Articles

Texas Case Warrants Over $4 Million in Attorneys’ Fees

Case:   OneBeacon Insurance Company v. T. Wade Welch & Associates
             United States District Court for the Southern District of Texas (Houston Division)
             No. H-11-3061; 2015 U.S. Dist. LEXIS 111500

A Texas federal Judge in OneBeacon Insurance awarded T. Wade Welch & Associates over $4 million in attorneys’ fee following a $30 million judgment requiring the insurer OneBeacon to indemnify T. Wade Welch in a DISH Network Corporation malpractice suit. The Welch litigants moved for attorneys’ fees of more than $9 million on a contingent fee basis, alternatively seeking a similar fee award based on the “lodestar” method with an enhancement due to the rare and exceptional circumstances of the case. The lodestar method of calculating attorney fees is a two-step process. First, courts multiply the hours an attorney works by the attorney’s hourly rate—this process yields the lodestar—and then courts adjust the lodestar up or down “to reflect the characteristics of a given action.” The lodestar method raises three questions: (1) how do courts determine a reasonable hourly rate? (2) how do courts determine a reasonable number of hours? and (3) once courts come up with the lodestar, on what basis do courts adjust that figure up or down?

In this case, fees were requested for the Welch Firm and Miller, Scarnardi & Carabba, P.C. (“MSC”), associated counsel. In addition, they sought $407,500 in conditional attorneys’ fees to cover a potential unsuccessful appeal by OneBeacon.

Judge Gray H. Miller granted the Motion for Attorneys’ Fees in part, after determining a nominal adjustment to the base lodestar for MSC only was warranted based on the contingent nature of the case and its undesirability. The Welch Firm was not entitled to a lodestar adjustment. Judge Gray conducted a detailed analysis of applicable factors in arriving at the award, including the time and labor required, the novelty and difficulty of the questions involved, preclusion of other employment, customary fees, time limitations imposed, the nature and depth of relationship with the client, experience, reputation and ability of the lawyers, the contingent or fixed nature of the fee and the results obtained. The Court found most of the factors irrelevant or inapplicable as they were sufficiently accounted for in the base lodestar. “While this was a difficult case involving more than the usual number of filings and many novel issues, these factors are adequately accounted for with the number of hours the attorneys spent on the case and the hourly rates used in determining the base lodestar.” However, the Court determined the lodestar method provided the Court with the flexibility to consider the contingency contract when considering the overall reasonableness of the rates. In the end, the Court applied a multiplier of 3.0 to the base lodestar (though the contingency agreement would have provided for 4.8 times the amount of the base lodestar) for the MSC portion of the fees sought, to arrive at a total fees award of over $4 million.

The Court also declined to award conditional appellate attorneys’ fees, agreeing that predicting attorneys’ fees on appeal would be “a fruitless exercise” and concluding the determination of appellate fees should await completion of the appeal.

Related Practices


Related Attorneys

Find an Attorney

Each of the firm's offices include partners, associates and a professional staff dedicated to meeting the challenge of providing the firm's clients with extraordinary service.