By Haywood S.B. No. 427
75R1217 DLF-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to protection of injured parties by certain limitations on
1-3 the amount of attorney's contingency fees after a settlement or
1-4 settlement offer.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Subtitle C, Title 2, Civil Practice and Remedies
1-7 Code, is amended by adding Chapter 44 to read as follows:
1-8 CHAPTER 44. ATTORNEY'S FEES FOLLOWING SETTLEMENT
1-9 OR SETTLEMENT OFFER
1-10 SUBCHAPTER A. GENERAL PROVISIONS
1-11 Sec. 44.001. DEFINITIONS. In this chapter:
1-12 (1) "Allegedly responsible party" means a person
1-13 alleged by the claimant to be responsible for at least some portion
1-14 of the injury, death, or loss alleged by the claimant.
1-15 (2) "Claimant" means an individual, including a
1-16 plaintiff, counterclaimant, cross-claimant, or third-party
1-17 claimant, seeking compensation for damages in a tort claim,
1-18 including damages for personal injury or death.
1-19 (3) "Contingent fee" means a fee that is payable from
1-20 the proceeds of a claimant's recovery without regard to the manner
1-21 in which the fee is calculated.
1-22 (4) "Qualified settlement offer" means a settlement
1-23 offer made in accordance with Subchapter C.
1-24 (5) "Recovery" means the total compensation, including
2-1 the total value of compensation other than money, obtained through
2-2 the efforts of an attorney on behalf of a claimant through
2-3 settlement, arbitration, or judgment, less the reasonable costs and
2-4 expenses incurred by the attorney in prosecuting or settling the
2-5 claim.
2-6 Sec. 44.002. SCOPE OF CHAPTER. (a) This chapter does not
2-7 apply to a claim for which an attorney is not retained or for which
2-8 a contingent fee is not charged.
2-9 (b) This chapter does not apply to a claim for workers'
2-10 compensation benefits.
2-11 Sec. 44.003. WRITTEN COMMUNICATION. A person required by
2-12 this chapter to mail a written communication must send the
2-13 communication by United States certified mail.
2-14 Sec. 44.004. CERTAIN EVIDENCE INADMISSIBLE. The fact that a
2-15 demand for compensation was or was not made, the fact that a
2-16 qualified settlement offer was or was not made, or the amount of
2-17 any demand or settlement offer is not admissible for any purpose in
2-18 an arbitration or judicial or other proceeding between a claimant
2-19 and any allegedly responsible party.
2-20 (Sections 44.005-44.020 reserved for expansion
2-21 SUBCHAPTER B. CLAIMANT'S DEMAND FOR COMPENSATION
2-22 Sec. 44.021. DEMAND FOR COMPENSATION. An attorney
2-23 representing a client for a contingent fee shall mail a written
2-24 demand for compensation to each allegedly responsible party known
2-25 to the attorney. The attorney shall simultaneously mail all the
2-26 demands.
2-27 Sec. 44.022. CONTENTS OF DEMAND. The demand for
3-1 compensation must specify the amount of compensation sought and
3-2 must include the material facts, documentary evidence, and other
3-3 information relevant to the claim, including:
3-4 (1) the name and address of the claimant or of the
3-5 injured or deceased person, as appropriate;
3-6 (2) a brief description of how the injury, death, or
3-7 other loss occurred;
3-8 (3) the name and, if known, the address and telephone
3-9 number of each known witness to the injury, death, or other loss;
3-10 (4) copies of photographs in the claimant's possession
3-11 that relate to the injury, death, or other loss;
3-12 (5) the basis for alleging that the party to whom the
3-13 demand is addressed is responsible or partially responsible for the
3-14 injury, death, or other loss;
3-15 (6) a description of the nature of the injury, death,
3-16 or other loss;
3-17 (7) the dates and nature of care or services provided
3-18 as a result of the injury, death, or other loss;
3-19 (8) the name and address of each health care provider,
3-20 if any, who provided care or services as a result of the injury,
3-21 death, or other loss;
3-22 (9) medical records relating to the injury, death, or
3-23 other loss, including records involving a prior injury or
3-24 preexisting medical condition that an allegedly responsible party
3-25 would be entitled to obtain in discovery during the course of
3-26 litigation or executed releases authorizing the allegedly
3-27 responsible party to obtain the medical records directly from each
4-1 health care provider that provided care; and
4-2 (10) documentation of any economic or noneconomic
4-3 damages suffered as a result of the injury, death, or other loss,
4-4 including documentation of any amount included in the demand for
4-5 medical expenses, lost wages, or personal losses.
4-6 Sec. 44.023. LATER-DISCOVERED PARTY. (a) A claimant's
4-7 attorney who learns of an additional allegedly responsible party on
4-8 or before the 90th day after the date a demand for compensation
4-9 under Section 44.021 is mailed shall mail a written demand for
4-10 compensation to the later-discovered allegedly responsible party.
4-11 (b) At the same time the demand is mailed to the
4-12 later-discovered allegedly responsible party, the claimant's
4-13 attorney shall mail a copy of the demand addressed to that party to
4-14 each other allegedly responsible party and the claimant.
4-15 (c) A claimant's attorney who learns of an additional
4-16 allegedly responsible party after the 90th day after the date a
4-17 demand for compensation under Section 44.021 is mailed:
4-18 (1) is not required to send a demand to that party;
4-19 and
4-20 (2) except as provided by Subsection (d), is not
4-21 subject to the fee limitations of this chapter with respect to any
4-22 amount recovered from that later-discovered party.
4-23 (d) A claimant's attorney who, as a result of a breach of
4-24 the applicable standard of care, fails to learn of an allegedly
4-25 responsible party before the 90th day after the date the written
4-26 demand is mailed under Section 44.021 may not collect a fee that
4-27 exceeds the amounts provided by Section 44.061 with respect to any
5-1 amount recovered from that allegedly responsible party.
5-2 (Sections 44.024-44.040 reserved for expansion
5-3 SUBCHAPTER C. QUALIFIED SETTLEMENT OFFER
5-4 Sec. 44.041. QUALIFIED SETTLEMENT OFFER. (a) An offer by an
5-5 allegedly responsible party to settle a claim is a qualified
5-6 settlement offer if the offer:
5-7 (1) is made:
5-8 (A) not later than the 60th day after the
5-9 date the allegedly responsible party receives a demand for
5-10 compensation; or
5-11 (B) before the allegedly responsible party
5-12 receives a demand for compensation;
5-13 (2) is made in writing and sent to the claimant's
5-14 attorney;
5-15 (3) provides that it may be accepted by the claimant
5-16 at least until the 30th day after the date the claimant's attorney
5-17 receives the offer; and
5-18 (4) is accompanied by the material described by
5-19 Section 44.042.
5-20 (b) An allegedly responsible party may amend a qualified
5-21 settlement offer or may make an additional qualified settlement
5-22 offer before any settlement offer is accepted and before the
5-23 expiration of the 60-day period established by Section
5-24 44.041(1)(A). This additional offer is subject to the requirements
5-25 of this section and Section 44.042.
5-26 Sec. 44.042. MATERIAL TO ACCOMPANY QUAlIFIED SETTLEMENT
5-27 OFFER. An allegedly responsible party must include with a
6-1 qualified settlement offer any material information and documentary
6-2 evidence in the party's possession relating to the alleged injury,
6-3 death, or loss that the party relied on in making the offer,
6-4 including:
6-5 (1) copies of photographs that relate to the injury,
6-6 death, or other loss;
6-7 (2) the basis for making any claim that the allegedly
6-8 responsible party is not responsible for the injury, death, or
6-9 loss, if applicable; and
6-10 (3) other information relating to the injury, death,
6-11 or loss suffered.
6-12 Sec. 44.043. SETTLEMENT OFFER NOT REQUIRED. An allegedly
6-13 responsible party is not required to respond to a demand for
6-14 compensation or to make a qualified settlement offer.
6-15 Sec. 44.044. COMMUNICATION OF OFFER TO CLIENT. A claimant's
6-16 attorney who receives a qualified settlement offer shall provide a
6-17 copy of the offer to the claimant.
6-18 (Sections 44.045-44.060 reserved for expansion
6-19 SUBCHAPTER D. LIMITATIONS ON CONTINGENT FEES
6-20 Sec. 44.061. SETTLEMENT OFFER ACCEPTED. (a) An attorney who
6-21 represents a claimant who has accepted a qualified settlement offer
6-22 may not collect a contingent fee that exceeds 15 percent of the
6-23 qualified settlement offer.
6-24 (b) For purposes of computing the maximum permissible
6-25 contingent fee under this section, the reasonable costs and
6-26 expenses incurred by the attorney before the date of acceptance of
6-27 the qualified settlement offer are deducted from the amount of the
7-1 offer.
7-2 Sec. 44.062. SETTLEMENT OFFER NOT ACCEPTED. (a) An
7-3 attorney who represents a claimant who receives a qualified
7-4 settlement offer but who does not accept that offer may not collect
7-5 a contingent fee that exceeds the total of:
7-6 (1) 15 percent of the qualified settlement offer; and
7-7 (2) a percentage of that portion of the claimant's
7-8 recovery that exceeds the amount of the qualified settlement offer.
7-9 (b) The percentage referred to in Subsection (a)(2) may not
7-10 exceed the percentage agreed to in writing by the claimant and the
7-11 claimant's attorney.
7-12 (c) For purposes of computing the maximum permissible
7-13 contingent fee under this section, the reasonable costs and
7-14 expenses incurred by the attorney before the last date the
7-15 qualified settlement offer could be accepted are deducted from the
7-16 amount of the offer.
7-17 Sec. 44.063. ADDITIONAL FEE LIMITATIONS. Notwithstanding
7-18 any other provision of this chapter, a claimant's attorney may not
7-19 receive a fee greater than 15 percent of the claimant's recovery,
7-20 if the attorney:
7-21 (1) does not make a demand for compensation under this
7-22 chapter;
7-23 (2) omits from the demand material information
7-24 required by Section 44.022 that is:
7-25 (A) in the possession of the attorney; or
7-26 (B) readily available to the attorney; or
7-27 (3) fails to communicate a qualified settlement offer
8-1 as required by Section 44.044.
8-2 SECTION 2. (a) This Act takes effect September 1, 1997, and
8-3 applies only to a claim for which a claimant retains an attorney on
8-4 or after that date. A claim for which a claimant has retained an
8-5 attorney before the effective date of this Act is governed by the
8-6 law in effect at the time the attorney was retained, and that law
8-7 is continued in effect for that purpose.
8-8 (b) An attorney is retained before the effective date of
8-9 this Act for purposes of this section if any attorney, including an
8-10 attorney who has withdrawn, is retained by the claimant to handle
8-11 the claim.
8-12 SECTION 3. The importance of this legislation and the
8-13 crowded condition of the calendars in both houses create an
8-14 emergency and an imperative public necessity that the
8-15 constitutional rule requiring bills to be read on three several
8-16 days in each house be suspended, and this rule is hereby suspended.