Attorney Fees In Insurance Cases

Dallas insurance lawyers and for that matter, almost all attorneys are going to be able to discuss with a client the various rules and statutes that allow for recovery of attorney fees in cases.
The Texas Civil Practice & Remedies Code, Chapter 38, is the first rule most attorneys will learn about regarding recovery of attorney fees.
Section 38.001 tells us that a person may recover reasonable attorney’s fees from an individual or corporation, in addition to the amount of a valid claim and costs, if the claim is for:
1) rendered services;
2) performed labor;
3) furnished material;
4) freight or express overcharges;
5) lost or damaged freight or express;
6) killed or injured stock;
7) a sworn account; or 8) an oral or written contract.
Beyond what is mentioned in the Section above, there are many, many, other rules and statutes allowing for recovery of attorney’s fees.
Relevant to this Blog are the statutes in the Texas Deceptive Trade Practices Act (DTPA) and the Texas Insurance Code (TIC) that allow recovery for attorney fees.
The most used statute in the DTPA is Section 17.50(d) which says:
Each consumer who prevails shall be awarded court costs and reasonable and necessary attorneys’ fees.
In the TIC, the most used statutes are Section 541.152(a)(1) which says:
A plaintiff who prevails in an action under this subchapter may obtain: (1) the amount of actual damages plus court costs and reasonable and necessary attorneys’ fees.
and Section 542.060, which says that a prevailing party is entitled to “reasonable attorney’s fees.”
One thing to key into on all the statutes allowing recovery of attorney’s fees is this – the word “reasonable.”
The case law governing the award of attorney’s fees in a case is governed by the 1997, Texas Supreme Court case, Arthur Andersen & Co. v. Perry Equipment Corp. In the Arthur Andersen case the court held that a reasonable fee must be based on the eight factors set out by the disciplinary rules. Fees cannot be awarded simply as a percentage of the recovery, but must be awarded as a dollar amount. A trier of fact can consider the fact that a plaintiff has agreed to a contingent fee as one factor in deciding what fee is reasonable.
In light of the Arthur Andersen ruling, cases that had previously allowed recovery of a percentage fee under statute are no longer good law.
Further to be aware of is that fees need to be segregated between those allowed by statute and other claims.