PRINTER'S NO. 1725
No. 1529 Session of 1993
INTRODUCED BY MASLAND, TRICH, FLICK, NAILOR, S. H. SMITH, FAJT,
STISH, CHADWICK, ARMSTRONG, HECKLER, CARONE, HUTCHINSON,
SCHEETZ, PLATTS, FARGO, MAITLAND, WAUGH, EGOLF AND TOMLINSON,
MAY 5, 1993
REFERRED TO COMMITTEE ON JUDICIARY, MAY 5, 1993
AN ACT
1 Amending Title 42 (Judiciary and Judicial Procedure) of the
2 Pennsylvania Consolidated Statutes, providing for contingent
3 fees.
4 The General Assembly finds and declares that there is a major
5 crisis in this Commonwealth with respect to malpractice cases in
6 particular and negligence cases in general. This crisis is
7 attributable to skyrocketing premium costs for all
8 Pennsylvanians and could eventually result in the collapse of
9 the health care delivery system, create hardships for the
10 medically indigent, deny access to care and insurance for the
11 economically marginal, substantially worsen the quality of
12 health care in particular and life in general available to
13 citizens of this Commonwealth and lead to the demise of our
14 civil justice system. Therefore, the General Assembly finds that
15 the statutory remedy provided in this act will begin to
16 reasonably address one aspect of this impending crisis.
17 The General Assembly of the Commonwealth of Pennsylvania
1 hereby enacts as follows:
2 Section 1. Title 42 of the Pennsylvania Consolidated
3 Statutes is amended by adding a section to read:
4 § 2526. Contingent fees.
5 (a) Contingent fee limits.--In any action based on tort,
6 contract law or otherwise to recover damages for personal
7 injury, death or property damage, an attorney representing any
8 party to such an action shall not contract for, charge or
9 collect on a contingent fee basis any fee for his services in
10 excess of the following limits:
11 (1) 40% of the first $50,000 recovered;
12 (2) 33 1/3% of the next $100,000 recovered;
13 (3) 25% of the next $350,000 recovered; and
14 (4) 15% of any amount by which the recovery exceeds
15 $500,000.
16 (b) Calculation.--The permissible fee provided for in
17 subsection (a) shall be computed on the net amount recovered
18 after deducting disbursements in connection with the initiation
19 and prosecution of the claim, regardless of who advances the
20 disbursements, including investigation expenses, expenses for
21 expert or other testimony or evidence, the cost of briefs and
22 transcripts on appeal and any interest included in a judgment,
23 but no deduction needs to be made for liens, assignments or
24 claims in favor of hospitals or for medical care and treatment
25 by physicians and nurses, or similar items. The permissible fee
26 shall include legal services rendered on any appeal or review
27 proceeding or on any retrial, but this provision shall not be
28 deemed to require an attorney to take an appeal. If
29 representation is undertaken on behalf of both a husband and
30 wife, or parent or guardian and child in a derivative action, or
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1 a claim for wrongful death is joined with a claim on behalf of a
2 decedent, the contingent fee shall be calculated on the
3 aggregate sum of the recovery.
4 (c) Multiple parties.--When representation is undertaken on
5 behalf of several persons or a class of persons whose respective
6 claims, whether or not joined in one action, arise out of the
7 same transaction or set of facts or involve substantially
8 identical liability issues, the contingent fee shall be
9 calculated on the basis of the aggregate sum of all recoveries,
10 whether by judgment or settlement, or both, and shall be charged
11 to the clients in proportion to the recovery of each.
12 (d) Purpose of section.--Subsection (a) is intended to fix
13 maximum permissible fees and does not preclude an attorney from
14 charging, entering into a contingent fee arrangement providing
15 for or collecting a lesser contingent fee.
16 (e) Petition for additional fee.--If at the conclusion of a
17 matter an attorney considers the fee permitted by subsection (a)
18 to be inadequate, an application on written notice to the client
19 may be made to the court in the manner prescribed by its general
20 rules. The court may grant an increase in the maximum contingent
21 fee permitted under subsection (a) only upon the presentation of
22 clear and convincing evidence of unusual, specific facts or
23 circumstances which warrant compensation in excess of that
24 provided in this section. This subsection shall be supplementary
25 to and shall not repeal or otherwise affect the exercise of any
26 right a client may have to a court review of the reasonableness
27 of an attorney's fee.
28 (f) Violations.--
29 (1) A contingent fee arrangement that is made in
30 violation of this section shall be void and unenforceable.
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1 (2) A person who is affected by a violation of this
2 section shall have the substantive right to bring an action
3 on his own behalf for damages by reason of the violation,
4 together with costs, including reasonable attorney fees, and
5 such other relief to which the person may be entitled under
6 law.
7 (3) If the Attorney General has reason to believe that a
8 person has violated this section, he shall have standing to
9 bring a civil action for injunctive relief and such other
10 relief as may be appropriate to secure compliance with this
11 section. This remedy shall be supplementary to and shall not
12 repeal or otherwise affect any remedy or penalty provided by
13 statute or rules of the Supreme Court.
14 (g) Definitions.--As used in this section, the following
15 words and phrases shall have the meanings given to them in this
16 subsection:
17 "Action." A civil action which contains one or more claims
18 for relief based upon alleged tortious conduct, and an appeal of
19 such civil action.
20 "Amount recovered." The amount awarded in an action or in
21 the settlement of a claim based upon alleged tortious conduct,
22 as calculated in accordance with the provisions of this section.
23 "Contingent fee." An agreement for legal services of an
24 attorney or attorneys, including any associated or forwarding
25 counsel, under which compensation is contingent, in whole or in
26 part, upon the successful accomplishment or disposition of the
27 subject matter of the agreement and under which the compensation
28 is a fixed amount or is to be determined pursuant to a specified
29 formula.
30 Section 2. The provisions of this act are severable. If any
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1 provision of this act or its application to any person or
2 circumstance is held invalid, the invalidity shall not affect
3 other provisions or applications of this act which can be given
4 effect without the invalid provision or application.
5 Section 3. All acts and parts of acts are repealed insofar
6 as they are inconsistent with this act.
7 Section 4. This act shall take effect in 60 days.
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