Contingency fee practice has always had its pluses and minuses. Forget about that steady flow of checks from hourly-rate clients. Don't even think about non-binding case budgets that often get exceeded. And the solvency of the defendant isn't just the client's problem. But at least there is an overarching compensation: unlike the hourly-rate drudges, you don't have to keep timesheets!
Trust the Supreme Court of Texas to spoil all the fun. In El Apple I, Ltd. v. Olivas, decided on June 22, the court effectively put an end to statutory attorneys' fee recovery based on after-the-fact general estimates of work done and time spent. Now, fee recovery requires, at a minimum, "documentation of the services performed, who performed them and at what hourly rate, when they were performed, and how much time the work required." In other words, timesheets!
The El Apple I opinion reconfirmed Texas' adherence to the "lodestar" method of attorneys' fee calculation, under which a reasonable hourly rate is multiplied by the number of hours reasonably expended in pursuing the matter. But the court was troubled by the incentives for inefficiency that exist when fees are paid by the opposing party. It therefore charged trial courts with the responsibility of scrutinizing fee applications to eliminate duplicative, excessive, or inadequately documented work. It regarded documentary evidence as essential to permit the trial court to properly perform this task.
The opinion requires that fee applicants provide the trial court with substantial detail, including (1) the nature of the work, (2) who performed the services and their rate, (3) approximately when the services were performed, and (4) the number of hours worked. The court acknowledged that this level of detail could theoretically be provided from an attorney's memory, but reasoned that in all but the simplest cases, reference to documentation will be necessary. The court therefore held that "when there is an expectation that the lodestar method will be used to calculate fees, attorneys should document their time much as they would for their own clients, that is, contemporaneous billing records or other documentation recorded reasonably close to the time when the work is performed." In other words, timesheets!
Because of the change in the law, the court allowed the attorneys in the El Apple I case to go back and try to reconstruct the necessary detailed information. Perhaps Texas courts will also allow reconstruction for tasks performed before the opinion was issued. But going forward, the price of failing to keep timesheets will likely be disallowance of statutory fee-shifting recovery. Personal-injury contingency fee lawyers can continue as before, but those who litigate commercial, employment, or similar cases will have to, as the late Strasburger partner Tom Unis was fond of saying, "do the Lord's work, but keep good track of your time."
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