Ethical rules in many states already require lawyers, whether they are paid by the hour or by a percentage of the recovery, to charge only “reasonable fees.”
In theory, this means fees should vary with the difficulty of the case, the expertise of the lawyer, the time required and the result obtained.
But in practice, the lawyers urging the change say, contingency fees are uniformly 33 percent in most places and 40 percent in others. They say that plaintiffs’ lawyers charge such fees even when a big settlement is quick, fixed and certain.
The new proposal would limit contingency fees in many cases to 10 percent of the first $100,000 of a settlement, and 5 percent of anything more. Common Good, an advocacy group pushing for the change, has enlisted the help of some lawyers in filing petitions for the change with state supreme courts, bar associations or ethics commissionsl.
Legal experts are sharply divided on whether such fees are a problem and whether lowering them makes sense. Plaintiffs’ lawyers scoff at the proposal.
“It’s a ridiculous idea,” said Barry J. Nace, a lawyer in Washington. “If we’re going to do this, let’s reduce the fees on the other side. Let’s put a limit on what think-tank guys can make. Let’s put a limit on what law professors can make.”
The proposal would require the plaintiff’s lawyer to send a letter to the defendant at the start of a case, describing the injury and why the defendant was liable for it. The defendant would not be required to make a settlement offer, and the plaintiff would not have to accept one. But if the defendant did make an offer and the plaintiff accepted it, his lawyer would be entitled to no more than 10 percent of the first $100,000 and 5 percent of anything more.
If plaintiffs’ lawyers did not send the letter, their fees would be capped at those levels no matter how long or hard they worked on the case.
“The proposal is really elegantly simple,” said Nancy Udell, the general counsel of Common Good, which is dedicated to changing what it calls the lawsuit culture. “The only thing this does is make sure that if there is an offer and if it is early, that 90 percent of the offer goes to the injured person. The only thing this does is encourage early settlements.”