Akin Gump v NDR - Practical Consequences of Allowing Attorneys' Fees as Damages
The Texas Supreme Court’s new opinion in Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. National Development and Research Corporation holds that
a malpractice plaintiff may recover damages for attorney’s fees paid in the underlying case to the extent the fees were proximately caused by the defendant attorney’s negligence.
Prior to this holding, Texas courts had generally disfavored the recovery of attorneys’ fees qua damages unless allowed by statute or contract.
At first glance, the Akin Gump Court’s holding appears straightforward and logical, and in some cases will be easy to implement. For example, if a lawyer fails to file an answer, resulting in a default judgment, the plaintiff should be able to recover the fees it must pay a second attorney to have the default set aside. In this example, 100% of the extra fees are attributable to cleaning up the first lawyer’s mistake. Most cases, however, are not so cut and dried.
I fear several unintended consequences from the Court’s ruling:
- First, will there be a new class of cases in which there are no damages but attorneys fees? For example, if a lawyer obtains a total victory for the client, will the client (perhaps hoping to bargain for a fee reduction) comb the record for inconsequential errors that nevertheless may have increased the total fee by some amount?
- Second, will the new rule be used to avoid summary judgment in cases in which the undisputed facts prove the negligence caused no damages? Take appellate malpractice. If a trial court decides as a matter of law that the client would have lost the appeal regardless of the malpractice, will the client’s claim now survive based on a “fact issue” regarding increased appellate costs due to the negligence?
- Third, how much will the rule expand the number and costs of mandatory expert witnesses? Expert testimony is needed to prove causation in all but the most obvious situations. Alexander v. Turtur & Assocs., Inc., 146 S.W.3d 113 (Tex. 2004).(PDF) Doesn’t this mean a new set of experts will be needed in every malpractice case in which the plaintiff seeks attorneys’ fees as damages? The experts will need to review the record and opine whether the malpractice proximately caused an increase in attorneys’ fees and, if so, how much.
Question: Does Akin Gump open Pandora’s box or is it simply a logical extension of “but for” causation? Are there any special rules or limits that should apply?
I think that ruling in the aforementioned case should be limited by some restrictions. Clients should only be able to recover attorney's fees if the complained-of negligence actually caused harm. As mentioned in the first unintended circumstance, clients may now use this ruling to collect damages for negligence that is inconsequential; this outcome would NOT promote justice!
I think that Akin Gump is a reasonable expansion of the proximate cause element that is required when making a legal malpractice claim. It only applies to the attorney's negligence. Thus, I don't think that clients will have the opportunity to "comb the record for inconsequential errors" after winning the underlying case. It is unlikely that inconsequential errors will rise to the level of malpractice. Additionally, if the lawyer won the case for the client, it is unlikely there will be a viable legal malpractice claim. If for some reason there is a viable legal malpractice claim then the client should be entitled to recover any attorney's fees that he or she paid as a result of the attorney's negligence.
I think that Akin Gump is a reasonable expansion of the proximate cause element that is required when making a legal malpractice claim. It only applies to the attorney's negligence. Thus, I don't think that clients will have the opportunity to "comb the record for inconsequential errors" after winning the underlying case. It is unlikely that inconsequential errors will rise to the level of malpractice. Additionally, if the lawyer won the case for the client, it is unlikely there will be a viable legal malpractice claim. If for some reason there is a viable legal malpractice claim then the client should be entitled to recover any attorney's fees that he or she paid as a result of the attorney's negligence.
I agree with Ms. Neuman. It seems like allowing one to recover for something which is nothing more than harmless error does not promote justice at all. The only thing I see it promoting is a flood of litigation, and that is something which the courts have repeatedly tried to avoid. I also see the point which Ms. Shuster makes, that there will likely not be a viable legal malpractice claim if the client won the case. While I agree that there may not be a claim, I think that simply allowing one to bring a claim for a harmless error would open the door to an abundance of unnecessary claims.
I don't see this ruling as allowing someone to recover for harmless error. If an error rises to the level of legal malpractice, then it is not harmless error. If this ruling leads to an influx of litigants bringing frivolous claims, then those lawsuits will likely be dismissed right off the bat. In a legal malpractice claim, a successful plaintiff is allowed to recover damages for the amount that they would have recovered in the underlying lawsuit. In my opinion, allowing plaintiffs to recover damages for the cost of their representation in the underlying suit seems perfectly reasonable and appropriate, as long as the attorney's negligence was the proximate cause of the fees.
My feeling is that when a harmed plaintiff brings an action for malpractice, there should not be an automatic awarding of legal fees. There are various factors that should be looked at. First, whether or not the court awarded damages that sufficiently reimbursed the plaintiff beyond the amount that they were damaged. If this is the case, then that extra award should be used to cover legal fees. Second, did the defendant do any other work for the plaintiff beyond the subject of the malpractice suit. For example, an attorney could combine various services into one fee. If that attorney was negligent while performing only part of the total service, then the plaintiff should only be entitled to partial legal fees. Finally, I agree with Ms. Kritikos in that subjecting the courts to this issue will further burden the court system with matters that are in many cases unnecessary.
I think Akin Gump is a logical extension of "but for" causation. The purpose of a legal malpractice action is to make the plaintiff "whole" again. It would completely contradict this purpose if a client had to pay attorney's fees to undue an attorney's negligence. Having said that, I do not think this is without limitation. I also foresee some of the unintended consequences as Mr. Koning stated above. I think the Texas and New Jersey courts will have to apply this extension on a case-by-case basis. Clients should not be able to use this extension as a means of reducing fees. Nor should malpractice attorneys be able to seek a "windfall" fee for undoing the previous negligence. The fees must be limited and must be reasonable as it pertains specifically to the underlying case.
I also agree with Ms. Neuman. I think this adds great pressure upon an attorney to not only screen his clients case, but also to screen his client. An attorney would now have to worry that his client, victorious or not, is going to review his work in hopes to possible decrease his attorneys fees. It seems that even if the attorney ultimately meets his goal and is successful in his representation, the road upon which he got there may be screened and any "cracks or bumps" may be used against him. Additionally, it seems that a detailed oriented and well informed client is not the best client for the attorney anymore, as the attorney may see his client become his adversary over miniscule issues taht caused his client no harm.
I also agree with Ms. Neuman. I think this adds great pressure upon an attorney to not only screen his clients case, but also to screen his client. An attorney would now have to worry that his client, victorious or not, is going to review his work in hopes to possible decrease his attorneys fees. It seems that even if the attorney ultimately meets his goal and is successful in his representation, the road upon which he got there may be screened and any "cracks or bumps" may be used against him. Additionally, it seems that a detailed oriented and well informed client is not the best client for the attorney anymore, as the attorney may see his client become his adversary over miniscule issues that caused his client no harm.
I agree with the above comments in that the Akin Gump holding may lead clients, who won the underlying case, to bring claims just so that they can recover attorney’s fees for inconsequential errors.
Has NJ, which also recognizes the prevailing malpractice plaintiffs’ right to be made whole again with an award of attorney's fees, dealt with such claims brought by clients to recover for negligence that is in fact inconsequential after winning the underlying case?
I agree with Ms. Shuster and Mr. Klein that the Atkin Gump decision is a logical extension of the "but for" causation requirement for a legal malpractice action. I think our legal system will be able to sift out frivolous claims brought by clients. The court is going to be able to make a determination between harmless error and actual acts of malpractice. Malpractice is malpractice, no matter how harmful one would perceive the act to be. If the act is found to be malpractice I don't see why a client should be prevented from recovery.
I agree with Ms. Neuman. Clients should only recover fees if the attorney’s conduct was the proximate cause of the client’s injury. In that case, recovery of legal fees would serve to make the client whole. However in the case of recovery of attorney fees for inconsequential errors that caused no actual damage to a client, no purpose is served other than to punish the attorney for, as Mr. Lieberman put it, any “cracks and bumps†that might have occurred during the course of representation.
As has been previously discussed on this websites blog, allowing the recovery of legal fees here may serve as a bargaining chip between an attorney and a greedy or disgruntled client who really has not much injury. Moreover, although the client may be injured, it may not be the proximate cause of the attorney at hand. Allowing the recovery of fees would only promote the notion that the client is allowed to recover from anyone even though not the proximate cause. This seems unjust.