• Client Attacks Common Engagement Letter Practice, Attorney Wins
  • October 29, 2008
  • Law Firm: Hinshaw & Culbertson LLP - Chicago Office
  • David J. Sacks, P.C. v. Haden, __ S.W.3d __, 2008 WL 2702184 (Tex. 2008) (subject to revision or withdrawal)

    Brief Summary
    The absence of language regarding maximum fees in an engagement letter did not create ambiguity or otherwise open the door for evidence of an oral agreement to that effect between lawyer and client.

    Complete Summary
    Attorney David Sacks sued his former client, Charles Haden, for unpaid attorney fees. Sacks’ suit was based on an engagement letter that specified Sacks’ hourly rate and called for Sacks to write an appellant brief as well as any necessary reply. Sacks billed Haden approximately $40,000 for writing a brief and a reply, but Haden refused to pay the total amount, claiming the parties had an oral agreement to cap attorney fees at $10,000. The trial court granted Sacks summary judgment but the intermediate appellate court reversed, holding that an issue of fact existed as to whether the parties had a meeting of the minds on the open account versus maximum fee issue.

    The Texas Supreme Court sided with the trial court, holding that the agreement evinced a meeting of the minds on enough essential terms (i.e. the type of legal work to be performed and hourly rate).

    The court held that the absence of contractual language on the open account versus maximum fee issue did not create ambiguity because “the lack of such explicit language is irrelevant if the agreement can be reasonably interpreted only one way.” Id. at *3. Haden argued that a finding of ambiguity was not necessary for the introduction of parol evidence because the alleged oral agreement could be introduced under the collateral and consistent exception to the parol evidence rule. The court, however, held that an oral agreement capping Sacks’ fees would be in conflict with the written agreement rather than collateral to, or consistent with, the agreement.

    Significance of Opinion
    To the extent that many attorney-client agreements presume, without stating, that bills are on open account, this opinion validates that presumption.