TO THE HONORABLE JUSTICES OF THE TEXAS SUPREME COURT
IN THE SUPREME COURT OF TEXAS
Albert G. Hill, Jr.
Shamoun & Norman, LLP
On Petition for Review
Motion for Leave to Submit Post-Submission Amicus Curiae Brief
By a Member of the Public
December 31, 2017
To the Honorable Texas Supreme Court minus Justice Guzman:
Comes now the undersigned member of the public and respectfully seeks leave to weigh on the Shamoun vs Hill fee fight in that nondescript capacity.
The public cares little that a billionaire may have to part with a few more millions on top of the one million he has already spent of his own volition on a drawn-out legal fight, however epic.
That said, the public has a dog in this fight if the Court should change the rules for charging clients – i.e. consumers of legal services -- more generally, and declares open season on ex-clients of Texas attorneys under a repurposed theory of quantum meruit that might be dubbed quantum meruit plus.
According to the Attorney General, arguing as Amicus for the State, Hill vs. Shamoun is an open-and-shut case. A matter of giving effect to the statute of frauds that governs the enforceability of contingent fee agreements. No more, no less.
The fact that this case has seen oral argument after amici interjections in triplicate and full briefing on the merits -- and still remains in “awaiting opinion” limbo at the end of the year -- carries portends. All omens intimate that the Court is seriously considering not enforcing the statute of frauds as urged by Hill and the State. If that be the case, the Court would be making substantive public policy for the legal services market in Texas, and the public should be allowed to have a voice in that policymaking process too.
Since the existing rules permit non-parties to participate only via amicus brief, the public should be allowed to use that channel to have its voice heard in the decision-making forum that has the power to make, unmake, or remake common law doctrines such as quantum meruit, and the power to pass judgment on the constitutionality, if not the wisdom, of acts of the Texas Legislature.
The undersigned member of the public therefore prays that the Court will allow for wider participation in the supreme decision-making process on the matter of extra-contractual fee recovery by Texas attorneys, and offers to submit the first such public-member amicus brief, should the Court decide to permit it.
A. Quantum meruit recovery is a court-fashioned remedy
On the assumption that the will of the Legislature, as expressed in the statute of frauds, should be followed, Shamoun v Hill is an easy case. The Fifth Court of Appeals should have affirmed the take-nothing judgment in Hill’s favor in an unpublished opinion. [Docket for 05-13-01634-CV]. The Dallas Court clearly erred in purporting to apply to barratry-exception to the statute of frauds that was not even yet in effect, and would not even cover the fact scenario of this case, had it been in effect.
On petition of review, this Court should accordingly have reversed the Dallas Court of Appeals in a per curiam opinion, and should summarily have rendered judgment that Shamoun take nothing. The High Court nevertheless granted the petition for review and scheduled oral argument. This factum alone compels the conclusion that the Court is seriously considering either gutting the statute of frauds governing contingent fee agreements, or fashioning an exception in the exercise of the court’s power to redefine and alter the common law, an exception the Texas Legislature has not seen fit to write into the relevant statute itself.
Quantum meruit is, after all, an equitable doctrine, rather than a statutory cause of action. To the extent the Court finds merit in Shamoun’s argument, the Court will necessarily exercise not only its power to create a work-around to circumvent the statute of frauds, but will also have to weigh in on the matter of the proper measure of “damages” on a quantum meruit claim; i.e. whether the quantum may be based in whole or in part on results obtained, and how success is measured in monetary terms when it involves avoidance of damages or other adverse outcomes, such as criminal liability for perjury.
It is respectfully submitted that these are public policy questions, and that the High Court – if it is to act as policy-making institution – should allow for the participation of a wider constituency of stake holders, not just attorneys with vested interests in the matter, and a rare billionaire ill-positioned to speak for the average consumer of legal services, even with the best of appellate talent that money can buy at his command.
A precedent-setting high-court decision on extra-contractual quantum meruit fees should be based on consideration of arguments and articulations of interests by a more representative segment of the affected population, - one that goes beyond the attorneys in private practice as an occupational category and their collectively shared economic interests. After all, most of the payors of attorney’s fees are not attorneys, and the vast majority are not millionaires. The public should accordingly be invited to submit amicus curiae letters and briefs in their own behalf and in defense of their shared interest in not being overbilled and overcharged, and in not being sued for legal fees that they did not agree to pay.
B. No good cause for exemption from the statute of frauds
Gregory Shamoun is a top-notch lawyer and a sophisticated party. He was fully aware that he needed to obtain the client’s signature on the client’s alleged promise of an extraordinary “success fee” for him to collect it by force, should the client not pay him voluntarily. By proceeding without an agreement compliant with the statute of frauds, Shamoun assumed the risk of not getting paid. There is no good reason why the High Court should bend over backwards to protect Shamoun from the consequences of his own omissions, not to mention gutting the statute of frauds in the process.
The Texas Legislature saw fit to write a barratry-exception into the statute to cover a scenario where the attorney was not at fault. If the Legislature had seen fit to provide for other exceptions, it could have done so. The Legislature may yet do so in the future, but it would be bad policy. In any event, the statutes in effect at the relevant time governs this case, and there is no question that Shamoun did not comply with the statute. This is not to say that Shamoun committed a violation of law. He merely did not follow the requirements necessary to enforce his claim predicated on a verbal promise of a success fee in a court of law. He and other attorneys who commit similar error (whether on purpose or negligently) should be left to face the consequences of their omissions, rather than having this court create a special rule in an ad hoc fashion to accommodate their pecuniary interests in soaking an exceptionally well-heeled client who can afford to pay several millions more, whether he telephonically agreed to it or not.
C. No reason to countermand the Legislature when constitutionality is not an issue.
No one has argued that the statute of frauds at issue in this case is unconstitutional. It should accordingly be given effect as written. Shamoun must be presumed to have been aware of the law that governs attorneys, and even if he was not, that hardly provides a valid excuse for an exemption. Contrary precedent would encourage other lawyers to provide services without a written agreement, and then sue their clients for exorbitant (or merely unaffordable) fees in quantum meruit. Which would have the further effect of forcing the (former) client to hire another lawyer to defend against the quantum meruit fee claim, thus incurring liability for even more fees. If fees-on-fees litigation be good labor policy to address the oversupply of lawyers and scarcity of legal work thanks to computer-based automation and other developments reducing demand, the Texas Legislature should provide for it by statute.
D. Oral argument confirms the entirely contingent nature of Shamoun’s claim for additional compensation.
To its credit, the Court makes recorded oral arguments available not only to attorneys-at-law, but to the media and to the public-at-large likewise. Alas, the privilege has not been extended to include the case records on appeal as to the latter two categories of stakeholders. [oral argument in Hill v Shamoun | Transcript ]
Nevertheless, having listened to oral argument presented by the distinguished high-octane attorneys for the parties, and the questions and answers between bench and rostrum, it is crystal clear, if any more crystal clear it could be after full briefing on the merits, that the enormous fee sought by Shamoun is a contingent fee, and that it would not have been sought, had the “spiderweb litigation” resulted in a debilitating sting, rather than a favorable settlement. It also appears that Shamoun did not even pursue a claim for what would be a much smaller fee amount on a non-contingent quantum meruit theory; - one that would presumably utilize the lodestar method for calculating the quantum.
Since the record on appeal is not available to the public via the court’s website, it is less clear what exactly happened with the non-contingent claim for attorney’s fees as an alternative theory of recovery (albeit a recovery that would pale by comparison with the amount sought by Shamoun and would be presumably be capped at 150 x $600, based on lodestar-type evidence presented at trial).
E. Quantum meruit in the absence of a written attorney fee agreement
Neither side appears to question that quantum meruit recovery should be available when there is no written fee agreement, absent a contingency condition. Given the special and sensitive nature of the attorney-client relationship, and the unequal bargaining power between most pairs of attorneys and clients – this understanding, which is no doubt shared by most litigating attorneys as an occupational class – should not go unchallenged as a matter of public policy because it entails lack of transparency in the market for legal services. Quite simply, as a basis principle of the free market economy, the price should be known before the purchase, so as to allow for comparison shopping and competition. Not to mention market discipline. What Shamoun endeavored to do is have a jury determine his price after the fact, with the intent to then use the coercive powers of the court to force the former client to pay it.
While the Texas Supreme Court regulates the practice of law and promulgates rules governing litigation, the policy issue should be addressed by statute. Although it would be good public policy and would make the market for legal services more efficient, the Legislature has not seen fit to enact a requirement that any and all fees to be paid for non-contingent legal services be based on a retainer agreement in writing as a condition of enforceability in the event of nonpayment.
But the Texas Legislature, in its collective wisdom, decided to require a written and signed contract for contingent fee contracts to be valid and enforceable. Oral argument confirms once more -- if any further confirmation were needed -- that Shamoun sought a contingent fee. Counsel for Shamoun pleaded with the Court to focus on the unique facts that “justify” the enormous fee award, but the whole point of the statute of frauds is that facts as to extraordinary circumstances to justify extraordinary compensation do not matter -- and cannot be considered -- when the basis for success-dependent liability – the required written and signed contract – never came into existence. In this context, the appellate advocate’s focus on unique facts is, much rather, an invitation to his former colleagues to render an unprincipled decision that is both ad hoc and sui generis.
The point of the statute of frauds is to not allow for recovery of fees when there is no fee contract compliant with its provisions, i.e. signed by attorney and client, and to deter noncompliance. Since this is a law specifically designed and enacted to regulate lawyers and their dealings with clients, it should be enforced as written, lest other lawyers feel free to ignore other rules governing the privilege of practice, and then come to this Court seeking special dispensation and consideration of the totality of the unique circumstances. If they can afford it.
In this case, it is plain to the naked eye, and not just to the petitioner-parroting amici, that Shamoun’s extra-contractual fee claim is a contingent one that falls under the statute of frauds. If this Court embraces the proposition that the purpose of the common-law quantum meruit doctrine is to authorize fee recovery when fee recovery is expressly prohibited by the statute of fraud, which renders noncompliant agreements invalid, then this Court has established itself has ultimate policy maker and countermanded the will of the Legislature.
Shamoun’s argument must be rejected. If this Court is nevertheless inclined to rule for Shamoun or carve out an exception to the statute of frauds, the public should be given an opportunity to weigh in with amicus submissions. And they will not merely parrot the three amici for Hill in the pre-grant stage because there are larger issues concerning Arthur Andersen, lodestar, and alternative approaches to measuring the dollar value of legal services.
The Court might consider issuing a press release on its website and via the OCA’s twitter account, or a procedural order to request such public participation in decision-making.
If this Court creates an attorney-friendly exception to the statute of frauds using its power to evolve the common law as it governs quantum meruit claims, then this Court has established itself as an arbiter over what public policy should be in denigration of the will of the Legislature, which has clearly spoken on the matter, rather than having merely remained silent. The Court would in effect have preempted an act of the Legislature without finding such act unconstitutional or even bad public policy, rather than acknowledging that the Legislature has preempted the common law of quantum meruit to the extent it conflicts with the statute of frauds enacted to regulate attorney fee recovery in contingent fee cases. Respectfully submitted,
[Member of the Public]
PROPOSED AMICUS BRIEF: COVER PAGE AND TABLE OF CONTENTS
IN THE SUPREME COURT OF TEXAS
Albert G. Hill, Jr.
Shamoun & Norman, LLP
On Petition for Review
From the Fifth Court of Appeals, Dallas, Texas (No. 05-13-01634-CV)
AMICUS CURIAE BRIEF
SUBMITTED IN SUPPORT OF PETITIONER ALBERT G. HILL, JR.
AND ATTORNEY FEE OBLIGORS NOT SIMILARLY SITUATED
TO THE HONORABLE MEMBERS OF THE TEXAS SUPREME COURT
TABLE OF CONTENTS
Index of Authorities …………………………………………………… 4
Issues Presented ..….……………………………,…………………….. 1
I. The Shamoun-Hill dispute is as atypical as it can get, factually speaking, but this Court’s resolution thereof will likely impact the vast majority of cases in which the amount in controversy is less than $50,000, and the market-based attorney’s fees are in the range of $150 - $500 per hour.
II. The implications of the issues in this case go far beyond the statute of frauds governing contingent fee contracts and the reasonableness of an hourly fee of $85,000.00, whether imputed or part of an express lodestar calculation.
III. The briefing of the distinguished legal practitioners on behalf of the parties and the amici in this case fails to address the wider ramifications of the Court’s anticipated ruling on the availability of quantum meruit recovery for attorney work not expressly contracted for.
IV. If the Court were to rule for Shamoun, it would encourage other attorneys to deceive their clients about the scope of representation, would encourage them to turn the tables on their own clients, and would reward them for colluding with opposing counsel to proffer favorable testimony about their “formidable-foe” status to exaggerate the alleged value of settlements to the former client and the quantum of compensation to be awarded on the quantum meruit claim asserted against the former client.
V. This Court should address the matter of how attorney’s fees are properly “priced” in the context of fee-shifting and in the absence of a contractual agreement across the full spectrum of cases, including those involving small or moderate amounts in controversy, which would never make it to the Supreme Court by petition for review or mandamus, and do not therefore provide the High Court with an opportunity to address the attorney-fee issue for the judicial system as a whole and the bulk of the caseload.
VI. The methodology for judicial determination of the value of legal work in Texas courts should be revisited and revamped to take into account advances in technology.
A. The lodestar approach incentivizes inefficient busywork and bill padding, but it also imposes some accountability because it is based on quantifiable measures and requires factual particulars. It thus promotes reasonableness in amounts requested and awarded, transparency, and predictability. As such, it facilitates rational assessments on both sides and settlement. It also enables trial courts to engage in a meaningful review of the necessity of discrete tasks performed in cases litigated to trial, and the reasonableness of the amount of time spent on them.
B. The Andersen laundry-list is nebulous, unempirical, and outmoded.
C. Neither the Lodestar nor the Andersen approach is satisfactory for computer-driven mass litigation that is largely template-driven and automated and requires minimal attorney time as a consequence
D. While not squarely before this Court, the issue of how legal work is properly appraised in small-value cases at the “retail level,”
and how excessive fees are to be curbed, cries out for high-court attention.
Issues Argued ........………………………………………………………… 4
A. The Shamoun-Hill dispute is as atypical as it can get on the facts,
but the issues are not sui generis. …………....……………..…… 4
B. The implications of the issues raised in this case go far beyond the statute of frauds and the $85,000.00 per-hour-equivalent fee…..… ..............5
C. The ample briefing fails to address the collateral consequences
of a ruling on viability of quantum meruit recovery for attorney
work not covered by contract………………………………………………………........ 7
D. Ethical attorneys and law firms would suffer a competitive
disadvantage …………………………………………………....... 8
E. Lawyers are in a privileged position to know the law
and obtain client consent ………………………………………. 10
F. The Court should address the “pricing issue” in the absence of an attorney-client contract and in the fee-shifting context ……………….......13
G. Scenario I: Computer-driven flat-fee mass litigation…………,.. 15
H. Scenario II: Computer-driven mass litigation with fee calculated
as a percentage of amount in controversy ………........................ 17
Conclusion …...…………………………..……………………………….. 22
Amicus Curiae Statement of Interest ..……………………………………. 23
Certificate of Service………………………………...……………………. 23
Certificate of Word Count ……………………...…………………………. 23
 The Court recently stated in a per curiam opinion that “we cannot judicially amend the statute to exempt legal professionals and must, instead, ‘apply the statute as written.’” See In re Coppola, No. 16-0723 (Tex. Dec. 15, 2017), citing Lippincottv. Whisenhunt, 462 S.W.3d 507, 508 (Tex. 2015)).
483 S.W.3d 767 (2016)
SHAMOUN & NORMAN, LLP, Appellant and Cross-Appellee
Opinion Filed January 26, 2016.
SHAMOUN & NORMAN, LLP, Appellant and Cross-Appellee
Albert G. HILL, Jr., Appellee and Cross-Appellant.
Court of Appeals of Texas, Dallas.
773On Appeal from the 160th Judicial District Court, Dallas County, Texas, Trial Court Cause No. DC-10-14714-H
Reverse, Render, Reinstate in part; Reverse and Remand in part; and Affirm in part
Charles T. Frazier, Jr., Daniel D. Tostrud, Jonathan J. Cunningham, William D. Cobb, Jr., Lindsey K. Wyrick, C. Gregory Shamoun, Melanie Plowman, Dallas, TX, Jennifer R. Josephson, Houston, TX, Douglas W. Alexander, Wallace Jefferson, Austin, TX, for appellants.
Joseph B. Morris, James C. Ho, Tom M. Dees III, Stewart H. Thomas, Rick Thompson, Andrew P. LeGrand, Sr., Michael L. Raiff, Dallas, TX, Broadus A. Spivey, Austin, TX, for appellees.
Before Justices Bridges, Francis, and Myers.
Opinion by Justice Bridges.
This case involves the settlement of lawsuits involving Albert G. Hill Jr. ("Hill"), his son, other family members, family trusts, and business entities. Following a ten-day jury trial, the jury awarded Shamoun & Norman, LLP ("S & N") $7,250,000 in attorney's fees under the theory of quantum meruit for the reasonable value of services it rendered to settle those suits. The trial court, however, set aside the jury's findings and rendered a take-nothing judgment in Hill's favor.
For the reasons set out below, we reverse the trial court's judgment as to S & N's quantum meruit claim and render judgment reinstating the jury's $7,250,000 verdict. We reverse the trial court's judgment as to attorney's fees and remand to the trial court for a determination of S & N's reasonable and necessary attorney's fees in prosecuting the quantum meruit claim. In all other aspects, the judgment of the trial court is affirmed.