give effect to a new Texas Supreme Court precedent on the proof necessary to establish entitlement to attorney’s fees, and to consider the ABA’s new opinion on division of contingent fees between successive attorneys in the same case.

The ABA's attorney ethics opinion on fee-splitting was released shortly after the South Texas appellate court handed down its opinion affirming judgment for the original attorney for the full amount claimed even though he had not won the federal appeal for the client in the underlying case.

See ABA Standing Committee on Ethics and Professional Responsibility. Fee Division with Client’s Prior Counsel. Formal Opinion 487 (Jun. 18, 2019);

RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 40 cmts. b & c (2000) (On discharge, a lawyer may be entitled to the fair value of the lawyer’s services. Determination of fair value takes into account the proportion of work performed by the discharged lawyer, and the value of work contributed. The determination also may consider a contract amount prorated for work actually performed.).

Keywords: contingent fee agreements, legal services, professional responsibility, attorney ethics, regulation of the legal profession, disputes over allocation of attorney's fees

JEL Classification: K00, K12, K13, K23