Lodestar Doesn’t Apply to Conditional Appellate Fees

The Texas Attorney’s Fee Blog*

By John W. Bridger & David A. Kirby

Just when I was preparing to have an academic, yet scintillating, discussion regarding the argument that appellate courts should render when they reverse cases for insufficient evidence of attorneys’ fees, which was certain to stir multiple contentious debates around the latte bar, the Texas Supreme Court held that the fee proponent need not comply with lodestar. See Yowell v. Granite Operating Co., No. 18-0841, 2020 Tex. LEXIS 425 (Tex. May 15, 2020). Since this opinion (a) comes from the Texas Supreme Court and (b) departs from what David Kirby and I write about appellate fee proof, I decided this actual holding preempted the theoretical ruminations.

In somewhat of a side issue in a case involving a disputed mineral lease interest, the Texas Supreme Court, in an opinion authored by Justice Busby, acknowledged:

We have not previously addressed how this lodestar analysis may affect the evidence needed to support a contingent award of fees that have not yet been incurred. . . . As we explained in Rohrmoos Venture, however, “[i]t should have been clear from our opinion[] in El Apple” that the lodestar analysis applies to situations “in which an objective calculation of reasonable hours worked . . . can be employed.” 578 S.W.3d at 498.

Id. at *36–37. In rejecting the argument that appellate fees should be proved with the same specificity as trial fees, the supreme court explained that lodestar cannot be employed when projecting appellate fees because those hours have not been worked. See id. at *37. Additionally, “there is no certainty regarding who will represent the appellee in the appellate courts, what counsel’s hourly rate(s) will be, or what services will be necessary to ensure appropriate representation in light of the issues the appellant chooses to raise.” Id.

Concluding, Justice Busby set the new standard for proving conditional appellate fees: The fee proponent must “provide opinion testimony about the services it reasonably believes will be necessary to defend the appeal and a reasonable hourly rate for those services.” Id. at *37–38. In Yowell, the fee proponent’s uncontroverted evidence met that standard.

The decision describes precious little about the fee proponent’s proof, other than the petitioner’s objection that it amounted to mere ipse dixit. See id. at *36. The Amarillo Court of Appeals relates that the fee proponent’s counsel provided testimony as to each of the Arthur Andersen factors, his experience with this type of litigation, fees charged in the Panhandle, and

that, in his opinion, $22,000 would be a reasonable fee for handling the case through an appeal to this Court; $7,500 would be a reasonable fee for handling a petition for review to the Supreme Court; $9,000 would be a reasonable fee for briefing on the merits; and $5,000 would be a reasonable fee for representation through oral argument and completion of proceedings in the Supreme Court.

Yowell v. Granite Operating Co., 557 S.W.3d 794, 808 (Tex. App.—Amarillo 2018), aff’d in part and rev’d in part, 2020 Tex. LEXIS 425 (Tex. May 15, 2020). The Amarillo court also noted that the fee opponent “did not cross-examine the witness regarding his estimates for attorneys’ fees on appeal, present any additional evidence on the issue of appellate attorneys’ fees, or otherwise contest his testimony on what a reasonable fee would be in the appeal of this case.” Id.

In a footnote, the supreme court points to two cases: one with sufficient proof of conditional appellate fees and one without. See id. at *38 n.12. It cites Assoun v. Gustafson as an example of a case with insufficient evidence of conditional appellate attorneys’ fees.  See 493 S.W.3d 156, 168 (Tex. App.—Dallas 2016, pet. denied). Assoun is hardly instructive as there was literally no evidence on appellate fees presented at the hearing; but, despite this fact, the final judgment awarded $22,500 for conditional appellate fees. See id. at 168.  The Court cites State & Cty. Mut. Fire Ins. Co. v. Walker as a case in which the proponent provided sufficient evidence. See 228 S.W.3d 404, 408–10 (Tex. App.—Fort Worth 2007, no pet.). The fee proponent’s testimony in Walker is similar to that in Yowell, i.e. discussing prevailing market rates, the attorney’s own hourly rate, and discussing the eight Arthur Andersen factors. Also like in Yowell, the fee opponent in Walker did not contest the evidence of the appellate fee.

So, where does this leave us?

  1. If you have adequately proven your trial fees under Rohrmoos Venture and Arthur Andersen and you are handling the appeal, then simply estimating the appellate fees should be sufficient to defeat a legal sufficiency challenge.
  2. If you anticipate someone else handling the appeal and know who will be handling the work, then you should establish the prevailing market rates for appellate work, the hourly rate for the attorneys, and a projected estimate for appellate fees. Again, this should be sufficient to defeat a legal sufficiency challenge.
  3. If you get in a bind and have pleaded Chapter 38 of the Texas Civil Practice & Remedies Code as a basis for awarding attorneys’ fees, you should request that the court make the presumptions and take the judicial notice permitted by sections 38.003 and 38.004.
  4. However, all of this may not be persuasive to a judge or jury, particularly if subjected to objections and cross examination. Therefore, consider being a bit more descriptive about what an appeal entails. For instance, you will have to select from the court’s file what will become the clerk’s record, review the clerks record (describing the number of pleadings and motions); review, analyze, and summarize the reporter’s record (often 300 pages per day; and I know my pace is 20–40 pages per hour depending on how esoteric the subject matter); additional research (perhaps identifying possible issues and including reviewing already cited cases); reading and analyzing the opposing parties’ briefs (usually an appellant’s brief and a reply) and writing the briefs (discuss how many, usually two per opposing party, response and sur-reply). Many of us have had to present budgets to clients. Take those skills and use them to flesh out a more persuasive appellate fees estimate.
  5. For heaven’s sake, as we point out in our paper at pages 99–100, if you are the fee opponent, object, vigorously cross-examine and provide controverting evidence. If you do not do this, later appellate points are unlikely to prevail.

*The Texas Attorney’s Fee Blog is intended to be a periodic update for Texas litigators with respect to prosecuting and defending attorney’s fee claims.

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