When lawyers in the Lone Star State open the Texas Bar Journal this month, they’ll see an advertisement warning them it’s now “more dicey to chase ambulances.”
The Bar Journal ad by The Edwards Law Firm in Corpus Christi may be the first, but definitely not the last, advertisement informing lawyers and the public of a new barratry law, which creates a cause of action for people to sue lawyers who violate existing barratry laws and rules.
As word spreads about the new law, Texas Lawyer contacted criminal-defense, plaintiffs’ and defense lawyers for their thoughts on what the new law will mean. Some say all attorneys should protect themselves by boosting documentation on how they bring in new cases, and others believe the new law may bring more litigation, thus increasing work for plaintiffs’ and defense lawyers. Most of the lawyers interviewed think the new law will cut down on barratry, but one disagrees.
Edwards Law Firm founder William R. “Bill” Edwards Sr. says he’s already seen another Corpus Christi lawyer’s television commercial about the new law, and he recently sat before a camera himself for a TV ad that informs lawyers and the general public about the law.
San Antonio plaintiffs’ lawyer James Shaw says his firm will launch a TV ad this month. It will feature a real client who says someone else illegally solicited her business and inform viewers that the new law allows them to do something about that conduct.
Edwards, who helped shepherd the law through the Legislature, says barratry is “the equivalent of a cancer” and must be stopped.
“I wanted lawyers who are misbehaving to understand what can happen — and those who are practicing law like they ought to — that there’s a new law out there, and they’re probably going to see litigation on it,” says Edwards.
Shaw, president of Carabin & Shaw in San Antonio, says, “We think these new laws are game changers.”
The 82nd Texas Legislature passed Senate Bill 1716 on May 6, and Gov. Rick Perry signed it May 19. It is codified at Government Code §82.065.
The statute says if an attorney secured any legal contract by violating barratry-related state laws or barratry-related rules in the Texas Disciplinary Rules of Professional Conduct, the client could sue to void the contract.
Under the old law, only contingent-fee contracts were voidable, but S.B. 1716 broadens the reach to any type of legal contract. A client who prevailed in voiding a contract could recover attorney’s fees and expenses already paid to the lawyer, as well as actual damages and attorney’s fees.
However, if the client failed to prove the lawyer engaged in or had actual knowledge of the barratry, the lawyer could collect expenses and fees for completed work, despite the voided contract, on a quantum meruit basis.
To receive those attorney’s fees, the lawyer would have to report the barratry to the State Bar of Texas, unless another person had already reported it or reporting the barratry would harm the client.
The law also allows a barratry victim who didn’t sign a legal contract to bring a civil action against “any person who committed barratry.” A prevailing plaintiff would win a $10,000 penalty from “attorneys or other persons” who engaged in barratry, as well as actual damages and attorney’s fees.
Plaintiffs’ lawyer Guy Choate, partner in Webb, Stokes & Sparks in San Angelo, says his firm plans to boost documentation on how new cases come in the door.
“We’ve always been careful about knowing how cases came to us, and I think we’ll be even more vigilant now,” says Choate.
Defense lawyer David Chamberlain, senior partner in Chamberlain McHaney in Austin, says lawyers should ask how a referral source and a client became acquainted, whether they exchanged money or other valuables, and whether the referrer promised the client anything.
Plaintiffs’ lawyer Mark Kincaid, who helped negotiate S.B. 1716 as it passed through the Legislature, says he thinks ethical lawyers may become more “skittish” and refuse to represent clients if they can’t prove a referred case was barratry free.
Kincaid, a partner inKincaid & Horton in Austin, notes that the law has a safe-harbor provision that protects lawyers who didn’t know about the barratry, and he says it may take some court decisions to define the actions lawyers must take to protect themselves.
Chamberlain says he expects to see additional litigation “where lawyers or defense firms are defending lawyers.” Defense costs could be $100,000 just to reach summary judgment or to reach mediation, and up to $200,000 to go to trial, he says.
Jett Hanna, senior vice president of the Texas Lawyers’ Insurance Exchange, says most lawyers’ insurance policies probably would not cover suits under the new law, because most policies exclude coverage for criminal acts, penalties and actions seeking the return of fees.
Chamberlain says he thinks the new barratry law could give rise to a “cottage industry” of plaintiffs’ lawyers specializing in checking for improprieties in settlements and in disbursement and attorney-fee agreements.
“There are some lawyers who do specialize in looking over fee agreements. That’s already a small cottage industry as it is. With a new cause of action involved, I’d expect that to grow somewhat,” says Chamberlain.
But Kincaid says he expects lawyers to pursue civil barratry actions for clients for philosophical reasons, and he thinks they won’t make “a ton of money.”
“I don’t see the barratry law as being a growth industry,” Kincaid says. He does note that plaintiffs’ lawyers may provide evidence to local district attorneys who could pursue criminal charges against lawyers who violated the barratry law, which is codified in Penal Code §38.12.
Wendy Baker, an assistant district attorney in Harris County, says she hopes the new law does reveal more barratry violations. Baker says she’s prosecuted three barratry cases in the past three years.
Baker says, in general, it’s difficult to prosecute lawyers for barratry, because they may pay case referrers with cash, leaving no paper trail to prove financial benefit. It’s also difficult to prove intent to commit a crime. Baker says she’s pleased the new law creates another way for barratry victims to seek justice.
“If we don’t have proof beyond a reasonable doubt, maybe [victims] can meet the civil standard, more likely than not, of preponderance,” Baker says.
Houston solo Rand Mintzer says he questions whether the new law will cut down on barratry.
“If people are willing to risk going to jail to chase a case, I can’t see where the thought of a civil suit would slow them down as much as that,” says Mintzer, who practices criminal-defense and personal-injury law. He says he has defended about 12 lawyers facing allegations of barratry in criminal proceedings and in State Bar of Texas disciplinary proceedings.
He says a previous case, David Burrow, et al. v. Carol Arce, et al. , decided by the Texas Supreme Court in 1999,provides a similar remedy as the new barratry law: It allows a client to sue a lawyer for fee forfeiture or disgorgement if the lawyer committed an unethical act.
“There has not been a flurry of Arce cases,” says Mintzer. The new barratry law gives the remedy “more teeth,” he says, but he still doesn’t expect many suits.
But Edwards and Kincaid say they expect a flurry of suits in the beginning, and they think filings will slow down in one year to three years as the law acts as a deterrent.
“This act will give people and lawyers across the state new tools to work with in the enforcement of rules and statutes that have been on the books for years,” says Edwards.
The law could deter barratry once offending lawyers know that “every lawyer in your community has a weapon against you, to come against you for barratry,” explains Kincaid.
He says the $10,000 civil penalty is the “weapon.” Lawyers who ethically obtain clients and hear them tell stories about other lawyers who engaged in barratry now can sue on behalf of their clients, he says.
“You had to create a penalty, because you can’t justify going after the guy if there’s nothing in it for the client,” says Kincaid.
San Antonio solo Bernard Fischman says he has a problem with the civil-penalty provision. He represents plaintiffs in legal-malpractice suits and lawyers in court and in State Bar disciplinary proceedings.
“I can see instances where it’s going to be a he-said, she-said kind of deal where the lawyer really didn’t do anything that stepped over the line,” Fischman says.
But Shaw says he does plan to use the civil-penalty provision to help some of his personal-injury clients who tell stories of other people who solicited them.
“We’re probably losing 20 or 30 cases a month that would have come to us if there weren’t chiropractors knocking on doors,” he says, noting that he thinks chiropractors end up shuffling cases to lawyers.
“All the lawyers who are trying to do it right — this new law should help them. It should curtail the chiropractors and lawyers who are knocking on doors,” Shaw says.