Lawyers in Utah and 12 other states have begun a coordinated campaign to limit the fees their colleagues collect in some lawsuits. They say it is unethical for plaintiffs' lawyers to routinely pocket one-third or more of the money they win for clients, no matter how long or hard they work on a case.
Ethical rules in many states already require lawyers, whether they are paid by the hour or by a percentage of the recovery, to charge only "reasonable fees."
In theory, this means fees should vary with the difficulty of the case, the expertise of the lawyer, the time required and the result obtained.
But in practice, the lawyers urging the change say, contingency fees are uniformly 33 percent in most places and 40 percent in others. They say that plaintiffs' lawyers charge such fees even when a big settlement is quick, fixed and certain.
The new proposal would limit contingency fees in most cases to 10 percent of the first $100,000 of a settlement, and 5 percent of anything more. Common Good, an advocacy group pushing for the change, has enlisted the help of some lawyers in filing petitions for the change with state supreme courts, bar associations or ethics commissions in 13 states — Alabama, Arizona, California, Colorado, Maryland, Mississippi, New Jersey, New York, Ohio, Oklahoma, Texas, Utah and Virginia.
With the exception of the petition in Texas, all were filed in the last few weeks. The Colorado petition was filed on Friday.
Legal experts are sharply divided on whether such fees are a problem and whether lowering them makes sense.
The new proposal would require the plaintiff's lawyer to send a letter to the defendant at the start of the case, describing the injury and the reason the defendant was liable for it. The defendant would not be required to make a settlement offer, and the plaintiff would not be required to accept one. But if the defendant did make an offer and the plaintiff accepted it, the plaintiff's lawyer would be entitled to no more than 10 percent of the first $100,000 and 5 percent of anything more.
If plaintiffs' lawyers did not send the letter, their fees would be capped at those levels no matter how long or hard they worked on the case.
"The proposal is really elegantly simple," said Nancy Udell, the general counsel of Common Good, which is dedicated to changing what it calls the lawsuit culture. "The only thing this does is make sure that if there is an offer and if it is early, that 90 percent of the offer goes to the injured person. The only thing this does is encourage early settlements."
She added that the proposal would encourage defendants to make larger early settlement offers. Among the reasons for this, she said, are that defense lawyers tend to be paid by the hour and have incentives to prolong cases, that early settlement offers have until now been considered a sign of weakness, and that delay can be a way to wear plaintiffs down.
There appears to be little price competition in contingency fees, supporters of the proposal said. A study by Jeffrey O'Connell, a law professor at the University of Virginia, found that only seven of more than 1,400 advertisements by lawyers in the Yellow Pages of the telephone directories in 12 big cities stated the percentage to be charged. It averaged 31 percent.
Herbert M. Kritzer, who teaches political science at the University of Wisconsin in Madison, said it is significant that few consumers of the services of personal injury lawyers complain.
Then again, few customers are able to draw on an earlier experience to try to negotiate a better deal the second time around.
Susan Sheridan said she was an exception. Sheridan, 43, a former banking executive who lives in Eagle, Idaho, said she had been devastated twice by the medical system and had been sorely disappointed by the legal system.
Her son Cal, 8, was born healthy but suffered brain damage when the jaundice he developed in his first week went untreated. The litigation that followed was, she said, long, ugly and costly on all sides. It was settled for a confidential amount this year, after seven years of litigation. The Sheridans' lawyer took 40 percent of the settlement.
When the spinal cancer of her husband, Pat, was misdiagnosed in 1999, the Sheridans said they thought they had learned something from the first lawsuit. They consulted a series of lawyers in Phoenix, where he had been treated, asking them to drop their fees and handle the matter through a quick and informal mediation.
All of the lawyers insisted on a standard cut of the settlement.
"It was 40 percent, take it or leave it," said Martin J. Hatlie, who helped the Sheridans search for a lawyer. Pat Sheridan has since died.
It did not matter to the lawyers how quickly the case might be resolved, Susan Sheridan said.
"They looked at us like we were speaking a foreign language," she said.