Shamoun & Norman, LLP v. Hill

Dallas Court of Appeals, No. 05-13-01634-CV (January 26, 2016)

Justices Bridges (Opinion), Francis, and Myers

Oral contingency fee agreements are not enforceable under the Texas Government Code, but the Dallas Court of Appeals recently held that evidence of such an alleged oral agreement can be considered to prove the reasonable value of the attorneys’ services for the purpose of quantum meruit. The Court also held that an award amounting to $48,000 per hour is not necessarily excessive.

Attorney Greg Shamoun represented Albert G. Hill Jr. in attempting to reach a global settlement of a “spider web” of over twenty lawsuits pending between Hill and his son “Hill III” and various other family members, trusts, and entities. Shamoun claimed he and Hill had reached an oral agreement that, if Shamoun could settle all of the cases for under $73 million, he would be compensated by receiving fifty percent of the difference between the settlement amount and $73 million. (Shamoun was also representing Hill on isolated pieces of the litigation at a contractual hourly rate.)

Shamoun put in between 150 and 400 hours negotiating a global settlement and reportedly made considerable progress, but by the time the settlement was finalized, the relationship between Hill and Shamoun had soured, and Hill refused to pay him for his work. Shamoun sued. The jury found for Shamoun on his quantum meruit claim and awarded him $7,250,000 as the reasonable value of his services, but the trial court set aside the jury’s verdict and rendered a take-nothing judgment in favor of Hill. Shamoun appealed. The Dallas Court reversed and rendered judgment in Shamoun’s favor for $7,250,000.

Section 82.065 of the Texas Government Code provides that contingency fee agreements must be in writing and “operate[s] in a manner similar to the statute of frauds.” Hill argued that Shamoun was inappropriately attempting to use quantum meruit to “resurrect an oral contingency agreement that violates the statute of frauds.” But the Court disagreed, pointing to subsection (c) of the statute, which specifically provides that an attorney owed fees under a contract that is voided because not in writing “may recover fees and expenses based on a quantum meruit theory.” The measure of damages for a quantum meruit claim is the reasonable value of the work or services performed. And the Court held that evidence of the oral agreement may be used to prove the value of the services rendered.

Here, Shamoun’s expert, Dick Sayles, also testified that, considering the Andersen factors, the reasonable fee for Shamoun’s services was $15,912,000. Sayles relied primarily on the novelty and difficulty of the representation, opining that the settlement involved “the most complex array of litigation” he had ever seen, and that few lawyers had the “intelligence and wit” to match Hill III’s legal team and negotiate a favorable settlement. Sayles also pointed out that a billion dollars was at stake in the litigation and written demands were as high as $100 million. He therefore considered the global settlement to be a “remarkable achievement.” The appeals court found this testimony sufficient to support the jury’s verdict of $7,250,000 and rejected Hill’s argument that a fee that amounted to $48,000 per hour could never be justified as reasonable. The Court therefore reversed and rendered judgment for Shamoun for $7,250,000.

The Court also remanded for a determination of Shamoun’s reasonable attorneys’ fees incurred in prosecuting the quantum meruit claim. A party prevailing on a quantum meruit claim is entitled to recover attorneys’ fees, but the jury awarded Shamoun $0 in fees. The Court held that, although the jury can determine the amount of fees reasonably incurred, it cannot simply refuse to award fees if any were properly proven.