Introduced Version
Senate Bill 637 History
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Senate Bill No. 637
(By Senator Sprouse)
____________
[Introduced March 21, 2005; referred to the Committee
on the Judiciary.]
____________
A BILL to amend the Code of West Virginia, 1931, as amended, by
adding thereto a new chapter, designated §55A-1-1, §55A-1-2,
§55A-1-3 and §55A-2-1, all
relating to
establishing an Injured
Consumers Legal Bill of Rights; stating legislative findings
and declarations of purposes; defining terms used in said
chapter; restricting contact by attorneys and insurers with
potential claimants; authorizing claimants to elect fee
arrangement with attorneys; establishing right of claimants to
receive written statement of fees and estimated expenses;
establishing a public policy-suggested maximum contingency fee
schedule; providing a right of cancellation of contingency fee
agreement; providing a contingency fee information fact sheet;
prohibiting disclosure of names of claimants receiving
periodic payments to persons interested in converting payments
to a lump sum; and providing criminal penalties for violations.
Be it enacted by the Legislature of West Virginia:
That the Code of West Virginia, 1931, as amended, be amended
by adding thereto a new chapter, designated §55A-1-1, §55A-1-2,
§55A-1-3 and §55A-2-1, all to read as follows:
CHAPTER 55A. INJURED CONSUMERS BILL OF RIGHTS.
ARTICLE 1. SHORT TITLE; LEGISLATIVE FINDINGS AND DECLARATION OF
PURPOSES; DEFINITIONS.
§
55A-1-1. Short title.
This chapter shall be known and may be cited as the
"
Injured
Consumers
'
Bill of Rights."
§55A-1-2. Legislative findings and declaration of purposes.
(a) The Legislature finds that:
(1) The contingency fee system is an important part of the
state's civil justice system. It provides access to courts for
people of low or moderate incomes. However, it can be unfair to
many of those it is supposed to serve. It costs some claimants far
too much in fees, leaves some with no representation for valid
claims, and results in excess costs being passed on to the public.
(2) Ordinary people who suffer serious injuries are often not
sophisticated consumers of legal services and generally lack the
information needed to make a reasonable choice about an attorney;
(3) Promotional advertisements by personal injury lawyers do
not always adequately inform potential clients of the basics about a contingent fee. Uninformed injured consumers may sign agreements
that have hidden expenses they must pay regardless of whether they
win or lose;
(4) Injured consumers and their families may sign a contingent
fee agreement before they can make a rational decision. Where
there has been a mass disaster or an unexpected traumatic loss,
there is generally no "cooling off" period after the tragedy.
Agents may take unfair advantage by pressuring vulnerable,
ill-prepared victims to retain them for extravagant fees;
(5) There does not appear to be adequate competition with
respect to contingency fees. Instead, a standard fee of one-third
or more of any recovery received plus expenses appears to be the
norm. This is true even though the contingency of tort liability
suits has dropped markedly over the past three decades due to
changes in law and practice.
(b) The Legislature further finds and declares that there
exist clear social and economic problems associated with our civil
justice system and a need to correct those problems by restoring
rationality, certainty, and fairness to the civil justice system
through the enactment of the "Injured Consumers
'
Bill of Rights."
§
55A-1-3. Definitions.
As used in this chapter:
(a) "Attorney" means any natural person, professional law
association, corporation, or partnership authorized to practice law;
(b) "Attorney's services" mean the professional advice or
counseling of or representation by an attorney, but does not
include other assistance incurred, directly or indirectly, in
connection with an attorney's services, such as administrative or
secretarial assistance, overhead, travel expenses, witness fees, or
preparation by a person other than the attorney of any study,
analysis, report, or test;
(c) "Claimant" means any natural person who brings a personal
injury claim and, if such a claim is brought on behalf of the
claimant's estate, the term shall include the claimant's parent,
guardian, or personal representative. The term does not include an
artificial organization or legal entity, such as a firm,
corporation, association, company, partnership, society, joint
venture, or governmental body;
(d) "Contingent fee" means the cost or price of any attorney's
services determined by applying a specified percentage, which may
be a firm fixed percentage, a graduated or sliding percentage, or
any combination thereof, to the amount of the settlement or
judgment obtained in a personal injury claim;
(e) "Defendant" means, for purposes of determining an
obligation to pay money to another under this chapter, any person
against whom a claim is asserted by a plaintiff;
(f) "Hourly fee" means the cost or price per hour of an attorney's services;
(g) "Initial meeting" means the first conference or discussion
between the claimant and the attorney, whether by telephone or in
person, of the details, facts, or basis of a personal injury claim;
(h) "Person" means any individual, corporation, company,
association, firm, partnership, society, joint stock company, or
other entity, including any governmental entity or unincorporated
association.
(i) "Personal injury claim" means:
(1) Any assertion of a right to payment, whether or not such
right is disputed or undisputed, excluding a right to payment under
a Federal or State Workers' Compensation Law; or
(2) Any civil action regardless of the legal theory on which
it is based, for physical illness, injury or death, caused to a
natural person, including mental anguish, emotional harm, damage to
reputation or character, and loss of consortium caused to that
person or caused to another as a result of that person's physical
illness, injury or death.
(j) "
Plaintiff" means, for purposes of determining a right to
recover under this chapter, any person asserting a claim.
(k) "Retain" means the act of a claimant in engaging an
attorney's services, whether by express agreement or impliedly by
seeking and obtaining the attorney's services.
ARTICLE 2. INJURED CONSUMERS LEGAL BILL OF RIGHTS.
§
55A-2-1. Restriction on contact with potential claimant; election
of fee arrangement; right of claimant to receive
written statement of fees and estimated expenses;
public policy suggested maximum fee schedule; right
of cancellation; contingency fee information fact
sheet.
(a) No attorney, or an attorney's representative, may contact
any potential claimant or the claimant's family or representative,
directly or indirectly, within seven days of an event which may
give rise to the claim, for the purpose of securing the claimant as
a client for legal services in connection with such claim. If such
contact has been made, any agreement between the attorney and the
claimant is voidable by the claimant at any time within two years
after the final adjudication of such claim, and the claimant shall
not be liable to the attorney for any compensation or expenses
involved in pursuing the claim. This provision does not apply to
any such contacts made by an attorney purely on a preexisting
personal, family or attorney/client relationship, nor does it
prohibit a claimant from contacting an attorney during such period.
(b) No insurer, or an insurer
'
s representative, may make a
final offer of settlement with any potential claimant or the
claimant's family or representative, directly or indirectly, within
seven days of an event which may give rise to the claim. If such
an offer has been made, any agreement between the insurer and the claimant pursuant thereto is voidable by the claimant at any time
within two years thereafter. This provision does not apply to
other contacts made by the insurer for purposes such as for the
payment of the claimant's expenses or other reasonable assistance
to the claimant.
(c) A claimant who retains an attorney in connection with a
personal injury claim shall have the right to elect whether to
compensate the attorney for services in connection with that
personal injury claim on an hourly basis or on a contingent fee
basis.
(d) An attorney retained by a claimant in connection with a
personal injury claim shall, at the initial meeting, disclose to
the claimant the claimant's right to elect the method of
compensating the attorney's services.
(e) An attorney retained by a claimant in connection with a
personal injury claim shall, before signing a contract to represent
the claimant, disclose in a written statement to the claimant:
(1) The attorney
'
s hourly fee for services in the personal
injury claim and any conditions, limitations, restrictions, or
other qualifications on that fee the attorney deems appropriate;
(2) The attorney's contingent fee for services in the personal
injury claim and any conditions, limitations, restrictions, or
other qualifications on that fee the attorney deems appropriate;
(3) A reasonable estimate of the amount of any costs or expenses that the client must bear; and
(4) All other fee agreements to be made concerning the case,
including the amount to be paid to any cocounsel associated with
the case.
(f) An attorney who contracts to represent a claimant in
accordance with this article shall, at the time the contract is
entered into, provide a duplicate copy of the contract, signed by
both the attorney and the claimant or his or her guardian or
representative, to the claimant or his or her guardian or
representative.
(g) The Legislature hereby adopts the schedule of maximum
contingency fees as contained on the "fee information fact sheet"
referred to in this section as the appropriate maximum fees based
on sound public policy, but does not mandate such fees, allowing
claimants and attorneys to agree to a fee in the open marketplace.
(h) Any agreement for the payment of legal services on a
contingency fee basis may be cancelled in its entirety by the
claimant within three days after the date on which the contract was
signed, and the claimant shall not be assessed any penalty or costs
by the attorney for effecting such cancellation.
(i) If the agreement between the attorney and the claimant
involves a contingency fee, the attorney shall complete the "fee
information fact sheet" below and incorporate it into the contract:
FEE INFORMATION FACT SHEET -- PLEASE READ CAREFULLY: West Virginia law requires all claimants in personal injury cases entering into
an agreement with an attorney to provide legal services on a
contingency fee to be provided with this fact sheet. A contingency
fee is an arrangement by which a claimant pays the attorney a
percentage of the amount awarded for the injury. This can result
in a very substantial fee, and you should consider it very
carefully. The law allows you three days in which to cancel this
agreement, and you are encouraged to seek proposals from at least
two attorneys and compare them. The most important factors, in
addition to the reputation and ability of the attorneys, are the
percentages of the contingency fees and the expenses. You should
ask the attorney about the expenses, including whether you will be
required to pay for some of them before a final award, and whether
you will be required to pay some if your claim is unsuccessful.
PORTION OF AWARD
SUGGESTED MAXIMUM FEEYOUR FEE
On the first $100,000
25 to 35 percent___ percent
On the amount between
$100,000 and $500,000
20 to 25 percent___ percent
On the amount
over $500,000
15 to 20 percent___ percent
TOTAL ESTIMATED EXPENSES
$___________
(includes court costs, expert witness fees, stenographer fees,
etc., and charges)
Expenses will be deducted from (check one):
_____ your portion of the award
_____ the attorney's portion of the award
Itemized Charges:
Photocopies:$ ___ a pageTravel Meal Allotment:
$ ____ a day
Faxes:$ ___ a pageTravel Hotel
Allotment: $ ____ a day
Mileage:$ ___ a mileOther:
_______________________
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
++++
RIGHT OF CANCELLATION
You have three (3) days from the date of this Agreement to
cancel it by signing the statement below and returning it to
the attorney. (You should make a photocopy for your own
safekeeping)
I WISH TO CANCEL THE AGREEMENT WITH _________________ [NAME OF
ATTORNEY] THAT I SIGNED ON ___________________ [DATE YOU
SIGNED CONTRACT]
YOUR SIGNATURE ______________________
DATE OF CANCELLATION ____________
(j) An attorney retained by a claimant in connection with a
personal injury claim shall, within a reasonable time not later
than thirty days after the personal injury claim is finally settled
or adjudicated, disclose in a written statement to the claimant the
total amount of the hourly fees or total contingent fee for the
attorney'
s services in connection with the personal injury claim
and the actual fee per hour of the attorney
'
s services in
connection with the personal injury claim, determined by dividing
the total amount of the hourly fees or the total contingent fee by
the actual number of hours of the attorney
'
s services.
(k) In cases involving a contingency fee in excess of the
"standard public policy maximum fee" as contained in the
"contingency fee information fact sheet" provided under this
article, or where the actual expenses exceeded the estimated
expenses on such "fact sheet" by more than twenty-five percent, the
claimant may request an objective review of the fee and expenses by
a court or a bar association committee to assure that they are
reasonable and fair in the circumstances, based on such factors as
whether liability was contested, whether the amount of damages was
clear, and how much actual time the lawyer would have reasonably
spent on the case.
(l) An attorney who has information relating to periodic
payments awarded to a claimant shall not divulge the name of the
claimant, the amount of the award or any other relevant information
to any person known to the attorney to be interested in converting
such periodic payments to a lump sum. Any person who violates this
provision shall be guilty of a misdemeanor and, upon conviction
thereof, shall be fined not less than five thousand dollars nor
more than ten thousand dollars.
(m) The provisions of this section shall be in addition to and
not in lieu of any other available remedies or penalties.
NOTE: The purpose of this bill is to establish an injured
consumers legal bill of rights which restricts contact by attorneys
and insurers with potential claimants; authorizes claimants to
elect fee arrangement with attorneys; establishes the right of
claimants to receive written statement of fees and estimated
expenses; establishes a suggested maximum contingency fee schedule;
provides a right of cancellation of contingency fee agreement;
requires a contingency fee information fact sheet; and, prohibits
disclosure of names of claimants receiving periodic payments to
persons interested in converting payments to a lump sum. The bill
also provides a criminal penalty for violation of the disclosure
prohibition.
This chapter is new; therefore, strike-throughs and
underscoring have been omitted.