By Corte H.B. No. 37 76R1655 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 a 2-17 demand or settlement offer is not admissible for any purpose in an 2-18 arbitration or judicial or other proceeding between a claimant and 2-19 an 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 any health care provider 3-20 who provided care or services as a result of the injury, death, or 3-21 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 economic or noneconomic damages 4-3 suffered as a result of the injury, death, or other loss, including 4-4 documentation of any amount included in the demand for medical 4-5 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 an 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) before the allegedly responsible party 5-9 receives a demand for compensation; or 5-10 (B) not later than the 60th day after the 5-11 date the allegedly responsible party receives a demand for 5-12 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)(B). 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, 1999, 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.