MIDDLE RANGE ISSUE

SUMMARY: Some tort reform advocates have suggested that one of the ways to curb the filing of non-meritorious lawsuits is to place strict percentage limits on lawyer contingency fees. This idea is based on the belief that the open-ended contingency fee method encourages plaintiffs’ attorneys to inflate the size of settlements and awards in order to collect higher fees. Critics of the present system also contend that allowing contingency fees in the punitive damages context is a windfall for both the plaintiffs and the plaintiffs’ attorneys and should be handled differently than the fees for compensatory awards.

A bill was introduced in the 1990 General Assembly that proposed to cap attorney fees at a percentage of the award that would decrease as the total amount of the recovery increased. For example, a lawyer in a case that resulted in a $100,000 award could collect up to $30,000, or 30 per cent, while the attorney in an action that resulted in a $500,000 total recovery would be limited to a fee of $75,000, or 15 per cent. Bills were filed in 1993 to limit fees in cases with awards in excess of $150,000 to 20 per cent of the settlement, and to three annual installments. None of these measures passed the House Judiciary Committee, and since that time legislative interest in the issue has ebbed.

MSBA 2002 POSITION: Strongly oppose all bills aimed at regulating legal fees by statute for the following reasons:

1. The Court of Appeals is the proper authority for disciplining attorneys who charge excessive fees, and has shown a willingness to limit abuses.

2. Those who propose to limit contingency fees fail to appreciate that many injured parties cannot afford to pay legal expenses prior to a settlement. Contingency fees enable poorer clients to receive competent legal assistance on complicated cases that involve months of preparation and research without paying for these services before the conclusion of the trial. A flexible contingency fee system allows attorneys to assume responsibility and take the risks in deserving cases.

3. Strict percentage formulas to cap lawyer fees do not recognize that some cases require enormous amounts of research and preparation while other actions involve minimal work. Plaintiffs who have complex causes of action or injuries may have to pay a higher amount to attorneys than those who have relatively simple cases.

SAMPLE LEGISLATION:
House Bill 1196, General Assembly of Maryland, 1990
House Bill 1292, page 1, General Assembly of Maryland, 1993

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