by Jennifer McCollum and Nicholas Kennedy, Baker & McKenzie LLP

We all know the American Rule—that each party generally pays its own attorneys’ fees. But attorneys’ fees are available more often than you may expect—and when they are, there are six keys to keep in mind.

  1. Availability. Does a contract, rule or statute provide for attorneys’ fees in your case? One of the most common grounds for seeking attorneys’ fees in Texas is Civil Practice and Remedies Code § 38.001. However, many people do not appreciate that the statute is facially limited to instances where the defendant is an individual or a corporation— in theory excluding partnerships, LLCs and other business entities. While there are cases awarding attorneys’ fees against non-corporate entities, this facial limitation should be considered when advising your client on the likelihood of a fee award. Other examples of statutes that permit recovery of attorneys’ fees include the Deceptive Trade Practices Act, the Insurance Code, and the Texas Commission on Human Rights Act. Be sure to review the statutes relevant to your claims and to include the basis for your fee request in the live petition.
  2. Presentment. A party seeking fees under Civil Practice and Remedies Code § 38.001 must present its claim to the other party by demanding payment of the underlying claim. Attorneys’ fees are only available if the demand is made and the opposing party fails to pay the claim within 30 days. Generally, filing a lawsuit does not satisfy the presentment requirement, so be sure your client (or the other side) has satisfied the demand requirements of § 38.002. Although the demand may be made orally, it is easiest to prove the demand by submitting a copy of a demand letter. 
  3. Expert Designation. Remember to designate an expert who will be able to either establish your client’s claim for attorneys’ fees or rebut the other party’s claim. This should be an attorney who can testify to what work was done in the case and should be someone with enough experience to testify that the fees were reasonable and necessary. Parties commonly designate their lead attorney as their expert on attorneys’ fees. 
  4. Discovering Evidence of Attorneys’ Fees. If your opponent is seeking attorneys’ fees, then you should request copies of fee invoices with time entry narratives as well as any fee agreements. Although you can expect this information to be redacted to remove privileged information, it can be invaluable when the time comes to assess whether the party seeking fees has appropriately segregated them between recoverable and non-recoverable claims (#6 below). 
  5. Proving Fees at Trial. Evidence of attorneys’ fees can be presented to the jury or, by agreement, to the judge. If presented to the judge, the parties can agree to present evidence of attorneys’ fees at an evidentiary hearing or through an application for award of attorneys’ fees supported by an affidavit. Try to reach an agreement with the other side before trial begins on how attorneys’ fees will be presented. However the evidence is presented, the party seeking fees must generally prove that the requested amount is both reasonable and necessary. An outline of the eight factors the court will consider in determining whether the fees are reasonable can be found in Texas Disciplinary Rule of Professional Conduct 1.04(b). 
  6. Segregation. When attorneys’ fees cannot be awarded on all of a party’s claims, the total amount of attorneys’ fees incurred must be segregated between claims for which fees are recoverable and those for which they are not. In other words, the party seeking fees should either track through time entries or billing records the amount of fees attributable to the various claims or be prepared to give a good estimate of the percentage of its attorneys’ fees that is related to claims for which fees can be awarded. While many litigants argue that time spent on claims for which fees are not recoverable is “inextricably intertwined” with time spent on claims for which fees are recoverable, recent case law disfavors this approach and requires segregation. If you are the party opposing a request for fees and you contend the other side did not properly segregate its fees, consider preparing your expert to provide an amount that she or he would consider to be a reasonable and necessary sum for the work performed. 

These six keys are just the tip of the iceberg, but keeping them in mind throughout your case will prove invaluable in your quest to prove (or disprove) a claim for attorney’s fees.

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