PJC Malpractice 2024

E CONOMIC D AMAGES

PJC 84.7

PJC 84.7

Attorney’s Fee Forfeiture (Comment)

In Burrow v. Arce , the Texas Supreme Court held that, in a breach of fiduciary duty case, an attorney may be required to forfeit some amount of the fees his client paid regardless of whether the client can prove that the attorney’s breach caused harm. Bur row v. Arce , 997 S.W.2d 229, 240 (Tex. 1999) (“[A] client need not prove actual dam ages in order to obtain forfeiture of an attorney’s fee for the attorney’s breach of fiduciary duty to the client.”). The remedy of fee forfeiture is equitable in nature and is restricted to “clear and serious” violations. Burrow , 997 S.W.2d at 241. Even then, not every serious breach should result in forfeiture of all compensation. 997 S.W.2d at 240. The remedy must “fit the circumstances presented.” Burrow , 997 S.W.2d at 241. The money forfeited must be funds paid by the client, not some other party, or part of a contingency award. See Swank v. Cunningham , 258 S.W.3d 647, 673–74 & n.11 (Tex. App.—Eastland 2008, pet. denied). Determining when clear and serious violation has occurred. The court’s rea soning in Burrow relies heavily on Restatement (Third) of the Law Governing Lawyers § 37 (2000): “[W]hether an attorney must forfeit any or all of his fee for a breach of fiduciary duty to his client must be determined by applying the rule as stated in section 49 [section 37 in the final version] of the proposed Restatement (Third) of The Law Governing Lawyers and the factors we have identified to the individual circumstances of each case.” Burrow , 997 S.W.2d at 245. A clear violation occurs when a reasonable lawyer, knowing the relevant facts and law reasonably accessible to the lawyer, would have known that the conduct was wrongful. Burrow , 997 S.W.2d at 241. Whether the violation was serious , and ultimately to what extent forfeiture is appropriate, requires consideration of “the gravity and timing of the violation, its willfulness, its effect on the value of the lawyer’s work for the client, any other threatened or actual harm to the client, and the adequacy of other remedies.” Burrow , 997 S.W.2d at 243. This list is not exclusive. Burrow , 997 S.W.2d at 243. To that list, the court added another: the public interest in maintaining the integrity of attorney-client relationships. Burrow , 997 S.W.2d at 244. Some of these conditions are appropriate for the jury; others are not. Respective roles of court and jury. The availability of the remedy and amount of the forfeiture, if any, involve decisions inherently equitable and must be made by the court. The court’s decision, however, may require the jury’s aid in resolving certain relevant factual disputes. As a general rule, a jury does not determine the expediency, necessity, or propriety of equitable relief. Burrow , 997 S.W.2d at 245 (quoting State v. Texas Pet Foods, Inc. , 591 S.W.2d 800, 803 (Tex. 1979)). “If the relevant facts are undisputed, these issues may, of course, be determined by the court as a matter of law.” Burrow , 997 S.W.2d at 246. However, “when contested fact issues must be

397