Wednesday, September 14, 2011

New Texas Law on Barratry

Barratry(?) Do you remember that term from your law school Ethics course? It means “ambulance chasing.” Texas recently enacted a statute that creates a civil action against overly ambitious lawyers. Here is a summary from the Texas Lawyer:

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.

One wonders if the statute will result in much litigation. Certainly lawyers will be documenting how clients came to them. Attorneys wishing to represent plaintiffs who have been the subject of barratry may find it difficult to document verbal conversations needed to provide the essential evidence. Finally, there has to be a fine line between ambulance chasing in a personal injury case and the sort of subtle and unsubtle soliciting in which that big firm lawyers engage.


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