For over a decade, the Texas Supreme Court has tightened the proof necessary to recover attorney fees in Texas. That, coupled with Legislative expansion of fee shifting, makes understanding the standard even more important. This is particularly true about appellate fees, which, unlike federal court, must be estimated and proven before the appeal. This week, Todd Smith and Jody Sanders discuss the evolution of attorney-fee proof in Texas and ways attorneys can make the best record for both trial and appellate fees.
We’ve gone quite some time without having an episode that was the two of us. We thought that this topic that we’re going to cover about attorney’s fees would be one that we could have a conversation about. We could talk through some of the things that we’ve seen in our practices, focusing to some degree on the appellate side of things because that’s our area of expertise. It seems like we’re seeing attorney’s fees being litigated more and more often these days. Why do you think that is?
There are a couple of reasons. Number one is the amounts of attorney’s fees in a lot of cases now exceeds sometimes the recovery. That’s a huge reason. Number two is as litigation gets more sophisticated, you have a lot more facts and things that bear on attorney’s fees. No longer is it just you pick up the file, see how thick it is and say, “This is a case that’s ought to cost about X.” You’ve got many hours of preparation. The third thing, and this is what we’re going to spend a lot of our time talking about, is the Texas Supreme Court and state court cases has continued to tighten the standards for attorney fee recovery. You can’t show up and say a reasonable fee is $50,000. It’s like what we tell our kids when we’re doing math homework, “You have to show your work to the end result.” You can’t come in with the answer and not back your way into it, or the appellate courts are not going to let you get away with that.
Litigation has timed up. There’s a lot of pressure on law firms to try to recover for their clients and make them whole. The businesspeople are experiencing a lot of pressure to try to get back as much money as they can if they’re going to lay out money to prosecute a commercial case where there’s a breach of contract at issue and there’s a provision that anything through the contractor, through the statute, that provides for the recovery of attorney’s fees. In different practice areas, it’s a little different. In the PI practice, you’re almost never going to be able to recover attorney’s fees for a straight up PI situation.
Although we’ve seen the creative use of the Declaratory Judgements Act to try and do that. It’s at least a legally defensible, if not correct, approach in certain circumstances like an uninsured, under-insured motorist claim against the carrier. The economics of litigation and the sophistication of litigation have driven a lot of efforts to try and find ways to recover attorney’s fees to shift them as it were to the other side. Our state follows the American rule, which is most sides bear their own attorney’s fees unless there is a contract or a statutory mechanism for switching or shifting the fees to the other side. In a PI case, if you don’t have that mechanism, or in any case to the extent you get recovery, the fees have to be carved out from that recovery to pay the lawyer.
Fee shifting in itself is a hugely important facet of our justice system if we think about who ought to pay when someone’s at fault. We see that a lot in largely commercial litigation. We see it in some insurance litigation where the statutes provide for the recovery fees. There are any numbers that you could do. In DPA and family law cases, that’s the first question that a lawyer ought to ask if they’re getting ready to bring an action, “What are my prospects for recovering attorney’s fees for the benefit of my client?”
I thought of another area where we see a lot more litigation of it. The legislature has put in fee-shifting in places where you wouldn’t have had it traditionally. In a contract claim, the prevailing party can win their fees depending on how that goes. In places like the Citizens Participation Act, Rule 91a, there are a lot more opportunities for somebody to get their fees in a situation outside of a normal plaintiff whose defendant plaintiff wins and gets their fees in a contract case deal. Especially in the last several years, as you saw the TCPA ramp up and take over the court system, when you had a mandatory loser-pays attorney fee deal there, there was so much litigation on attorney’s fees in addition to the statute itself. You have that now still out there in a limited extent. You still have it in Rule 91a. There are a lot more of those that have come in where there’s a sanctions element to it, and a loser-pays element to it in those vehicles as well.
What’s the proliferation of these statutes? It does take on a loser pays air to it, even though the legislature over the past few sessions has not been able to enact a strict loser pays law. This statutory scheme does provide a substitute, it seems. For the party who’s bringing the lawsuit, that’s one thing. As you point out in the TCPA and 91a contexts, they can benefit what traditionally would be the defendant in the case. You could even go so far as to say that if you are not aware of the possible avenues of obtaining attorney’s fees for your client, whichever side of the docket you’re on, you need to study it up because you’re either missing out or you’re going to be facing a malpractice claim.
Responding to a TCPA motion can get expensive. I haven’t done one under the new statute and it may be a bit more streamlined now, but under the old one, there was so much uncertainty in the laws, whether it applies or not. You had that avenue, then you had to deal with the evidence part of it. It was almost like a whole summary judgment proceeding before you even get to discovery, which can ramp up everybody’s fees regardless of who wins that motion.
That’s a good reminder that litigation is expensive. It underscores the idea that whoever it is, whichever side of the docket you’re on, you need to be looking at what your means of recovering fees from the other side are. Before we jump too far further in on this, it might be useful to talk generally about the differences between attorney’s fee recovery in state court versus federal court. State court practitioners are going to be familiar with this because the basic rule is that you’ve got to prove up your fees to the factfinder at the time of trial, your hearing, or whatever it may be before the final judgment to get your fees. Because the rule is different in federal court, I sometimes see federal court practitioners struggle with this a bit.
To cover the differences, in federal court, unlike a state court, you can wait until the case is over. You’ve litigated the final judgment even until after appeal to prove up your trial fees and any appellate fees. That’s not the case in state courts. In federal courts, the district judge determines the fee to file an application for attorney’s fees or something styled similarly to that. The case law is developing in Texas and we’ve had a seat change with a couple of Supreme Court cases going back to 2019. The federal courts have been working under fee-shifting and this lodestar type analysis for a long time. Even a number of US Supreme Court opinions talk about the lodestar largely in the labor and employment context. It’s interesting that it’s how the law has developed.
The one thing that is the biggest difference between the federal and the state systems on how to prove up and recover attorney’s fees is that in a state court in Texas, you have to make a prediction. When you’re at trial, talking to whoever your factfinder is, the jury or the judge, you’ve got to come up with hard and fast numbers as conditional awards for appellate attorney’s fees. The federal court system can be more accurate because you’re looking backwards rather than being predictive and looking forward, and trying to guess what your fee is going to be. You know what’s gone into the case and you have, ideally, your fee statement. You can give a hard and fast number on what the appeal will likely cost. Whereas in state court, you’ve got to make your best guess. That’s something that is a bit mind-boggling.
It’s an interesting nuance of Texas practice. It comes from Texas’ insistence on the One Final Judgment Rule that you’ve got to have all the pieces in there, which from an efficiency standpoint, makes a lot of sense in terms of let’s let the Court of Appeals sort it all out on the first go. I’ve had cases in federal court where you’ve got your substance of appeal up on appeal to the Federal Circuit Court of Appeals for wherever you are. Later on, you now have an attorney’s fee ruling coming behind it potentially. You have two proceedings instead of one, but the attorney’s fee sometimes can wait until the conclusion of the appeal. You may not have to have a second appeal. There are a lot of advantages there, but if Texas were going to go that way, there have to be changes both at the Texas Supreme Court and probably in the legislature to make that happen. It is interesting that you have to say, “Here’s what we think might happen and how much our fees might be,” with your best educated guess. In some cases, as we’ve seen, just a guess.
The other thing that is interesting and a nuance of Texas practice is, because you are forward-looking in proving up your appellate fees, they have to be conditional. That’s something that people sometimes forget when you’re drafting a judgment is you can’t award appellate attorney’s fees outright because you haven’t incurred them yet. You have to award them conditioned on success on appeal, which is a funny little nuance that can trip people up if you don’t think about it. It’s one of those little tips to keep in the back of your mind.
One thing the Courts of Appeals I’ve noticed has started doing on that though is they’ll fix that easily without a required remand, generally. They’ll modify the clockwork judgment if the court failed to make it conditional. That used to be an “a-ha, got you” years ago, but I don’t think it is much anymore. You mentioned the One Final Judgment Rule. What is holding Texas back from being more like the federal courts in this way on how to go through the recovery of attorney’s fees, particularly appellate fees, is that rule. It’s interesting that seems to be a big barrier at this point because we’ve gone far in state practice toward the federal model in many other ways. Our rules of civil procedure are starting to be the same for the rules of appellate procedure.
In the cases that we’re going to talk about in a little more detail, adopting the lodestar method specifically for proving up fees, it does seem like we’re going to hit a wall that we’re not going to be able to go beyond, unless there’s some change to the procedure that we use. We can only go so close to the federal model unless we adopt the model that allows for fees to be dealt with separately. That’s an editorial comment, but it’s also for my observation about the limitations that I’ve seen. It’s going to probably, at the least, take a rule change. It very well could take a legislative change to make that happen, but it will be interesting to watch. It won’t be this session that’s for sure. Probably not for several years. It’d be interesting to see how the case law continues to develop and influence whether that’s something that the courts ought to look at.
As we’ve seen and Jerry Bullard alluded to, we have been through several sessions where they won’t even change 38.001 to make it where you can recover against entities other than a corporation. The wheels of justice on attorney’s fees tend to move fairly slowly.
You mentioned that little “gotcha” in the statute, we can record five episodes on this topic and dealing with the substance in a detailed way. I want to be upfront with the readers. We can’t possibly impart any great expertise in this short episode, other than we can highlight some of the issues for further discussion and development.
A lot of it is still transitioning. It’s only been the last several years that the Supreme Court has clamped down even more on this. It’s been a trend that’s gone on for about the last several years, but I feel like every two years or so, they come in a bit tighter and a bit tighter on the recovery standards too.
You think it was the Tony Gullo versus Chapa case that started the tightening? Is that the timeframe?
That seems like it. That was in 2010 or somewhere in there. That’s when they started talking about the segregation of recoverable and nonrecoverable fees. That seemed to start to do it and then you had the El Apple case and now they have Rohrmoos.
You mentioned a couple of the traps, and people need to be mindful of the traps from the beginning. Not only that can I recover fees, but what are the procedural minefields to look for. One of those is the limitation in 38.001 that you pointed out about recovering from anything other than a corporation or an individual. We’ll see if the legislature moves forward on fixing that. There are so many that it’s hard to even make a laundry list to try and cover in one episode, but there have been fortunately some good articles written on this topic. I would suggest that folks who are dealing with this issue for the first time, if you need to spend the money on the TexasBarCLE website to view a presentation on an appellate fee, you should because there’s so much at stake.
I was going to touch upon some ways to short-circuit the differences between federal and state practice. For example, in state court, I’m not sure how advisable it is in many cases to ask the jury to award 6 or 7 figures worth of appellate fees on top of whatever damages you’re asking them to award in a commercial case or worse yet, as you suggested, that the attorney’s fees eclipse the actual damages. You have to think about, is it a good idea to go and ask the jury for more money for the lawyers than they’re going to give the client? One way of getting around that is to try and reach an agreement with your opposing counsel on letting the trial judge decide the issue of attorney’s fees, which is the workaround to bring it closer to the federal model, which is what’s typically happened in federal court. Not the jury but the judge is the factfinder deciding fees and doing it in even a separate motion and proceeding.
There are a couple of advantages to doing that, which both sides ought to consider as a general matter. For one thing, you’re going to cut down the time it’s going to take to try your case. You’re going to avoid presenting what can be fairly detailed evidence that your eyes are going to glaze over when you started talking about issues like segregation, and expert testimony on fees, and what’s reasonable and what’s not reasonable. Lay people are going to struggle more with that perhaps than with some issues in a fairly complex commercial case. You run the risk, too, of seeming greedy.
You also don’t have to have the lawyers testify, which is always a benefit.
That’s a big issue. Maybe people tend to undersell their fees a bit in significant cases because you want to ask your trial lawyer after being cross-examined by the opposing counsel. There are ways to limit the scope of the testimony, but as in any other case, once the genie is out of the bottle, you can’t put them back in after something has happened. You would think that most lawyers wouldn’t wind up in that situation, that they would be able to control what they say, and they would argue for a limited scope of the testimony, but it still creates a lot of discomfort among the parties and the lawyer to think about their lawyer testifying as a fact witness.
You’re going to have to have an expert witness and you are. You’re looking outside of your lawyer’s law firm as someone to be an objective expert. I realize this is self-interested, but I happen to think that applies on the appellate side. There are a lot of tricky issues on appeals that most trial lawyers may not be the best-qualified person to present testimony on. That can come back to bite you on appeal if you’re not careful. You can adopt the federal approach in that you can probably do this by affidavit as opposed to having the lawyer testify live. There’s a lot of efficiency in reaching an agreement on handling the fee issues separate from the main trial issues. I would encourage people to look hard at that. There may be some reasons not to do it, but to me, it seems like the reasons to do it are stronger and lead to a lot of efficiencies potentially.
One final point, something I’ve seen in quite a few cases, is you have the parties reach a stipulation on amount, especially if you’ve got a commercial case where both sides have a fee claim. They sit down and say, “We think our fees are X.” The other side says, “We think they’re Y.” They look at what it’s going to cost to take to try it. They say, “Let’s agree that the winner gets Z and ABC for appellate fees on all the steps.” That’s the stipulation that you now know what the prevailing party gets. That isn’t necessarily appropriate in every case but a lot of times, if you have a big commercial claim with big firms or firms that charge similar rates on both sides, you may be able to sit down and realize the delta between the two is not that much, and come to a compromise that takes that whole step out anyway.
I could see situations where that would be useful. I’m a little skeptical of the inclination of people who agree. You suggest if it’s two firms of a similar station, it very well could work. If it’s small practitioner versus big law, if I’m on the solo side, I don’t think I would ever agree to that with a big law firm. I would be able to poke holes in that all day long, but that’s one perspective. As you suggest, it’s something that you have to consider on a case-by-case basis.
It’s not a one size fits all development.
As part of the overall strategy, evaluate what you could agree to or you might be able to agree to, and what you couldn’t. I always encourage lawyers to work with opposing counsel to see where you can cut out the waste in a trial and avoid unnecessary expense. That is a burden on our justice system. If you can reach agreement, by all means do it. You mentioned the Rohrmoos case, and it was decided back in 2019 by the Texas Supreme Court, in an opinion written by our previous guest, Justice Paul Green. It’s going to wind up being one of his more significant opinions as a Justice on the Texas Supreme Court.
As we suggested, the court in that case adopted the lodestar method for proving reasonable and necessary attorney fees. The lodestar method essentially is a mathematical calculation. A lot of our readers are going to be familiar with it, but in case you’re not, the way that the Supreme Court described it in Rohrmoos, and I’ve seen it in many other cases, is there are two facts that have to be determined by whoever the factfinder is. One is the reasonable hours worked. The second is the reasonable hourly rate for each attorney involved. We can expand that into paralegals because there is a mechanism for recovering for paralegals.
If you’ve proven it up, lump that in there because you ought to. It’s not going to hurt you. It’s only going to help you.
The court has said that this analysis applies whenever it’s possible to reach an objective calculation, the reasonable hours worked times the reasonable hourly rate. This has come up often. We’ve seen already, when it comes to trial fees, the Courts of Appeals started citing Rohrmoos early on, and then have applied it many times in the last several years since it was issued. What it seems was slower to develop was the question of whether Rohrmoos applied to the appellate fees and how that lodestar analysis overlaid with this whole notion of predictive appellate fees. That was the logical disconnect and this is where it gets interesting. How on earth do you calculate reasonable hours worked and a reasonable hourly rate for each attorney or paralegal involved when you don’t know what the time will be, and you don’t know what the tasks are going to be?
That is the hard question out there because it leaves open a lot of variables. It’s the same thing that happens when you have a client come to you to take on an appeal that you haven’t sat down and looked at and they say, “How much is it going to cost?” You say, “Here’s my best guess. Here are the steps that we have to go through to get there. I haven’t seen the record. I haven’t talked to the trial counsel. I don’t know what happened other than what you’ve told me.” There are a lot in that same situation there, trying to estimate the closest certainty it can come to.
You could argue that appellate lawyers have experience in making these predictions, because at least those who work with the kinds of clients who require budgeting are often asked, or they’re told, “Give us the numbers and make them based on principle and not your gut feeling.” Often what has happened in awarding appellate fees is in the jury charge, there would be a blank that says, “What is a reasonable fee for appeal,” or you would ask the trial judge to make that same determination. I can get on my soap box about how too often the numbers were too low in terms of what was awarded on appellate fees. It would be, instead, if you might have detailed numbers on segments of a trial court proceeding like fees through trial, and then post-trial to appeal, then you might have the appeal.
Often what we see now is when you get up past the Court of Appeals, you’ll see blanks for different segments of the Texas Supreme Court proceeding. Preparation of the petition for review, preparation for opposition of a brief on the merits of the case, and then another blank for preparation and presentation at oral argument. Maybe even another blank for a motion for a hearing or presenting or opposing a motion for a hearing. There are potentially a lot of blanks for a jury to fill out there, but when it comes to that first level appeal, often it seemed like the number would be picked out of thin air. A lawyer would testify as an expert and say, “You might give more detailed testimony on the trial fees.” What would tend to happen is the appeal would get drifted on the analysis because the lawyer wasn’t asked before to say, “What’s a lodestar type analysis going to look like here?”
It would be more often that the lawyer would be asked, “What do you think the reasonable and necessary fee would be for handling this appeal?” In a decent case, $50,000. That would be the end of the estimate for the most part. Rohrmoos raised the question of, “Is that going to be good enough anymore?” It seemed clear that it wasn’t going to be, but the Supreme Court decided a case called Yowell versus Granite Operating Company. There, for the first time, the court decided whether the Rohrmoos framework was going to apply when proving up respective or conditional appellate fees. The court interestingly said no and cited 1 or 2 opinions in that decision where the Courts of Appeals had tried to apply the Rohrmoos framework onto conditional appellate fees.
The court said, “No, it doesn’t work that way for appellate fees in part because they’re unknown and predictive. You can’t ascertain with certainty what the numbers are going to be.” There’s some good language in that opinion to the effect of these appeals at this point are hypothetical. The who, what, when, where and why can’t be known. In my observation, often you’d have one expert who would testify about all attorney fees and give the numbers on the trial fees. That might work and the jury or the judge may accept those numbers, but then also give a number about appeals. All too often, it would be X. In Yowell, what the court reached back to was the statement in Rohrmoos where it said that the lodestar analysis applies to any situation in which an objective calculation of reasonable hours worked times the reasonable hourly rate can be employed.
The courts say, “Because this is predictive and prospective, you can’t use that analysis because you’re not looking backward. You’re not looking at the data that reflects what occurred. It is predictive.” The lodestar method isn’t a complete overlay when it comes to appellate fees. What the court said you have to do, which I consider this to be Rohrmoos light or pointing this idea of a Rohrmoos guess is the court says, “A party seeking to recover conditional appellate fees must provide expert opinion testimony about the services reasonably necessary to defend the appeal and a reasonable hourly rate for those services.” You’re going to have to make a prediction. Predicting the hourly rate is the easy part.
You more or less know who’s going to be on this case. I’m going to have myself and a firm. I might have a junior lawyer doing some research and drafting, and we’re probably going to have a paralegal, probably at the time this testimony is being given, who’s going to be staffing the case more or less. It gets trickier if you’re going to send the case out to a big firm. Once you get past the hourly rate, though, how are we supposed to predict, because I’ve been pulling the tricks out of what we’ve learned from budgeting for clients. We can put a legitimate approach. How are we supposed to predict what an appeal is going to cost if we don’t know what the other party is going to do? How are they going to go about litigating their appeal?
It does come back to budgeting the way that you do it. You have to break it down into the stages of the appeal that you know are going to happen because no matter what, you’re going to have to read the record. No matter what you’re going to have to file a brief. Presumably if you’re going to say that you’re the prevailing party, you can figure out what an appellee’s brief would be. If you think you may not be the prevailing party or you’re going to be the appellant, that’s a different consideration. You can work from that. The benefit the trial lawyer has at this stage in the testimony is you know the issues. You know where you feel like there’s going to be problems on appeal.
This is a place where outside counsel can benefit, if you’re having an outside expert or even if an appellate expert can benefit from talking to the trial lawyer to forecast. By the time you’re at trial, or even after trial, offering appellate fee testimony, the trial lawyer has a good sense of where they think the issues are going to be on appeal. They can forecast and it doesn’t have to be perfect, but at least you can say, “We think that there are evidentiary issues. We think that there are legal issues that respectfully, your honor, didn’t get correctly decided, or maybe an issue on appeal,” and explain what those are. You do not even have to go that far. We see 3 or 4 big issues.
The level of detail probably depends on the amount of fees that you’re getting because the more fees you ask for, probably the more detail the reviewing court is going to want from you. That’s something that you’re going to have to look at, and then you can forecast from there. You build in some time for oral argument and put that in the calculation. In the times of COVID, you may or may not get oral argument depending on the court. These are all things that someone with some appellate expertise can help walk you through and come up with what are reasonable numbers. I do think it looks like that. You have to sit down and map out the stages and the tasks, and come up with some round numbers to justify what you come to as the final fee, showing your work again and going back to that theme.
What we know after Yowell, seems to me, is that filling in the blank with something like, “In my years of experience of trying cases, I’ve seen so many appeals go up. I know more or less what an appeal is going to cost. It’s going to be $50,000.” It’s clear from the Yowell opinion that testimony isn’t going to be good enough. You’re going to have to go into that depth of analysis that you described. As a testifier, you are going to be drawing from your experience, but you’re going to have to justify it for the factfinder in a way that’s understandable. A lot of times the numbers are going to seem large for what goes into an appeal because you’re fighting against the tendency of the juries to a large degree, but sometimes it’s even tougher with trial judges who cut the amount from what’s requested from that to the amount awarded. All too often, we’ve seen appellate fees awarded in these woefully insufficient amounts, $5,000, $10,000 for an appeal, which you can’t even look at an appeal for $10,000 in most cases.
Especially if it’s from a jury trial.
To that point, there are things you can do to give you some indication of how involved and how complex the case is going to be. Knowing that it’s from a jury trial, knowing that there are jury charge issues potentially versus evidentiary error in the admission of evidence versus the legal issue, you get a sense of what the issues are. You can arrive at some educated guesses about what things would cost. You’ve got to build in and review the transcript. If you’ve got a two-week jury trial, you can count on an appeal from that judgment being expensive. There are variables that the testifier can look at to make reasonably educated guesses. These are the things that might drive the broader adoption of flat fees for an appeal, but that doesn’t do you any good. It’s like having a contingent fee agreement that doesn’t do you any good for these purposes.
You’ve got to justify the numbers that you’re presenting to the factfinder regardless of what you’re receiving, getting paid as a lawyer on the other end. There are scientific or mathematical elements you can bring into it, but to some degree too, there’s no substitute for the experience of having handled a number of appeals to know, or at least as a testifying expert, you can rely on things that a fact witness couldn’t rely on. What the testifier ought to do is talk to people who have done these things and have handled a number of appeals, and can get a better feel for what the numbers should be. This is where I start to get a little preachy even. If you don’t ask for enough money, the party that’s damaged in this is your client. We’ve got many fee-shifting mechanisms available now.
One of the objectives of a lawyer ought to be to put your client in the best position possible, to recover the maximum amount possible provided the law allows it. My personal opinion on this is that it’s a real mistake. Attorney’s fees generally, and appellate fees specifically, is an afterthought because it can come back to hurt you. What we see, tying this back to the mechanism of appeals, is when it’s treated as an afterthought and when it’s not proved up properly, all too often, even if the merits of the judgment are affirmed, we’ll see a reversal or a remand to go back and fix whatever the defects are in the attorney’s fee evidence. It’s a hollow victory to some degree, or a win, but yet have the case not quite be over because you’ve got to go back and fix an issue. If I could encourage lawyers to spend the time and even spend the money on the frontend, there’s a lot of this that can be avoided with some of that front end work.
Don’t be afraid to call your friendly local appellate lawyer even if it’s not to hire him as your fee expert. Talk to him about, “What goes into a typical appeal? What am I looking at here?” It may be that the $50,000 may be a correct figure, yet you have to be able to explain how you get there and talk about, “Is it a jury trial? Is it a bench trial? What’s the briefing look like? What do we think the record’s going to look like?” These are all things that somebody can sit down and talk with you about for twenty minutes and probably come up with a solid figure to justify. You need to take the time and do that to form your opinion if you’re going to be the one testifying to that. Otherwise, if you don’t explain how you get there, the Court of Appeals is going to knock it down. If you’re lucky, they’ll remand it because there’s some evidence of attorney’s fees. If you’re not lucky, they’re going to render it, and then your client gets a big goose egg for appellate fees.
It seems like for trial fees, it’s easy to find enough of a nugget of evidence that they’re going to send it back for a new trial. My prediction, and this is not anything too controversial I don’t think, but after Yowell, we’re going to start seeing some rendition of take-nothing judgments on appellate fees. The court has pretty much made it clear what will fly and what won’t fly. That testimony that I described about a reasonable and necessary amount of appellate fees would be blank with no further explanation. Be prepared because folks that are giving that testimony if you prevail at trial, that’s going to get reversed on appeal. After Yowell, we’re going to start seeing some renditions on appellate fees. Hopefully, that should happen because in any other evidentiary area, you don’t get multiple do-overs. You present legally sufficient evidence or you don’t.
This is one of those situations because the court has said, “This is the analysis you go through. You’ve got to make a prediction and justify it.” If you don’t tie those numbers back to the kinds of activities that the court has described in Rohrmoos and Yowell, I think that’s where the conclusory testimony is being held to be legally insufficient. In most cases, the amount awarded for an appellate fee is going to be significantly smaller than trial fees, but still you’re talking about failing to make the initial required investment of time and energy. You’re talking about potentially, in a complex case, six figures’ worth of recovering that your client will lose out. It cannot be emphasized enough in my mind that it is a grievous mistake if you treat appellate fees as an afterthought.
You got to at least take it to the level that you described, Jody. At least talk to somebody who’s been through this. Another thing that we’re going to see happen is in Rohrmoos or in some other cases, the Supreme Court has said, “We don’t want to have a lot of satellite litigation over appellate fees.” It’s interesting. It’s like the One Final Judgment Rule. You can say that. You can keep going more towards the federal model but until that rule has changed, you’re talking to litigators. You’re talking to trial lawyers who are looking for any advantage in a case that they can get. If my opponent puts up a 3rd-year associate to testify about appellate fees, you better believe that the qualifications are going to be challenged.
These are things that trial lawyers are not going to appeal to help themselves, unless they can see the bigger picture and say, “We’re not going to generate a bunch of fees litigating about fees.” We’re going to reach those kinds of agreements that we talked about. Despite the Supreme Court’s best intentions, we are going to see satellite litigation over not only trial fees, but appellate fees specifically. How many trial lawyers are going to be qualified to stand up and testify about what would be a reasonable fee for appeal based on the kinds of details that the Supreme Court has said that we have to go into to identify those fees? There will be some, but they will tend to be more experienced trial lawyers who maybe handle their own appeals or who work closely with appellate counsel. That would be a reasonable basis for an opinion. We’re not done when it comes to seeing challenges about the attorney’s fees reasonableness and necessity. Appellate fees are the prime target.
We still see lots of challenges on attorney fee segregation, and that’s been the rule for several years. No matter what your fee arrangement is, and this is trial and appellate, whether flat fee, contingency or hourly, keep your lodestar records because they say that’s not the ultimate standard and there are ways that you can do it, but assume that’s going to be the standard. That is the precision the Supreme Court seems to want to require. If you have a flat fee or a contingency fee, keep contemporaneous time even though it’s a pain in the butt. It can make or break attorney’s fees recovery in a case if you don’t do it.
I don’t see any way around it. To try and go back and justify what was done in a case, possibly years after the fact, you’re going to spend more money, either in opportunity cost or actual outlay of money to do that way, more than it would take to adopt the practice, as much as many of us hated, of keeping contemporaneous time records. It’s for the purpose of knowing that you’re going to be asked about this and have to justify the absence of those record when you’re asking for attorney’s fees. That’s a good piece of advice. Segregation has its own error in fees, but we’ve now seen the development with Rohrmoos and, before that, going back to some of the others. Rohrmoos and now Yowell, we’re seeing it from a perspective of evidentiary insufficiency, as opposed to segregation. They’re interrelated, but the Tony Gullo point is different from the Rohrmoos point.
With a segregation point, generally you’re going to get a remand if there’s error on appeal. You’re going to get a do-over. Some people may factor that into the calculation and say, “I’m going to prove this up this way. The worst thing that could ever happen to me is I get remand for new trial fees.” If you’re willing to take that risk, there could be situations that justify that. Rohrmoos is different and Yowell is different. You run the risk, if you don’t do it right, of a take-nothing judgment on appellate fees. I would advise folks to be mindful of that as they’re presenting their cases. We’ve covered what I intended to cover. What do you think, Jody?
Raising this issue and pointing out some of the stumbling blocks on it is what we wanted to do to make sure that people are aware that the stuff’s out there, and that simply picking a figure out of the air for an appeal is not going to cut it anymore. Call an appellate attorney to help you out even if it’s an informal consult. We’re happy to do that because we want to make sure that people get it right. There’s nothing worse as the appellate attorney for them coming in and saying, “We may have a little fee issue.” You look at the record and go, “We do have a fee issue, and there’s nothing you can do about it.”
That’s as good a point as any to wrap up.
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