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Appendix I for Proposed Contingent Fee Restrictions

THE FIRST PROPOSAL IS TO AMEND RULE 1.5 OF THE UTAH RULES OF PROFESSIONAL CONDUCT AS FOLLOWS:

Rules 1.5 Fees.

(d)A lawyer shall not enter into an arrangement for, charge or collect:

(d)(1)Any fee in a domestic relations matter, the payment or amount of which is contingent upon the securing of a divorce or upon the amount of alimony or support, or property settlement in lieu thereof; or

(d)(2)A contingent fee for representing a defendant in a criminal case; or

(d)(3)A contingent fee in a personal injury matter except as provided herein:

(i) The lawyer shall submit a notice of injury to the allegedly liable party. If the attorney does not submit such notice, or if the client accepts an early settlement offer the lawyer may charge an hourly fee that shall not exceed 10% of the first $100,000 plus 5% of the recovery in excess of $100,000.

(ii) Pursuant to a motion by the lawyer, the court may find that the fees permitted by subparagraph (i) are unreasonably low in light of the reasonableness factors set fort in Rule 1.5(a)(1) through (8).

(iii) For purposed of Rule 1.5(3)(d):
"Early settlement offer" denotes a written offer of settlement made by an allegedly liable party to a personal injury claimant that: (a) is made prior to claimant's retention of counsel or within 60 days of the date the allegedly liable party received claimant's notice of injury; (b) has an expiration date at least 30 days after claimant and claimant's attorney, if any, have actual notice of the offer. If a personal injury claimant is represented by counsel, the allegedly liable party may send a copy of the offer to both the attorney and the claimant.

"Notice of injury" denotes a written notice made by a personal injury claimant's attorney to an allegedly liable party that contains accurate and sufficiently detailed information to allow the allegedly liable party to assess the claim and make a reasonable offer of settlement. The notice shall include information required to be disclosed under Rule 26(a)(1) of the Utah Rules of Civil Procedure.

"Personal injury" denotes the incurrence of bodily injury, sickness, death.

THE SECOND PROPOSAL IS TO AMEND THE COMMENTS TO RULE 1.5 OF THE UTAH RULES OF PROFESSIONAL CONDUCT:

Contingent Fees and Early Offers of Settlement
Contingent fees play a useful and critical role in ensuring access to counsel and the courts for personal injury claimants who would otherwise be unable to afford such access. Nonetheless, standard contingent fees should only be charged where the lawyer undertaking representation bears a substantial risk of non-recovery. Clients should not be charged standard contingent fees where no real risk of non-recovery or non-payment of fees exists. Rule 1.5(d)(3) makes it unethical conduct to charge a contingency fee in situations where an allegedly liable party makes an early settlement offer that is satisfactory to the personal injury claimant - thereby eliminating any risk that a claimant will not recover for his injury. In such a situation, charging a standard contingency fee is excessive and unreasonable; the lawyer representing the claimant may charge only a reasonable hourly rate or fixed fee that is otherwise consistent with this Rule.

Nothing in this Rule requires that a personal injury claimant accept the early settlement offer of the allegedly liable party. If the claimant rejects the early settlement offer of the allegedly liable party, or if no such offer is made within 60 days of the allegedly liable party having received notice of claimant's claim, a lawyer will remain free to charge a contingent fee that is otherwise reasonable and consistent with this Rule.

In order to foster early settlement offers and the swift resolution of personal injury claims, Rule 1.5(d)(3)(i) makes it unethical conduct to charge a contingency fee in a personal injury matter if a lawyer does not provide the allegedly liable party with written notice of the client's alleged injury. Written notice is required even when the allegedly liable party has made an early settlement offer prior to a personal injury claimant's retention of counsel.

An early settlement offer, as defined under Rule 1.5(d)(3)(iii), is one that is made promptly in a manner that permits the early resolution of a personal injury claimant's alleged injury without the expenditure of legal or judicial resources. An early settlement offer qualifies under Rule 1.5(d)(3) only if it is made prior to or within 60 days of an allegedly liable party receiving claimant's notice of injury or prior to claimant's retention of counsel. In order to permit claimant a suitable time to consider the early settlement offer, no offer qualifies under this Rule if it does not remain open for acceptance for at least 30 days. Nothing in this Rule requires an allegedly liable party to make an early settlement offer.

The notice of injury filed by a personal injury claimant must contain sufficient information to permit the allegedly liable party to evaluate the notice. It is, therefore, misconduct to charge a contingency fee if a lawyer conceals material information the lawyer reasonably believes or reasonably should know bears a substantial relationship to the injury alleged or the notice of the injury provided. The Rule therefore requires that a personal injury claimant's notice provide the allegedly liable party with: a) sufficient information to assess the basis for the claim that the allegedly liable party is liable for claimant's injury; and b) sufficient information to assess the relationship between the injury alleged and the value of claimant's claim. The notice must include information required to be disclosed in initial discovery under Rule 26(a)(1) of the Utah Rules of Civil Procedure. Absent compelling circumstances, such material information would also include: a) the name, address, age, marital status and occupation of the claimant; b) a brief description of how the injury occurred; c) a description of the nature of the claimant's injury including the names and addresses of all physicians or other health care providers who provided medical care to claimant in connection with the alleged injury; d) medical records relating to the injury or, in lieu thereof, executed releases authorizing the allegedly liable party to obtain such records from claimant's health care providers; and e) a statement of the basis for believing that the allegedly liable party is liable (in whole or in part) for causing the claimant's injury.

In the event a personal injury claimant's notice is determined to have omitted material information which the lawyer reasonably believes or reasonably should know bears a substantial relationship to the injury alleged or the notice of the injury, the claimant's lawyer is not permitted to charge a contingency fee and shall be subject to discipline or sanction in the same manner as a lawyer who withholds or conceals evidence duly subpoenaed during discovery.

A personal injury claimant's notice of injury, an allegedly liable party's early settlement offer, and all discussions relating thereto shall be inadmissible in any subsequent proceeding except in a proceeding to enforce a settlement agreement or to determine the proper fees to be charged after acceptance of an early settlement offer.

Subsection (d)(3)(i) bars a personal injury claimant's counsel from charging excessive fees when a claimant accepts an early settlement offer, and limits hourly rate charges to 10% of the first $100,000 of the accepted early settlement offer plus 5% of any additional amounts. These restrictions on the total hourly fees an attorney may charge are imposed in order to prevent windfall payments to claimant's counsel which the Rule otherwise precludes. Excessive contingency fee arrangements prohibited by the Rule should not be accomplished by the alternate method of charging exorbitant and excessive hourly rates. The fee restrictions in subsection (d)(3)(i) apply only when the early offer is accepted, an attorney has no risk of non-recovery, and comparatively little effort is necessary to recover the settlement. Accordingly, the restriction of fees is limited to charges made against sums produced with little or no attorney effort when an early settlement offer is accepted.

Subsection (d)(3)(ii) has a savings provision that permits the court, on motion of a personal injury claimant's counsel, to award fees in excess of those otherwise permissible under the subsection. Such awards shall not be routine. The savings provision is intended to permit compensation of attorneys when an early offer is accepted in excess of that otherwise permissible only in the exceedingly rare and unusual situation where an attorney's pre-acceptance representation requires extensive factual investigation or extensive research of legally novel theories of liability. Both an extraordinary effort and an unusually large time commitment are required to justify such otherwise excessive compensation.

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This page contains a single entry from the blog posted on January 2, 2004 7:51 AM.

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