Yesterday we discussed the latest Center for Justice & Democracy‘s report on the importance of contingency fee arrangements in personal injury cases. We explained how the arrangments work to open access to the civil justice system and align client/attorney interests to improve the efficiency of the system. It is worth looking at the full report to gain an even more detailed perspective into how these issues work.
One of the reasons that understanding contingency arrangments are important is because there are some attempts to limit the rights of parties to use these agreements. States across the country have passed legislation related to these agreements, often limiting the rights of parties to contract openly in the pursuit of access to justice.
On one hand, it woule seem straightforward that private individuals would be able to reach whatever agreement they like with their counsel to best meet their needs. However, the freedom of contract is far from complete, as there are often laws in place to limit private contracts.
When it comes to contingency agreements, some states have rules in place which limit what percentage of an award an attorney can collect. Often, these limits are on a “sliding scale” with a smaller overall percentage allowed to be taken on settlment amounts over a certain value.
What effect do these limits have?
Those pushing these limits are, not surprisingly, large insurance companues and chronic defendants. They attempt to sell the policies as “pro consumer” issues, allowing parties to keep a larger portion of their award. However, this completely ignores the reality that plaintiff’s attorneys are forced to make decisions about how much money they can front for cases based on how much they can expect to receive in a settlment. For example, in many complex cases (including Chicago nursing home abuse cases with tricky medical issues), attorneys are forced to spend tens of thousands of dollars (or much more) just to keep things moving. As a business matter, the firm cannot survive by fronting that money with limits of their recovery.
All of this usually works to the disadvantage of plaintiffs with the most severe injuries and the potenial for significant recovery. That is because, these cases often cost much more to take to court. But with limits on recovery, many attorneys would be unable to justify spending the funds to do so. All the while, defendants are free to hire the best attorneys.
New Contingency Fee Agreement in Illinois
Fortunately, our state is a national example of changes in the right direction. As we have noted, Governor Pat Quinn recently signed a bill into law which removes the “sliding scale” limit on contingency fee arrangements in certain personal injury cases related to medical malpractice. Instead, a flat ⅓ limit on recovery is now the law. This straighforward new rule best balances the need for fair compensation to cover costs and keep access open to all community members.
Our firm applauds those lawmakers who supported this common sense change in rules to preserve open access to the civil justice systme in our state.
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