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AUSTIN, Texas-Plaintiffs in a Texas mass tort case are trying to force their lawyers to forfeit legal fees because the plaintiffs think the settlement they negotiated was too small.
Under a 1991 settlement reached with the Phillips Petroleum Co. over a chemical plant explosion, the group of 126 plaintiffs received $190 million, while out of that amount, their attorneys were paid $65 million for handling the case, leaving $125 million for the plaintiffs.
But 46 of the plaintiffs charge that their lawyers, working as a group called Umphrey, Burrow, Reaud, Williams & Bailey, negotiated the settlement without their knowledge or consent. The group filed suit after learning that plaintiffs represented by other lawyers received larger amounts.
The plaintiffs against the lawyers are seeking to have the $65 million in fees paid to them. The $65 million amount was paid to all the lawyers involved in the mass tort; of that, $11 million went to the Umphrey, Burrow lawyers. The plaintiffs, however, want all $65 million of the fees returned,
The case, Arce vs. Burrow, had been dismissed by Judge Mark Davidson of Texas District Court in Houston. He said there was no evidence the attorneys had harmed their clients by negotiating a lump-sum settlement and then apportioning the amount among them.
But the suit against Umphrey, Burrow now will be retried after an April appellate court ruling upholding fee forfeiture as a viable remedy for breaches of fiduciary duty.
A three-judge panel of the Texas Court of Appeals in Houston found "the trial court erred in holding that a claim for fee forfeiture requires proof of damage."
"While we have found no Texas cases specifically involving fee forfeiture for a breach of the fiduciary duty in the attorney/client relationship, we discern no reason to carve out an exception for breaches of fiduciary duty in the attorney/client relationship," the panel wrote.
"Thus, we hold that fee forfeiture is a recognized remedy when an attorney breaches a fiduciary duty to his or her client."
The legal malpractice lawsuit stems from the 1989 chemical plant explosion in Pasadena, Texas, that killed 23 people and injured hundreds more.