• 21
  • October
    2011

A recent Texas Supreme Court case admonishes a business litigation attorney for failure to properly handle a fee agreement. The case, Anglo-Dutch Petroleum International Inc. v. Greenberg Peden, et al., is a warning to all lawyers to be clear in all of their contracts with clients and to put a client's best interests first.

The business litigation matter involved complicated oil and gas litigation (the "Tenge Field" case). The attorney who took the case was of counsel to Greenberg Peden, P.C. While he stated that he would personally represent the defendant, Anglo-Dutch, he prepared his fee agreement on the law firm's letterhead. Anglo-Dutch responded to that fee agreement by acknowledging an "agreement between Greenberg Peden, P.C., and Anglo-Dutch." Greenberg Peden dissolved while the case was in progress and the attorney continued the case while employed with a different law firm.

After the case concluded, Anglo-Dutch agreed to pay the attorney for the time he worked for Greenberg Peden but not for the time after the dissolution since, according to Anglo-Dutch, the agreement was with Greenberg Peden and not the attorney or his new firm.

Anglo-Dutch sued for breach of fiduciary duty (a form of legal malpractice) and claimed that the agreement was with Greenberg Peden. The attorney sued Greenberg Peden for breach of contract and claimed he had been defrauded by the president of Anglo-Dutch.

A jury awarded the attorney $1 million in fees, which was upheld by the Court of Appeals. However, in an August 26 opinion, the Texas Supreme Court reversed and remanded the case to trial court for further proceedings. In the decision, Justice Nathan Hecht said the fee agreement was unambiguous and was plainly a fee agreement with Greenberg Peden. He wrote:

Construing client-lawyer agreements from the perspective of a reasonable
client in the circumstances imposes a responsibility of clarity on the lawyer
that should preclude a determination that an agreement is ambiguous in
most instances. Lawyers appreciate the importance of words and are more
able than most clients to detect and repair omissions in client-lawyer
contracts. A client's best interests, which its lawyer is obliged to pursue,
do not include having a jury construe their agreements.

Source: Texas Supreme Court Opinions, Anglo-Dutch Petroleum International, Inc. and Anglo Dutch (Tenge) L.L.C. v. Greenberg Peden, P.C. and Gerald J. Swonke, Aug. 26, 2011.