TEXAS GUIDELINES FOR SETTING FAIR ATTORNEY FEES

Study of 2008

by
Fred Hepner

(Document originally published on June 13, 2008)

This document is provided for educational purposes only and should not to be construed as rendering legal advice.
Readers of this document should consult a qualified attorney to discuss the application of any personal legal issues
and how these issues pertain to their own facts and circumstances. Tax and financial matters should be discussed
with a qualified financial and tax advisor.

An attorney must avoid illegal or unconscionable fees. 1 Fees must be reasonable. Relevant factors
in a determination of reasonable attorney fees are:

(1) Time and labor involved;

(2) Nature and complexities of the case;
(3) Amount of money or the value of the property or interest involved;
(4) Extent of the responsibilities assumed by the attorney;
(5) Whether other employment is lost by the attorney because of the undertaking;
(6) Benefits resulting to the client from the services;
(7) Contingency or certainty of compensation; and,
(8) Whether the employment is casual or for an established or constant client. 2

The fact that the attorney and client agreed to a certain sum per hour is not proof of reasonableness.
A statement entered into evidence by an attorney does not necessarily prove reasonableness,
however, the statement raises a fact issue sufficient to overcome a summary judgment on the issue
of attorney fees.3

Defending Attorney Fees - Breach of Fiduciary Duty

An attorney’s professional relationship with a client is characterized as "highly fiduciary.” Proof

is on the part of the attorney to prove the relationship is of "perfect fairness.” Meeting this burden
means the attorney must implement a mechanism to prevent breach of the fiduciary relationship,
and to accomplish this task, the duty of full disclosure must be met. The attorney as a fiduciary is
required to exercise more than the “traditional obligation” to avoid making any material
misrepresentations. The attorney has an “affirmative duty to make a full and accurate confession
of all his fiduciary activities, transactions, profits, and mistakes.” The breach of the duty of full

1
Tex. Disciplinary R. Prof’l Conduct 1.04, reprinted in Tex. Gov’t Code Ann., tit. 2, subtit. G, app. A, (Vernon 1989)
(Tex. State Bar R., art. X, § 9).
2
Ibid.
3
Nguyen v. Smith & Lamn, P.C., 714 S.W.2d 144, 148 (Tex. Civ. App.-- Houston [1 st Dist.] 1986).
disclosure by a fiduciary is tantamount to fraudulent concealment and where "self-dealing,” by the
attorney/fiduciary is alleged, a "presumption of unfairness" automatically arises and the burden is
placed on the attorney/fiduciary to prove (a) that the questioned transaction was made in good
faith, (b) for a fair consideration, and (c) after full and complete disclosure of all material
information to the principal.

How Not to Bill a Client

The fiduciary duty affects the collection of attorney fees. An attorney’s fee agreement needs to be
reduced to writing and show on its face that the agreement was not vague. Throughout the
representation the attorney must keep accurate billing records for the services rendered. A client
needs to receive regular billings, especially upon request by the client. A client must be able to
ascertain the current obligation for the legal services rendered. Do not condition producing a billing
statement upon the client paying the current balance in full, when the client wishes to understand
the current outstanding balance. Do not inflate hours expended on the case. Do not bill a client
for the attorney’s defense before a grievance committee, even though filed by the opposing party.
Attorneys should not assure a client that another party will eventually pay the client’s legal fees,
but then actually bill the client for the fees. Avoid forcing the client to execute an agreement to
assign property, as a condition of continued representation, without making appropriate
disclosures. A client is entitled to know the consequences of the assignment and a recommendation
that the client seeks outside legal counsel. This needs to be accomplished before the client is
forced to execute the agreement. Certainly, the assignment should not be forced on the client,
where evidence suggests that the assignment of the property is in violation of standing court order,
especially when your client may be held in contempt for violating the order. Facts of this
magnitude will most likely support a finding of breach of fiduciary duty, where there is evidence
of failure to disclose, misrepresentation, conflict of interest, and self-dealing. 4

Fee Forfeiture - Trial Court Discretion

In 1999, the Texas Supreme Court clarified its position on fee forfeitures. Once the jury finds that
an attorney has breached his fiduciary duty to his client, the trial court then determines the amount
of any fee forfeiture damages. Forfeiture is an equitable remedy. The trial court has the discretion
to award the attorney full compensation, reduce, or alternatively deny compensation to the
attorney. Forfeiture is available and a trial court may order a fee forfeiture whether or not the
client sustains actual damages.5

Tex. Prob. Code § 243 - Allowance for Defending Will.

When any person designated as executor in a will or an alleged will, or as administrator with the
will or alleged will annexed, defends it or prosecutes any proceeding in good faith, and with just
cause, for the purpose of having the will or alleged will admitted to probate, whether successful or
not, he shall be allowed out of the estate his necessary expenses and disbursements, including
reasonable attorney fees, in such proceedings. When any person designated as a devisee, legatee,
or beneficiary in a will or an alleged will, or as administrator with the will or alleged will annexed,

4
Jackson Law Office v. Chappell, 37 S.W.3d 15, 22-23 (Tex. App. -- Tyler 2000 rehearing overruled).
5
Ibid at 23.
defends it or prosecutes any proceeding in good faith, and with just cause, for the purpose of having
the will or alleged will admitted to probate, whether successful or not, he may be allowed out of
the estate his necessary expenses and disbursements, including reasonable attorney fees in such
proceedings.

Contingency Fees and Probate

In Salomon, the Court considered the meaning of §243 of the probate code and the relationship of
the statute with reference to contingency fees. The Court concluded that the meaning of reasonable
attorney fees is taken in light of a reasonable fee based on services rendered and the analysis is not
based on contingency fees.6 The statute that the attorney of the executor designated in the will, or
an alleged will, may recover attorney fees, whether or not successful. Likewise, a beneficiary may
also recover attorney fees for defending a will. However, when allegations are made against the
beneficiary for acts of personal wrongdoing, rather than defending the will as a beneficiary, the
beneficiary is not entitled to recover under §243. 7

Attorney fees may be payable under a declaratory judgment from the estate, where the Declaratory
Judgment Act applies and evidence in support of the attorney’s fees is included. Under the
Declaratory Judgment Act, a trial court has discretion to award attorney fees, subject to certain
requirements. The fees must be reasonable and necessary based on the facts. The fees must be
equitable and just. Upon review, an appeals court will review the evidence for factual sufficiency. 8

6
Salmon v. Salmon, 395 S.W.2d 29 (Tex.1965, rehearing denied).
7
In re: Wilcox, 193 S.W.3d 701 (Tex. App. – Beaumont 2006, no writ).
8
Mandell v. Mandell, 214 S.W.3d 682, (Tex. App. – Houston [14 th Dist.] 2007, no writ)