82R5360 YDB-F

By: Fletcher H.B. No. 1890

A BILL TO BE ENTITLED

AN ACT

relating to the offense of prohibited barratry and solicitation, liability for contingent fee contracts for legal services, and attorney general prosecution of certain offenses.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 82.065, Government Code, is amended by adding Subsections (c) and (d) to read as follows:

(c) A client may bring an action to void a contingent fee contract for legal services before the fourth anniversary of the date the client knew or, in the exercise of reasonable care, should have known that the contract is voidable. A statement or affidavit by the client stating that the employment of the attorney was properly secured or a similar statement or affidavit does not have evidentiary value and may not be presented to a jury.

(d) An attorney who did not perform any illegal act in the procurement of the contingent fee contract for legal services, who did not have any actual knowledge that the contract is voidable, and who made a reasonable attempt to ensure the validity of the contract may recover legal fees based on a quantum meruit theory. An attorney who learns of conduct described by Subsection (b) that is involved in the procurement of the contract and fails to report the activity to the disciplinary authorities of the State Bar of Texas is not entitled to quantum meruit recovery.

SECTION 2. Subchapter C, Chapter 82, Government Code, is amended by adding Section 82.0651 to read as follows:

Sec. 82.0651. CIVIL LIABILITY FOR PROHIBITED BARRATRY AND SOLICITATION. (a) In this section, "prohibited conduct" means conduct that is prohibited by:

(1) Section 38.12, 38.122, or 38.123, Penal Code; or

(2) Rule 7.03, 7.06, or 8.04(a)(9), Texas Disciplinary Rules of Professional Conduct.

(b) A person affected by any prohibited conduct may bring an action against one or more persons who knowingly engaged or participated in, directly or indirectly, the prohibited conduct.

(c) The fact finder may award to a plaintiff that brings an action under Subsection (b):

(1) all amounts paid to or received by any person as a result of the prohibited conduct;

(2) damages for past and future mental anguish resulting from the prohibited conduct;

(3) at the discretion of the fact finder and as a penalty based on the severity of the prohibited conduct, an amount not to exceed three times the amounts awarded under Subdivisions (1) and (2);

(4) reasonable and necessary attorney's fees and court costs incurred by the plaintiff in the action;

(5) prejudgment and postjudgment interest as provided by law; and

(6) an injunction prohibiting the defendant from engaging in future acts that constitute the prohibited conduct.

(d) The standard of proof for each element of a cause of action under this section, including damages for mental anguish and additional damages, is preponderance of the evidence. The court may accept a verdict of 10 or more jurors in a district court or five or more jurors in a county court at law.

(e) For purposes of Subsection (b), a person acts "knowingly" when the person knows or by the exercise of reasonable diligence should have known that the prohibited conduct occurred, or at any time learns or by the exercise of reasonable diligence should have learned the prohibited conduct occurred, and takes any action that furthers the effect of the conduct. For purposes of Subsection (c)(3), a person acts "knowingly" if the person has actual awareness of the nature of the conduct or has actual awareness that the circumstances exist or that the person's conduct is reasonably certain to cause the result. For purposes of this section, "actual awareness" may be inferred if objective manifestations indicate a person acted with actual awareness.

(f) A person must bring suit for a cause of action under this section not later than four years after the date the last act of the prohibited conduct occurs. The discovery rules apply to a cause of action brought under this section. Prohibited conduct is considered inherently undiscoverable for purposes of this section.

(g) A judgment rendered against two or more persons under this section is joint and several.

(h) This section shall be liberally construed in favor of actions brought under this section to accomplish the purpose of the legislature to reduce or eliminate the occurrences of prohibited conduct, which is pervasive and difficult to prove.

(i) This section provides remedies that are in addition to any other remedy available under other law.

SECTION 3. Section 41.008(c), Civil Practice and Remedies Code, is amended to read as follows:

(c) This section does not apply to a cause of action against a defendant from whom a plaintiff seeks recovery of exemplary damages based on conduct described as a felony in the following sections of the Penal Code if, except for Sections 49.07 and 49.08, the conduct was committed knowingly or intentionally:

(1) Section 19.02 (murder);

(2) Section 19.03 (capital murder);

(3) Section 20.04 (aggravated kidnapping);

(4) Section 22.02 (aggravated assault);

(5) Section 22.011 (sexual assault);

(6) Section 22.021 (aggravated sexual assault);

(7) Section 22.04 (injury to a child, elderly individual, or disabled individual, but not if the conduct occurred while providing health care as defined by Section 74.001);

(8) Section 32.21 (forgery);

(9) Section 32.43 (commercial bribery);

(10) Section 32.45 (misapplication of fiduciary property or property of financial institution);

(11) Section 32.46 (securing execution of document by deception);

(12) Section 32.47 (fraudulent destruction, removal, or concealment of writing);

(13) Chapter 31 (theft) the punishment level for which is a felony of the third degree or higher;

(14) Section 49.07 (intoxication assault);

(15) Section 49.08 (intoxication manslaughter);

(16) Section 21.02 (continuous sexual abuse of young child or children); [or]

(17) Chapter 20A (trafficking of persons);

(18) Section 38.12 (barratry and solicitation of professional employment);

(19) Section 38.122 (falsely holding oneself out as a lawyer); or

(20) Section 38.123 (unauthorized practice of law).

SECTION 4. Section 38.01(11), Penal Code, is amended to read as follows:

(11) "Solicit employment" means to communicate in person or by telephone with a prospective client or a member of the prospective client's family concerning professional employment within the scope of a professional's license, registration, or certification arising out of a particular occurrence or event, or series of occurrences or events, or concerning an existing problem of the prospective client within the scope of the professional's license, registration, or certification, for the purpose of providing professional services to the prospective client, when neither the person receiving the communication nor anyone authorized by law to act for [acting on] that person [person's behalf has] requested the communication. The term does not include a communication initiated by a family member of the person receiving a communication, a communication by a professional who has a prior or existing professional-client relationship with the person receiving the communication, or communication by an attorney for a qualified nonprofit organization with the organization's members for the purpose of educating the organization's members to understand the law, to recognize legal problems, to make intelligent selection of legal counsel, or to use available legal services. The term does not include an advertisement by a professional through public media.

SECTION 5. Section 38.12, Penal Code, is amended by amending Subsection (b) and adding Subsection (c-1) to read as follows:

(b) A person commits an offense if the person:

(1) knowingly finances the commission of an offense under Subsection (a);

(2) invests funds the person knows or believes are intended to further the commission of an offense under Subsection (a); [or]

(3) is a professional or an employee or agent of a professional who knowingly accepts employment within the scope of the professional's [person's] license, registration, or certification that results from the solicitation of employment in violation of Subsection (a); or

(4) is a professional or an employee or agent of a professional excepted under Subsection (c-1) who is soliciting employment for a professional other than one excepted under Subsection (c-1).

(c-1) It is an exception to prosecution under Subsection (b)(3) that the professional or the employee or agent of the professional is soliciting employment:

(1) as or for a chiropractor or other health care provider; or

(2) as or for an attorney to represent a person related to a crime for which the person is placed under arrest.

SECTION 6. Chapter 38, Penal Code, is amended by adding Section 38.20 to read as follows:

Sec. 38.20. PROSECUTION BY ATTORNEY GENERAL. The attorney general has discretionary jurisdiction concurrent with local authorities to prosecute an offense under Section 38.12, 38.122, 38.123, or 71.02.

SECTION 7. The changes in law made by this Act apply only to an offense committed on or after the effective date of this Act. An offense committed before the effective date of this Act is covered by the law in effect when the offense was committed, and the former law is continued in effect for that purpose. For purposes of this section, an offense was committed before the effective date of this Act if any element of the offense was committed before that date.

SECTION 8. The changes in law made by this Act do not apply to a cause of action that accrued before the effective date of this Act. A cause of action that accrued before the effective date of this Act is governed by the law in effect on the date the cause of action accrued, and the former law is continued in effect for that purpose.

SECTION 9. This Act takes effect September 1, 2011.