CROSSOVER: Fee Segregation by Percentage Survives: Trial Courts May Credit an Opponent’s Detailed Allocation Evidence

Joseph Thompson and Thompson Custom Properties, LLC v. High Equity Investments, LLC, 03-25-00086-CV, November 06, 2026.

On appeal from 21st District Court of Bastrop County

Synopsis

A trial court may credit opposing counsel’s reasoned percentage allocation when determining the fees attributable to the only claim supporting fee recovery. Because the competing declaration identified segregable work, explained why the fee-bearing claim required substantially less effort, and tied the proposed percentage to the billing evidence, the reduced award complied with Rohrmoos and Chapa.

Relevance to Family Law

Texas family-law cases frequently combine claims and fee-shifting theories with different scopes: divorce and conservatorship proceedings, contractual claims involving marital agreements, declaratory claims, third-party property disputes, enforcement proceedings, and sanctions requests. When only part of the case authorizes fee recovery—or when a fee statute, contract, or order does not reach all services—the requesting lawyer’s allocation is not conclusive. The opposing party may present a competing allocation through qualified counsel who has reviewed the invoices, understands the litigation, identifies work attributable to nonrecoverable matters, and explains a defensible percentage reduction.

The threshold question remains whether segregation is legally required. Broad Family Code fee provisions may cover work that would not be recoverable in an ordinary commercial case, while tort, contract, third-party, or collateral claims may require separate analysis. But once segregation is required, Thompson confirms that the trial court may choose between competing percentage-based opinions without conducting its own line-by-line billing audit.

Case Summary

Fact Summary

Joseph Thompson and Thompson Custom Properties, LLC sued High Equity Investments, LLC and other parties concerning five real-estate development projects. The trial court disposed of six claims by summary judgment, and the remaining claims proceeded to a jury trial. The jury found for Thompson on one breach-of-contract claim involving the Tyler properties and awarded $251,538.80 in actual damages.

That Tyler-properties contract claim was the sole claim supporting an attorney’s-fee recovery. Thompson requested $327,617.30 in fees and $11,894.24 in costs. His lead counsel supported the request with a declaration, billing records, and a segregated calculation. Counsel testified that most of the litigation advanced the recoverable contract claim and that work attributable to the other claims was minimal. He nevertheless reduced selected billing entries by 25% or 50%, depending on the task, producing a requested amount substantially below the firm’s total billings of $576,497.05.

High Equity did not dispute Thompson’s entitlement to some reasonable fees or the reasonableness of the stated hourly rates. It disputed the allocation. High Equity’s lead counsel reviewed Thompson’s declaration, the billing summary, and the work performed in the litigation. He explained that the Tyler-properties dispute was separate from the other four projects and comparatively straightforward: liability for some payment was not disputed, the principal issue was the amount owed, and the relevant evidence was limited and already existed before suit.

By contrast, the other project-related claims required more extensive discovery and involved more complex factual issues. High Equity’s counsel identified examples of billing entries that could have been segregated but were not removed from Thompson’s calculation. He opined that no more than 20% of the total fees—$115,299.41—was reasonably attributable to the Tyler-properties contract claim.

Following an evidentiary hearing, the trial court adopted that allocation and awarded $115,299.41 in attorney’s fees. It also awarded $2,378.75 in costs and applied a $12,500 settlement credit. Thompson appealed, arguing in relevant part that the fee reduction disregarded the lodestar method and rested on an impermissible percentage calculation.

Issues Decided

Whether the trial court could rely on opposing counsel’s testimony to determine the percentage of total fees attributable to the sole fee-recoverable contract claim.
Whether percentage-based segregation evidence was legally sufficient when the requesting party had offered a more granular, entry-specific allocation.
Whether the reduced award complied with the lodestar framework by resting on evidence of reasonable hours and rates attributable to the recoverable claim.

Rules Applied

Under Texas law, attorney’s fees are recoverable only when authorized by statute or contract. A claimant seeking fees therefore must establish that the requested services fall within a recognized basis for fee recovery.

Under Tony Gullo Motors I, L.P. v. Chapa, a claimant generally must segregate fees incurred on recoverable claims from fees incurred on claims for which fees are unavailable. Segregation is unnecessary only for discrete legal services that advance both recoverable and nonrecoverable claims and are so intertwined that separating the work is not feasible. Separate contemporaneous time records for each claim are not mandatory; counsel may satisfy the segregation requirement through an opinion identifying the approximate percentage of total time attributable to recoverable work.

Under Rohrmoos Venture v. UTSW DVA Healthcare, LLP, a fee claimant must present sufficient evidence of:

The particular services performed;
The person who performed those services;
Approximately when the services were performed;
The reasonable time required to perform them; and
The reasonable hourly rate for each person performing them.

The lodestar begins with the reasonable hours worked multiplied by the reasonable hourly rate. Rohrmoos, however, did not displace the comparatively relaxed evidentiary standard governing segregation. Percentage testimony may remain sufficient if it is grounded in the work performed and explains the portion attributable to the fee-bearing claim.

The court also relied on authorities recognizing that segregation evidence need not be extensive and that trial courts may accept a reasonable percentage allocation instead of requiring a line-by-line analysis. See New Horizons Ranch & Center, Inc. v. Grebe; Kelly v. Isaac; Lederer v. Lederer; and Flagship Hotel, Ltd. v. City of Galveston.

Application

The appellate court rejected Thompson’s contention that his fee evidence was effectively unrebutted. High Equity’s counsel did not merely propose an unexplained discount. He reviewed the requesting party’s declaration and billing information, compared the factual and procedural demands of the Tyler-properties claim with those of the other project disputes, and identified specific entries that should have been removed or further reduced.

That evidence gave the trial court a substantive basis for concluding that Thompson’s 25% and 50% reductions did not adequately segregate the work. The Tyler-properties claim was factually distinct from the other project disputes, involved a narrower evidentiary record, and principally concerned the amount due. The remaining claims involved more extensive discovery and greater factual complexity. The trial court therefore could find that only 20% of the total billed work was reasonably attributable to the recoverable claim.

The court also rejected the argument that the trial court had to accept Thompson’s more granular allocation merely because it was presented on an entry-by-entry basis. A line-item methodology may be persuasive, but it is not categorically superior to percentage testimony. The trial court, as factfinder on fees, could assess the competing declarations, the underlying billing records, and counsel’s familiarity with the litigation.

Nor did the percentage calculation violate Rohrmoos. The parties did not meaningfully dispute the underlying rates, and the record contained billing evidence concerning the services and hours. The contested question was how much of that work belonged to the recoverable claim. By crediting the 20% allocation, the trial court determined the reasonable hours attributable to that claim and applied the accepted rates to reach the recoverable lodestar.

Holding

The Third Court of Appeals held that a trial court may rely on competing counsel testimony to determine the percentage of attorney’s fees attributable to the only claim authorizing fee recovery. Percentage-based segregation is permissible when the witness identifies the work that can be segregated and provides a reasoned explanation for the proposed allocation.

The court further held that the $115,299.41 award complied with the lodestar framework. The billing records and testimony supplied evidence of the services, hours, personnel, and rates, while the competing allocation evidence supported the trial court’s determination of the hours reasonably attributable to the contract claim.

The trial court was not required to accept the fee claimant’s more granular allocation. Because the record supported the competing 20% allocation, the trial court acted within its discretion in awarding less than Thompson requested.

Practical Application

Family-law litigators should treat segregation as a contested proof issue, not as an accounting exercise controlled exclusively by the fee applicant. Detailed invoices remain important, but the ultimate allocation may turn on counsel’s explanation of how each category of work relates to the claims or proceedings for which fees are legally recoverable.

In a divorce involving contractual claims under a premarital or partition agreement, counsel should identify whether the governing fee authority reaches the entire proceeding or only the contract dispute. Discovery concerning enforceability, contract interpretation, and breach may be distinguishable from work concerning conservatorship, support, characterization, valuation, or a just-and-right division.

The same issue can arise when a divorce includes third-party claims concerning title, fraud, business ownership, or transfers of marital property. Even if the factual background overlaps, discrete services directed solely to a claim without fee authorization may require segregation. Counsel should distinguish genuinely intertwined services from tasks that merely occurred in the same lawsuit.

In post-divorce enforcement litigation, separate the work performed to enforce a decree or contractual obligation from work addressing modification, clarification, contempt, or collateral disputes when those matters proceed under different fee authorities. A single hearing or pleading may advance multiple matters, but that does not automatically make all related fees inseparable.

In suits affecting the parent-child relationship, Family Code section 106.002 may provide broad authority for a reasonable fee award. Even so, segregation questions may arise when the case includes independent tort claims, sanctions proceedings, appellate work, third-party discovery, or matters falling outside the statutory proceeding. The fee witness should identify each legal basis for recovery before deciding whether segregation is necessary.

A party opposing fees should not rely solely on cross-examination or a generalized assertion that the bill is excessive. Thompson illustrates the value of an affirmative counter-presentation: a qualified witness, familiarity with the litigation, review of the invoices, specific examples of improperly included work, and a principled percentage tied to the relative demands of the recoverable and nonrecoverable matters.

Checklists

Build the Fee Claim

Identify every statute, contract, rule, or order authorizing attorney’s fees.
Match each requested category of work to a specific fee-recovery basis.
Determine which claims require segregation before preparing the fee declaration.
Preserve billing records identifying the professional, date, task, time, and rate.
Describe services with enough detail to permit a court to assess their relationship to the recoverable matter.
Calculate the lodestar using reasonable hours and reasonable rates.
Explain why any work advancing multiple claims could not reasonably be segregated.
State the percentage or amount removed for nonrecoverable work.
Explain how the percentage was derived rather than presenting it as an unsupported estimate.
Address trial, post-judgment, and conditional appellate fees separately.

Prepare the Fee Witness

Establish the witness’s qualifications, experience, and familiarity with the litigation.
Identify the records reviewed in forming the opinion.
Explain the procedural history and the relative complexity of the different claims.
Distinguish claim-specific services from common or intertwined services.
Identify representative billing entries illustrating the allocation methodology.
Be prepared to defend why a percentage reduction is reasonable.
Reconcile the requested amount with the underlying invoices.
Confirm that the testimony addresses both lodestar proof and segregation.
Avoid relying solely on a statement that the requested fees are “reasonable and necessary.”

Challenge an Opponent’s Allocation

Determine whether every claim or proceeding actually supports fee recovery.
Compare the fee-bearing issues with the nonrecoverable issues in factual scope and complexity.
Review invoices for work directed exclusively to nonrecoverable claims.
Identify entries that combine multiple tasks without a meaningful allocation.
Test whether claimed “intertwining” reflects truly indivisible services or merely factual overlap.
Prepare specific examples showing why the requesting party’s reductions are inadequate.
Offer an alternative dollar amount or percentage supported by the record.
Explain how the proposed percentage relates to discovery, motion practice, witnesses, experts, hearings, and trial time.
Address the reasonableness of both the hours and the rates when either is disputed.
Ensure that the counter-opinion is more than a conclusory across-the-board discount.

Apply the Rule in a Family-Law Matter

Separate SAPCR work from independent tort or third-party claims.
Distinguish property characterization and division work from contractual enforcement claims.
Analyze whether Family Code sections 6.708, 9.014, 106.002, or another provision reaches the particular services at issue.
Track enforcement, modification, clarification, contempt, and sanctions work separately where practicable.
Maintain separate billing phases for temporary orders, discovery, mediation, trial, and post-judgment proceedings.
Identify work that would have been required even if the nonrecoverable claim had not been pleaded.
Explain why common discovery or motion practice advanced the recoverable matter.
Preserve unredacted records for in-camera review if privilege or work-product concerns require public redactions.
Request findings supporting the fee award and allocation when appropriate.
Make a timely objection if the opponent fails to segregate recoverable from nonrecoverable fees.

Preserve the Issue for Appeal

Object specifically to the absence or inadequacy of segregation evidence.
Identify the claims for which fees are and are not recoverable.
Present competing evidence rather than relying exclusively on argument.
Ensure that declarations, invoices, exhibits, and hearing testimony are included in the appellate record.
Obtain a ruling on objections to the fee evidence.
Request findings of fact and conclusions of law when procedurally available.
Challenge the evidentiary sufficiency of the hours, rates, allocation, and resulting lodestar separately.
Frame the appellate complaint around the trial court’s discretion and the evidence supporting its allocation.

Citation

Joseph Thompson and Thompson Custom Properties, LLC v. High Equity Investments, LLC, ___ S.W.3d ___, No. 03-25-00086-CV (Tex. App.—Austin Nov. 6, 2026, no pet. h.).

Full Opinion

Read the full opinion.

Family Law Crossover

The crossover rule is procedural and evidentiary: when a party seeks fees for litigation containing both recoverable and nonrecoverable matters, the trial court may determine the recoverable portion through competing percentage-allocation testimony. The opponent’s witness need not reconstruct every time entry if the witness reviews the billing evidence, identifies services capable of segregation, explains the relative demands of the claims, provides concrete examples, and offers a reasoned percentage attributable to the fee-bearing matter.

In a Texas family-law proceeding, the mechanism may arise during a post-verdict or post-hearing fee submission, through declarations attached to a motion for judgment, or at an evidentiary hearing on attorney’s fees. For example, a divorce may include a contractual dispute over a marital agreement, third-party property claims, and ordinary division-of-property issues. If the relevant fee authority reaches only part of that work, each side may offer counsel testimony allocating the invoices. The trial court may then credit either methodology—including a supported percentage allocation—and incorporate that determination into the lodestar award.

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