The Texas Legislature Has Significantly Broadened the Statute Governing Recovery of Attorney's Fees in Breach of Contract Cases

Abstract

Texas recently enacted amendments that significantly expand the scope of section 38.001 of the Texas Civil Practice & Remedies Code, a statute that awards attorney’s fees to successful claimants in breach of contract cases. Under the new amendments, which take effect September 1, 2021, the prevailing party may recover reasonable attorney’s fees from most forms of business organizations, including partnerships and limited liability companies—not just from individuals and corporations, as the statute previously provided. And although there has been some confusion on this point, the amended statute continues to protect governments and governmental agencies from attorney’s fees liability. Additionally, the amendments expressly preclude recovery of fees against certain quasi-governmental organizations providing public services and religious or charitable organizations.