Introduced Version Senate Bill 637 History

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Senate Bill No. 637
(By Senator Sprouse)
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[Introduced March 21, 2005; referred to the Committee
on the Judiciary.]
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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: _______________________

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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.