Many Texas litigation attorneys are familiar with Chapter 38 of the Texas Civil Practices and Remedies Code—the most common statutory basis for recovery of attorney'fees under Texas law. Chapter 38 provides for recovery of attorney's fees "from an individual or corporation" if the claim is in one of eight different categories, including: (1) rendered services; (2) performed labor; (3) furnished material; (4) freight or express overcharges; (5) lost or damaged freight or express; (6) killed or injured stock; (7) a sworn account; or (8) an oral or written contract.

A common issue that arose after Chapter 38's passage was whether the language "individual or corporation" permitted a claimant to recover attorney fees from non-corporation entities such as limited liability companies or partnerships. The majority of the case law in Texas determined that no, Chapter 38 did not permit a claimant to recover attorney fees from an LLC, LLP, LP, or any similar entity other than a corporation. This loophole affected litigation in sometimes very significant ways—for example, if a corporation and an LLC were suing each other with competing claims of breach of contract, the corporation could not recover attorney fees if it prevailed but the LLC could recover its attorney fees. To many, this one-way street seemed inequitable. Given the cost of litigation, whether a party could be liable for or recover attorney's fees plays a significant role in case analysis and strategy.