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Is a Legal Fee of $48K Per Hour Going to Fly?

By George Khoury, Esq. on October 18, 2017 3:56 PM

It's like a real life crossover episode between the casts of two very different television dramas. One involving the chaotic fight over an oil baron's vast billion dollar estate, and the other being the life and times of a fast talking, high paid, and damn good lawyer who tows the line and once called a donkey named Buddy to the witness stand (this last part is actually true and got the case settled).

The Texas Supreme Court is being asked to decide whether that damn good lawyer's $7.5 million contingency fee (which amounts to $48K per hour) is valid. However, it's not really the amount of the fee that's contested, and in fact, the actual contingency the attorney would have earned was more than double that. Why this lawyer now has to fight to defend his fee is the sort of cautionary tale every attorney that agrees to accept a contingency should be aware of.

What's the Trouble?

The lawyer that earned the high fee was retained late in the game in an effort to jump start settlement negotiations with a fresh approach. The case involved the dispute over late Texas oil baron H.L. Hunt billion dollar estate. Hunt's grandson, Albert Hill Jr., is alleged to have agreed to a contingency fee as high as 50% if the matter settled in certain amount ranges. The big problem is that Gregory Shaumon never got that agreement in writing. Yet he still commenced work, and actually got the case settled for over $40 million. Then, it got interesting.

Hill denied making the agreement, and claimed that Shaumon was not entitled to anything more than his $600 hourly rate for the 150 hours he spent on the matter. Notably, the matter had been hotly contested with countless other attorneys having worked on the matter. The $7.5 million in fees was actually awarded by a jury after Shaumon filed a lawsuit seeking to get paid.

Let's Talk About Fees

When it comes to contingency fees, sometimes the hourly rate breaks down nicely, other times, not so much. Settling a case before trial, or before dispositive motions, or even before discovery, can result in a windfall to an attorney. Getting 33.3 percent for a single meeting, a single review of a file, and a single phone call, can result in astronomical hourly rates.

However, when contingency fees are abnormally large, 150 hours of work, which is actually a pretty good chunk of time to put into a single matter that settles short of trial, can still result in an out of this world hourly rate.

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