Limits contingent fees to attorneys in actions for property damage or personal injury, including death

BILL NUMBER:S5499

Title of bill

An act to amend the judiciary law, in relation to contingent fees for attorneys

Purpose

Limits contingent fees to attorneys in actions for property damage or personal injury, including death

Summary of provisions

Section 1: Amends section 474-a of judiciary law.

Section 2: Sets the effective date.

Justification

Under traditional contingency fee rules, personal injury trial lawyers stand to take 1/3 of the amount recovered plus expenses. Individual payouts under the proposed settlement could range anywhere from $3200 to $2 million, but would be reduced to nearly half that amount with this legislation.

In response to past medical malpractice insurance crises, New York State enacted a law to statutorily limit the percentage that a malpractice attorney can take from a plaintiffs award. The statutory limitation on contingency fees diminishes the incentive for personal injury trial lawyers to drag out litigation and would discourage frivolous claims. It assures the attorney is adequately compensated by a sliding fee scale that provides the traditional 1/3 of smaller recoveries but only 10 percent for amounts over 1.25 Million.

These limitations help to ensure a plaintiff is fairly compensated for his or her injury, and that major parts of the awards are not diverted to pay what are often huge attorney fees in addition to all other disbursements that a suing plaintiff must reimburse to their attorney. Under the current law, attorneys are well compensated in medical liability actions, in the case of a $1 million award, for example, an attorney receive a fee of $237,500 rather than $333,333.

Legislative history

2009/10 - A.10695 - Held in Judiciary 2011/12 - A.1558 - Held in Judiciary 2013/2014- A.5190 - Held in judiciary

Fiscal implications

To be determined.

Effective date

This act shall take effect immediately.