The Texas Supreme Court recently held that a malpractice plaintiff may recover attorney’s fees incurred in a prior suit if those fees were proximately caused by counsel’s negligence. In this long and complex malpractice case, the plaintiff, NDR, sued Akin Gump for malpractice. The jury rendered a verdict for NDR and awarded damages, including damages for attorney’s fees incurred by NDR for its appeal of the underlying judgment.
In its opinion, the Dallas Court of Appeals reversed the attorney’s fees award citing the "American Rule" and a line of cases categorically barring recovery of attorney’s fees incurred in a prior suit as damages. The Texas Supreme Court disagreed and held that the American Rule did not apply because NDR was not seeking attorney’s fees incurred in prosecuting its malpractice claim, a claim for which fees were not provided by contract or statute. Instead, NDR was seeking its fees incurred in a prior suit that it would not have incurred but for Akin Gump’s alleged negligence.
After briefly discussing cases in which courts have disallowed recovery of fees as damages, the Court stated: "The better rule, and the rule we adopt today, is that a malpractice plaintiff may recover damages for attorney’s fees paid in the underlying case to the extent the fees were proximately caused by the attorney’s negligence." The Court did not address whether the new rule alters the general rule outside the context of legal malpractice cases, but the holding does not appear to extend beyond legal malpractice cases. The Court’s opinion in Akin Gump. Strauss, Hauer & Feld, L.L.P. v. Nat’l Devel. & Research Corp. can be found at this link.