Burrow v. Arce

Burrow v. Arce, 997 S.W.2d 229 (Tex. 1999) involved a legal-malpractice action that arose out of the representation of plaintiffs in a class action lawsuit that ended in settlement. The expert for the defendant lawyers averred that he had reviewed all the relevant facts and concluded that the plaintiffs' settlements were fair and reasonable. Id. at 235-36. The Supreme Court of Texas held the expert's affidavit was insufficient because he did not state the basis for his opinion. Id. The court described the expert's testimony as "Take my word for it, I know: the settlements were fair and reasonable." Id. at 236. In Burrow, the Supreme Court concluded that the affidavit of attorney Malinak was insufficient to support the lawyers' burden of proof in an affirmative motion for summary judgment. After concluding that the affidavit was conclusory, the court noted ways in which the affidavit could have presented a sufficient basis for the opinion, stating, "Malinak might have analyzed the Clients' injuries by type, or related settlement amounts to medical reports and expenses, or compared these settlements to those of similar claims, or provided other information showing a relationship between the plaintiffs' circumstances and the amounts received. He did not do so." Id. at 236. The Supreme Court of Texas examined an affidavit in a legal malpractice case. Burrow, 997 S.W.2d at 235. Former clients sued their attorneys, asserting that the attorneys had improperly settled their suits and allocated damages among the clients. Id. at 232-33. The attorneys moved for and were granted summary judgment by the trial court. Id. at 233. In support of their motion for summary judgment, the attorneys included an affidavit from an expert who opined that the attorneys' actions did not cause the clients any damages. Id. at 235. The expert stated there were several important considerations in considering the reasonableness of the settlement amounts, he considered those factors, and he concluded that the clients were all reasonably compensated and, therefore, had not been harmed by the alleged malpractice. Id. The Supreme Court explained that because the expert did not explain why the settlements were fair and reasonable for each client, the affidavit was conclusory. Id. at 236. The Texas Supreme Court cited the proposed RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS 49 (Proposed Final Draft No. 1, 1996), which provided that "a lawyer engaging in clear and serious violation of a duty to a client may be required to forfeit some or all of the lawyer's compensation for the matter." Id. at 241. The fee forfeiture remedy is based on two ideas. First, a client does not receive the benefit of the bargain if the attorney breaches fiduciary duties owed to the client. Second, fee forfeiture is a deterrent to an attorney breaching fiduciary duties to a client. Id. at 237-38. In some fee forfeiture cases, denying an attorney all compensation would be an excessive sanction because it would give a windfall to the client. Id. at 241-42. In sum, the plaintiffs sued their former attorneys for breach of fiduciary duty and other causes of action. Id. at 232. Factually, the plaintiffs alleged, among other things, that the defendant attorneys had improperly solicited their business through a "lay intermediary." Id. The supreme court held that fee forfeiture was a potential remedy for breach of fiduciary duty, even in the absence of any actual damages to the clients. Id. at 240.