On May 9, the Texas Supreme Court decided that Texas’s civil barratry statute does not apply to legal-services contracts solicited outside of Texas. Justice Huddle, writing for the Court, stated: “We reaffirm our longstanding presumption that a civil statute does not have extraterritorial effect unless the Legislature makes clear that such effect is intended.”
The case involved two Texas lawyers who had entered into legal-services contracts with clients in Louisiana and Arkansas for personal-injury cases. The clients later sued under Texas’s civil barratry statute, aiming to void these contracts by alleging that the lawyers used out-of-state case runners for solicitation.
The lawyers argued that since the solicitation occurred outside Texas, the statute did not apply. Initially, a trial court agreed with them and granted summary judgment. However, this decision was reversed by an appeals court which found some actions related to financing took place in Texas.
The central issue was whether the statute applied to acts of solicitation conducted outside state borders. The Court concluded it did not because all contract-procuring acts happened outside Texas.
Gibson Dunn attorneys Ben Wilson, Kathryn Cherry, Elizabeth Kiernan, Stephen Hammer, and Andrew Mitchell prepared this alert regarding developments at the Texas Supreme Court.
For more information or assistance on this matter, Gibson Dunn encourages contact with their practice group leaders specializing in Appellate and Constitutional Law Practice or related fields like Texas General Litigation.
