What is a Reasonable Attorney Fee in Texas?
This is the first of three guides about how to determine the reasonableness of an attorney’s fee in Texas. There are three methods for determining the reasonableness of an attorney’s fee in Texas: 1) Express Agreement; 2) Value furnished (Quantum Meruit); and 3) Cost shifting.
Method One: Express Agreement (also known as the Contract Rate).The contract rate is determined by the amount the attorney and client agree to. Rabb v. E. H. Goodrich & Son, 102 S.W. 910, 911 (Tex. App. 1907) (Attorney and Client may fix the amount of the fee by express contract); cf. John H. Carney &Assocs. v. Ahmad, 2016 Tex. App. LEXIS 989, at *5 (Tex. App.--Amarillo Jan. 28, 2016, no pet.) ("A suit by an attorney against a client or former client for the recovery of attorney's fees under an hourly fee contract of representation is governed by the usual rules of contract law."); Accord Levy v. Kimball, 465 P.2d 580, 584 (Haw. 1970) ("[B]y contract an attorney and his client may agree on fees other than that set by the court."). How the attorney and client determine payment between themselves is a matter within their province. See PetroleumAnalyzer Co., LP v. Olstowski, 2008 U.S. Dist. LEXIS 112674, at *2 (S.D. Tex. July 23, 2008). It is the Client's prerogative to pay to drive a "Cadillac Escalade" when a "Honda Civic" would do. See Beastie Boys v. Monster Energy Co., 112 F. Supp. 3d 31, 52 (S.D.N.Y. 2015).
Must the Fee Agreement between Attorney and Client be in Writing?No. However: "when the lawyer has not regularly represented the client, the basis or rate of the fee shall be communicated to the client, preferably in writing, before or within a reasonable time after commencing the representation." Texas Disciplinary Rule of Professional Conduct 1.04(c). If the basis or rate of fee being charged to a regularly represented client differs from the understanding that has evolved, the lawyer should so advise the client. Rule 1.04 at Comment 2; and "In the case of a contingent fee, a written agreement is mandatory." See Rule 1.04 (Comment 2).
Are there any limits to how much an attorney can charge, even when the client agrees?Yes. If an attorney seeks or charges an unconscionable fee, then that attorney may be barred from recovering the agreed fee, and possibly, any fee at all. According to Texas Disciplinary Rule of Professional Conduct 1.04(a), an attorney's "fee is unconscionable if a competent lawyer could not form a reasonable belief that the fee is reasonable." At least one court has found the unconscionability standard too high and applied a reasonableness standard. Under this standard, regardless of the fee the attorney and client agree to, the amount must still be reasonable. In re Wells, 2006 Bankr. LEXIS 330, at *28-30 (Bankr. N. D. Tex. 2006): Despite the relatively high standard for unconscionability applied by the Texas courts under general contract law discussed previously, the Court concludes that Texas courts would apply a different criterion with respect to contracts for attorney's fees. This is so because lawyers "owe their clients greater duties than are owed under the general law of contracts."