X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Plaintiffs’ lawyer John O’Quinn has such a mesmerizing courtroom presence that a judge once accused him of hypnotizing jurors. He’s so good that other trial lawyers hire him to take their cases before a jury. He’s won more than 250 verdicts of more than $1 million. But O’Quinn wants arbitrators, instead of a jury, deciding two multimillion-dollar malpractice suits lodged against his firm by disgruntled former clients. Lawyers representing the former O’Quinn & Laminack clients are fighting to keep the disputes in the courtroom. While the malpractice suits against O’Quinn & Laminack are attracting attention because the firm is prominent and the suits involve high-profile litigation, the Houston plaintiffs firm is far from alone in including arbitration clauses in its fee contracts with clients. But the ethics of those arbitration clauses in fee contracts between lawyers and their clients is a sticky issue complicated by two appellate rulings this year providing conflicting opinions. In January, the 4th Court of Appeals in San Antonio, in Henry v. Gonzalez, ordered a district judge to enter an order compelling arbitration in a legal-malpractice claim filed against Thomas J. Henry of the Law Offices of Thomas J. Henry in Corpus Christi. But in August, the 13th Court of Appeals in Corpus Christi held in In Re Pamela Godt that a legal-malpractice claim is a personal-injury action excluded from the scope of the Texas Arbitration Act unless the client — acting on the advice of an independent lawyer — agrees in writing to arbitrate. To be valid, the agreement must be signed by each party and each party’s attorney, the appeals court ruled. Ironically, that ruling is in another suit against Henry. The arbitration issue is likely to be decided by the Texas Supreme Court. But in the meantime and in the wake of the appellate rulings, some lawyers who once put arbitration clauses in their fee contracts aren’t doing it anymore. “Lawyers contemplating putting an arbitration clause in their fee contract should be extraordinarily cautious right now,” says David J. Moraine of Denton. “I don’t think there is any real authority in Texas right now. The law has become muddled.” Moraine, who has written on ethical issues, and Larry Doherty, another lawyer known for his knowledge of disciplinary rules and malpractice law, say they stopped putting arbitration clauses in any of their contracts after the Godt opinion. “Godt comes out with this cockeyed decision that may really, at a humanistic level, be right. Maybe arbitration is unfair. That’s what they are saying,” Doherty says. “Well, they are the first ones to say it. So the instant I read it, I cut arbitration out of my power of attorney.” Doherty, a partner in Doherty & Wagner of Houston, questions the 13th Court’s reasoning in Godt. “Godt wants to hold that it’s an ethical violation that a lawyer shall not attempt to exonerate himself in advance. That misses the point. It’s absurd,” he says. “The real objection is … that as a practical matter, it disadvantages the client.” “The truth of the matter is that if arbitration is unfair, it’s because it gives the opportunity to give the lawyer a fair hearing. The public hates us,” he says. Moraine, a partner in Dryburgh Moraine Borah Crosbie & Scofield, says the Godt ruling is scarier because of a recent ruling in Scott Sanes, et al. v. Clayton Clark, et al. In that suit, the 10th Court of Appeals in Waco ruled a fee contract void because it contained a provision that violates disciplinary rules. ARBITRATION ALTERNATIVE But before the supreme court weighs in on the issue, arbitrators may rule on the claims in both class-action suits against O’Quinn & Laminack. One is filed in Houston on behalf of plaintiffs in the Kennedy Heights toxic tort litigation; they allege the firm settled the suit with Chevron USA for far too little. They allege that the $12 million settlement was far less than the $500 million that O’Quinn & Laminack led them to believe the suit was worth. The second suit is in Henderson on behalf of silicone breast implant clients who allege the firm took too much in expenses out of their settlements. In Houston, 61st District Judge John Donovan granted O’Quinn & Laminack’s motion to compel arbitration in B ob Chambers, et al. v. John M. O’Quinn, et al. But a similar request is pending in Henderson before 4th District Judge Clay Gossett in Martha Wood, et al. v. John M. O’Quinn, et al. Although Donovan ordered arbitration in the malpractice suit filed over the Kennedy Heights litigation, lawyers representing unhappy clients of O’Quinn & Laminack want him to reconsider his decision. Houston sole practitioner Newton Schwartz filed a motion on Sept. 13 asking Donovan to stay the order compelling binding arbitration until the supreme court can resolve the conflicts between Henry v. Gonzalez and In Re Pamela Godt. Schwartz also argues the arbitration clauses in the fee contracts that the Kennedy Heights clients signed with O’Quinn & Laminack are not valid because they did not agree in writing to the clause and did not have independent counsel, as Godt would require. “Since they had no attorney, no plaintiffs herein, or the other 1,700 O’Quinn clients in the Kennedy Heights case had any attorney sign such arbitration agreements [it's] a fatal flaw,” Schwartz wrote. Lynne Liberato, a partner in Haynes and Boone in Houston who represents O’Quinn & Laminack in Chambers v. O’Quinn, says they have not decided what they will do in response to the motion to stay the arbitration. ( Liberato says it’s up to lawyers for the plaintiffs to initiate arbitration proceedings. But in Henderson, the fight over arbitration raged for several hours during a hearing on Sept. 22. William “Billy” Shepherd, a lawyer for O’Quinn & Laminack, argued at the hearing before Gossett that the contracts the silicone breast implant clients signed with O’Quinn & Laminack boldly make it clear that disputes with the firm are subject to binding arbitration in Harris County. “Arbitration here is mandatory,” Shepherd, a partner in Cruse, Scott, Henderson & Allen, told Gossett. Named plaintiffs in the suit signed powers of attorney with O’Quinn & Laminack after Henderson firm Wellborn, Houston, Adkinson, Mann, Sadler & Hill referred their cases to the Houston firm in December 1996. Wellborn, Houston’s managing partner, Mark Mann, testified on Sept. 22 that he could not recall any clients questioning the arbitration clause before signing the new fee contracts. “Arbitration never came up. It was never an issue that I was aware of,” Mann said. But W. Fred Hagans, a plaintiffs’ attorney in the malpractice suit, asked Gossett to deny the motion to compel arbitration. He argued it would be a logistical nightmare and a costly affair if each of the class members in the malpractice suit had to arrange their own arbitration. Hagans, a partner in Hagans, Bobb & Burdine, also argued that Gossett should keep control of the suit because the plaintiffs are making an Arce v. Burrow claim, which provides for fee forfeiture for a finding of breach of fiduciary duty. Under Arce v. Burrow, a judge determines the amount of fee forfeiture. “I was struck by the irony of a situation of a lawyer and a law firm who have truly crowed [about] their success in the courtroom, running from the courtroom to seek a safe haven in arbitration,” Hagans said during the hearing on Sept. 22. But Richard Laminack says the firm puts an arbitration clause in its contracts to protect the clients’ right to keep their matters private. “If there’s a dispute between attorney and client, it usually involves stuff that would otherwise be confidential, that the client doesn’t want out there and the lawyer doesn’t want out there,” he says. In the malpractice suit in Henderson, the plaintiffs allege they were wrongfully charged breast implant general expenses as well as a fee for the multidistrict litigation pending in federal court in Birmingham, Ala. With a minimum of 2,000 women in the class, the suit alleges the overcharges amount to more than $23 million in general expenses and $47 million for the MDL fee. The plaintiffs allege in the suit that the fee forfeiture could total about $580 million for the class. Gossett had not ruled on the motion to compel arbitration prior to press time on Sept. 28. Meanwhile, the Supreme Court may be spending some time soon looking at arbitration agreements. Lawyers representing Hector Gonzalez in Gonzalez v. Henry filed a petition for review in August. In that suit, the San Antonio appeals court dismissed the argument that an arbitration provision violates public policy. But that’s one of the questions Gonzalez’s lawyers want the supreme court to address. An appeals attorney for Gonzalez, Timothy Patton, also wants the court to establish a standard of review for fact-findings underlying an order denying a motion to compel arbitration. He also wants the court to decide if an arbitration clause is enforceable when the client was not advised to consult with independent counsel before signing the contract and was unaware of the impact on his rights. “Most people think absent some form of disclosure, it’s probably not proper,” suggests Patton, a sole practitioner in San Antonio. Patton also represents Godt. Lawyers representing defendant Henry have asked for an en banc rehearing before the Corpus Christi appeals court. Douglas Chaves, a partner in Corpus Christi’s Chaves, Gonzalez & Hoblit, did not return a telephone message by press time. In that suit, Godt sued Henry, alleging he mishandled her medical-malpractice suit. Henry filed a motion to compel Godt to arbitrate her claims based on a mandatory arbitration clause in her fee agreement. A trial judge granted the motion, but the appeals court said the trial court “clearly abused its discretion” because the agreement is unenforceable under the TAA. The court also said Henry could not enforce the clause under the Texas Government Code because the agreement was not signed by him or anyone from his office. Patton notes that the contracts at issue in both suits against Henry are identical, but the appellate courts ruled differently.

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.