By Corte H.B. No. 24
77R842 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 44.005-44.050 reserved for expansion
2-21 SUBCHAPTER B. CLAIMANT'S DEMAND FOR COMPENSATION
2-22 Sec. 44.051. 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. 44.052. 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. 44.053. 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 44.051 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 44.051 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 44.051 may not collect a fee that
4-27 exceeds the amounts provided by Section 44.151 with respect to an
5-1 amount recovered from that allegedly responsible party.
5-2 (Sections 44.054-44.100 reserved for expansion
5-3 SUBCHAPTER C. QUALIFIED SETTLEMENT OFFER
5-4 Sec. 44.101. 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 date
5-11 the allegedly responsible party receives a demand for compensation;
5-12 (2) is made in writing and sent to the claimant's
5-13 attorney;
5-14 (3) provides that it may be accepted by the claimant
5-15 at least until the 30th day after the date the claimant's attorney
5-16 receives the offer; and
5-17 (4) is accompanied by the material described by
5-18 Section 44.102.
5-19 (b) An allegedly responsible party may amend a qualified
5-20 settlement offer or may make an additional qualified settlement
5-21 offer before any settlement offer is accepted and before the
5-22 expiration of the 60-day period established by Subsection
5-23 (a)(1)(B). This additional offer is subject to the requirements of
5-24 this section and Section 44.102.
5-25 Sec. 44.102. MATERIAL TO ACCOMPANY QUALIFIED SETTLEMENT
5-26 OFFER. An allegedly responsible party must include with a
5-27 qualified settlement offer any material information and documentary
6-1 evidence in the party's possession relating to the alleged injury,
6-2 death, or loss that the party relied on in making the offer,
6-3 including:
6-4 (1) copies of photographs that relate to the injury,
6-5 death, or other loss;
6-6 (2) the basis for making any claim that the allegedly
6-7 responsible party is not responsible for the injury, death, or
6-8 loss, if applicable; and
6-9 (3) other information relating to the injury, death,
6-10 or loss suffered.
6-11 Sec. 44.103. SETTLEMENT OFFER NOT REQUIRED. An allegedly
6-12 responsible party is not required to respond to a demand for
6-13 compensation or to make a qualified settlement offer.
6-14 Sec. 44.104. COMMUNICATION OF OFFER TO CLIENT. A claimant's
6-15 attorney who receives a qualified settlement offer shall provide a
6-16 copy of the offer to the claimant.
6-17 (Sections 44.105-44.150 reserved for expansion
6-18 SUBCHAPTER D. LIMITATIONS ON CONTINGENT FEES
6-19 Sec. 44.151. SETTLEMENT OFFER ACCEPTED. (a) An attorney who
6-20 represents a claimant who has accepted a qualified settlement offer
6-21 may not collect a contingent fee that exceeds 15 percent of the
6-22 qualified settlement offer.
6-23 (b) For purposes of computing the maximum permissible
6-24 contingent fee under this section, the reasonable costs and
6-25 expenses incurred by the attorney before the date of acceptance of
6-26 the qualified settlement offer are deducted from the amount of the
6-27 offer.
7-1 Sec. 44.152. SETTLEMENT OFFER NOT ACCEPTED. (a) An
7-2 attorney who represents a claimant who receives a qualified
7-3 settlement offer but who does not accept that offer may not collect
7-4 a contingent fee that exceeds the total of:
7-5 (1) 15 percent of the qualified settlement offer; and
7-6 (2) a percentage of that portion of the claimant's
7-7 recovery that exceeds the amount of the qualified settlement offer.
7-8 (b) The percentage referred to in Subsection (a)(2) may not
7-9 exceed the percentage agreed to in writing by the claimant and the
7-10 claimant's attorney.
7-11 (c) For purposes of computing the maximum permissible
7-12 contingent fee under this section, the reasonable costs and
7-13 expenses incurred by the attorney before the last date the
7-14 qualified settlement offer could be accepted are deducted from the
7-15 amount of the offer.
7-16 Sec. 44.153. ADDITIONAL FEE LIMITATIONS. Notwithstanding
7-17 any other provision of this chapter, a claimant's attorney may not
7-18 receive a fee greater than 15 percent of the claimant's recovery,
7-19 if the attorney:
7-20 (1) does not make a demand for compensation under this
7-21 chapter;
7-22 (2) omits from the demand material information
7-23 required by Section 44.052 that is:
7-24 (A) in the possession of the attorney; or
7-25 (B) readily available to the attorney; or
7-26 (3) fails to communicate a qualified settlement offer
7-27 as required by Section 44.104.
8-1 SECTION 2. (a) This Act takes effect September 1, 2001, and
8-2 applies only to a claim for which a claimant retains an attorney on
8-3 or after that date. A claim for which a claimant has retained an
8-4 attorney before the effective date of this Act is governed by the
8-5 law in effect at the time the attorney was retained, and that law
8-6 is continued in effect for that purpose.
8-7 (b) An attorney is retained before the effective date of
8-8 this Act for purposes of this section if any attorney, including an
8-9 attorney who has withdrawn, is retained by the claimant to handle
8-10 the claim.