TO THE HONORABLE JUSTICES OF THE TEXAS SUPREME COURT
IN THE SUPREME COURT OF TEXAS
---------------------------------------------------------
Albert G. Hill, Jr.
v.
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 in on
the Shamoun vs. Hill fee fight in that
nondescript capacity.
SUMMARY
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.
ARGUMENT
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.[1]
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.
CONCLUSION
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]
APPENDIX:
PROPOSED AMICUS BRIEF: COVER
PAGE AND TABLE OF CONTENTS
No. 16-0107
IN THE SUPREME COURT OF TEXAS
---------------------------------------------------------
Albert G. Hill, Jr.
v.
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
[1] 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
No. 05-13-01634-CV.
Opinion Filed January 26, 2016.
SHAMOUN & NORMAN, LLP, Appellant and Cross-Appellee
v.
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
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.
