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State High Court nixes sky-high attorneys’ fees, says $450K for a $100K judgment is too much

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in Employment Law,Human Resources

The Texas Supreme Court has dealt a blow to attorneys representing employees in Texas. While employers that lose a lawsuit are supposed to pay the employee’s attorneys’ fees, there are limits to how high those fees can go.

Attorneys’ fees representing more than 50% of the employee’s award likely won’t be approved.

Recent case: Myriam managed an Applebee’s restaurant in El Paso and sued, alleging sex discrimination and retaliation under the Texas Commission on Human Rights Act (TCHRA).

She lost the sex discrimination claim but won her retaliation claim, based on proof her complaint was a motivating factor in the restaurant’s creation of a hostile work environment. That is, Myriam was punished for complaining—classic retaliation.

The trial court said Myriam should receive $100,000 in damages—and that her attorneys deserved about $450,000 for their work, all payable by the employer.

The restaurant appealed.

The Texas Supreme Court concluded that it was too much to award the attorneys 450% of what they recovered for Myriam. Even if they worked on a 50% contingency basis, the award would have only been around $50,000. The Supreme Court sent the case back to the trial court, directing it to calculate a more reasonable amount. (El Apple  I v. Olivas, No. 10-0490, Supreme Court of Texas, 2012)

Final note: This is good news. No longer will attorneys who manage to make a small part of their allegations stick be rewarded with a disproportionate fee award.

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