In almost all situations, there is this universal question: How can I afford to be involved in this lawsuit? The question is one asked by both plaintiffs (the ones bringing the lawsuit), and defendants (those receiving the punches). Let’s take a brief look.

Attorneys fees are permitted to be awarded in Texas in three instances: by statute, by contract, and/or by equity. For instance, a statutory basis would be in contract disputes per Chapter 38 of the Texas Civils Practice and Remedies Code, in insurance disputes via The Texas Insurance Code, and as consumers bringing a lawsuit under the Texas Deceptive Trade Practices Act. A contractual basis is one where the parties have inserted language into their written contract that permits one party – the winner, although I guess they could provide for both parties regardless of outcome – to collect reimbursement for fees, or fess up to a certain amount. Finally, an equitable basis would be the Texas Declaratory Judgment Act, whereby the trial judge can award a reasonable and equitable amount to the victor in a dispute over the rights claimed by contracting parties.

Notably missing from the actions permitting recovery of attorney’s fees is the tort claim. A tort claim is one where a plaintiff has suffered a civil wrong that causes him/her to suffer loss or harm and exposes the person causing the wrong to liability as a defendant. Common torts are personal injury from a motor vehicle accident, fraud, defamation, assault, and a host of accidents or wrongs whose list is too long for this article. A breach of contract is not on the list.

To retain an attorney, payment for the services must be agreed upon between the attorney and client, and should always be in writing to avoid ethical issues and a dispute between the parties. Many of your tort cases involve contingency fees arrangements. In an contingency fee arrangement, the attorney will often front expenses – although it is sometimes agreed that the client will pay expenses as the case proceeds – and the attorney is paid out of the results only. In other words, if the plaintiff collects in the end, the attorney gets a percentage of the recovery, where often between 33% and 40% is common. A contingency fee arrangement ensures the attorney is both frugal and constantly evaluating the likelihood of success, as the attorney being paid for time and effort are dependent on the result. The cost of litigation is also a driving factor as many individuals and small businesses cannot afford to pay by the hour.

On the other hand, the hourly attorney’s fee arrangement is just what it sounds like. Most of the hourly fee arrangements have the client putting up a retainer from which expenses and fees are reimbursed to the attorney as the case proceeds, the retainer being re-funded monthly as it dips below a certain threshold. These arrangements are often used in business and contractual disputes, but there is no set rule for when and at what amount the attorney and client may agree. In many hourly cases, those clients who can afford to pay as the lawsuit drags on, often choose to do so and then look to the court for reimbursement per one of the attorney’s fees recovery vehicles mentioned above.

There are some cases whereby the parties expect matters to be prolonged over time, and a combination of hourly and contingency are used. Again, it is left up to the imagination of the contracting parties, but it is always important to put it in writing so that there are no disputes as to what the rights are between the attorney and his/her client.

As always, ensure there are no unresolved issues between you and your attorney when the case starts. Contingency versus hourly fee arrangement is a necessary element of your attorney/client relationship that absolutely must be in writing.