Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. Nat'l Dev. & Research Corp
In Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. Nat'l Dev. & Research Corp., 299 S.W.3d 106 (Tex. 2009), the plaintiff NDR sued its attorneys for failing to request certain jury instructions in the underlying trial against Panda. 299 S.W.3d at 111.
The supreme court held that NDR could not recoup any of the attorneys' fees it paid to Akin Gump in appealing its loss at trial because it did not present evidence that it would not have otherwise had to pay some appellate fees. Id. at 123.
"There is no evidence that if NDR had recovered a favorable judgment in the Panda suit, it would not have paid appellate fees to defend the judgment. The evidence does not show that if NDR had obtained a favorable judgment, Panda would not have appealed the case or that NDR would not have defended its judgment on appeal if Panda appealed." Id.
The Texas Supreme Court held that "the general rule as to recovery of attorney's fees from an adverse party in litigation does not bar a malpractice plaintiff from claiming damages in the malpractice case for fees it paid its attorneys in the underlying suit."
The court distinguished the American Rule, noting that the former client did not seek to recover attorney's fees for prosecuting its malpractice claim against its former lawyer. Id. at 121.
"It seeks damages measured by the economic harm it suffered from Akin Gump's breach of its duty of care in prosecuting the Panda suit." Id.
Thus, the court adopted a rule 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 defendant attorney's negligence." Id. at 122.
The Court held that the collectibility of a judgment may be shown in a number of ways. Id. at 114.
Generally, the amount of an underlying judgment that would have been collectible is "the greater of either:
(1) the fair market value of the underlying defendant's net assets that would have been subject to legal process for satisfaction of the judgment as of the date the first judgment was signed or at some point thereafter, or (2) the amount that would have been paid on the judgment by the defendant or another, such as a guarantor or insurer." Id.