Houston Attorneys Prevail in “Apparent Authority” Suit
Jun 18, 2021
Houston Partner, Andrew Johnson, recently prevailed in the Fifth Circuit where he convinced the Court to affirm summary judgment in a complicated loan-transaction case involving numerous parties.
Thompson Coe’s client, a nationwide mass tort litigation firm, employed a contract lawyer who maintained a separate law and escrow practice. The lawyer performed escrow services for the underlying transaction and without the law firm’s knowledge. When disputes arose regarding the transaction, the lawyer was sued, as was the law firm under an apparent authority theory. Plaintiff argued that because the law firm held out the lawyer as a member of the firm, he had apparent authority of the firm to perform escrow work.
Steve Augustine, partner in the Houston office, successfully argued a motion for summary judgment in the trial court, arguing that a broad imposition of apparent authority by a law firm over a lawyer based on the fact the firm had the lawyer’s profile on its website would have far reaching results—i.e., law firms would be vicariously liable for any work their lawyers performed on the side as long as the work is something lawyers sometimes handle (like escrow services).
Andrew maintained this judgment in the Fifth Circuit with excellent briefing and oral argument. This is a great win for Thompson Coe and an important decision beneficial to all Texas law firms.