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Proposal to Undermine Contingency Fee System for Personal Injury Lawyers Should Be Rejected

July 15, 2003

Proposal to Undermine Contingency Fee System for Personal Injury Lawyers Should Be Rejected


Changes Would Put Injured Parties at a Disadvantage, National Public Interest Group Tells Utah Bar

WASHINGTON, D.C. – A proposal in Utah and 12 other states to alter the system through which personal injury lawyers are compensated would unfairly burden injured plaintiffs, is far too broad and could result in some consumers not being represented by counsel, Public Citizen, a national consumer advocacy group, told the state’s bar this week. Public Citizen urged the state Bar Association’s Office of Professional Conduct to reject the proposal.

The proposal is also flawed because the fee restrictions fall on the plaintiff but not the defendant. It also incorrectly assumes that plaintiff attorneys shoulder no risk in cases where an early settlement is reached, and it requires plaintiff attorneys to track their hours, a method they don’t normally use for their business.

“The proposal is far too broad and too simplistic,” said Public Citizen President Joan Claybrook. “It applies to all personal injury cases, including medical malpractice and products liability cases, where facts about liability and damages can be murky and require investigation through discovery, making the early settlement procedure inappropriate for these cases.”

Common Good, the business-connected group that seeks restrictions on the tort system and submitted the proposal, has not cited any empirical evidence that this proposal would have the desired results and has created no methods for monitoring the results.

Many personal injury lawyers are paid on a contingency basis, receiving a portion of the final settlement or verdict that they eventually obtain for their client or nothing if they lose the case. Common Good’s proposal alters that system by limiting plaintiff attorneys’ fees to an hourly fee if an early settlement offer is accepted.

The plaintiff’s attorney could charge contingency fees only by providing a “notice of injury” to the defendant, including the nature of the injury, the extent of damage and the reasons the plaintiff believes the defendant is liable. If the attorney did not provide the notice, the hourly fee limit would apply. Defendants would not be required to submit any information to the plaintiff.

The “notice of injury” places injured plaintiffs at a clear disadvantage because it provides defendants with valuable information about the claims they can use in deciding what kind of settlement to offer, while defendants do not have to disclose any information in return or even make a settlement offer.

“The proposal’s one-way discovery mechanism allows defendants to have the benefit of substantial information about the plaintiff’s claims, and, most significantly, information about what the plaintiffs do not know, without having to provide any information to justify the size of any settlement offer they decide to make,” Public Citizen wrote in the critique.

“Consumers across the state of Utah and in other states should not be the subject of this kind of mass, uncontrolled experiment,” said Alan Morrison, director of the Public Citizen Litigation Group. “This proposal also fails to recognize that the contingency fee system makes it possible for those who have been injured to have their day in court. This proposal would chip away at that essential right.”

Similar petitions are pending in Alabama, Arizona, California, Colorado, Maryland, Mississippi, New Jersey, New York, Ohio, Oklahoma, Texas and Virginia.

Click here to view a copy of Public Citizen’s comments.