Proposed Michigan Legislation Would Cap Attorney Fees, Limit Right to Contract

    May 28, 2007
    Michigan Lawyers Weekly
    By Melissa P. Stewart


    With the state's budget crisis looming large, it seems like saving money has been on everyone's mind.

    But, while other representatives and senators debated tax hikes and spending cuts, Rep. Bruce Caswell (R-Hillsdale) shifted his focus to another cost altogether - the cost clients pay to retain attorneys with a contingency agreement.

    As the sole sponsor of House Bill 4267, Caswell introduced a plan to limit an attorney's contingency fees to one-third of the first $1 million collected, 15 percent of the next $4 million, and 10 percent of any amount exceeding $5 million.

    If passed, the bill would modify MCL 600.919, which currently allows attorneys and clients significant flexibility to contract for a fee arrangement that best suits the particular case. That is, under the statute as presently codified, attorneys are restricted by only the limited constraints imposed by the Michigan Supreme Court. (See sidebar, "Attempted amendment. ")

    Interestingly, Caswell's bill is not the first attempt to amend the statute and limit fees. In fact, different versions of his measure have popped up in at least the past two legislative sessions.

    But, when asked why Caswell - who is not himself a lawyer - chose to reintroduce a bill that had failed in two consecutive terms, his legislative assistant David Martin gave no response, telling Lawyers Weekly instead that the representative "was not interested in the article. "

    Picking priorities

    Currently, the bill sits before the Michigan House Judiciary Committee, where it has held steady for more than three months. And, if history is any indication, that is exactly where it will stay.

    Committee chairperson Rep. Paul Condino (D-Southfield) said, "HB 4267 has been assigned to [us], [but] it is not anywhere on our list of bills to consider any time soon. "

    According to Condino, the committee "has [its] plate full with bills that are important to help end the state's fiscal crisis, such as sentencing guideline bills and parole guideline bills. "

    What's more, he suggested, "the bill, as introduced, would severely limit the ability of the working poor and middle class to have access to civil redress and access to judicial resources. "

    For Condino, "this is not only unreasonable but unconscionable. "

    Unilateral opposition

    Perhaps unsurprisingly, attorneys across the state - from the State Bar's Negligence section to the Michigan Trial Lawyers Association and the Michigan Trial Defense Council - wholeheartedly agree. (See sidebar, "Across the board. ")

    Standing in fierce opposition to the bill, Negligence Section spokesperson Jose T. Brown criticized it as "politically expedient ... because it attacks lawyers, who generally have a poor reputation with the public. "

    Moreover, he said if the bill passed it would "exclud[e] an entire class of people access to the court ... [because] you have people who are not able to pay an hourly fee being excluded access to the courts. "

    And, for Brown, "that's not justice. "

    However, he predicted, even if it passed, it's unlikely the bill could withstand constitutional muster.

    Not only would it "deny[] indigent people access to the court," but it would also "limit[] an individual's right to contract," he said. "Everyone in this country has the right to enter into arms-length agreements with plumbers, electricians, etc. without any impediment. "

    But here, Brown concluded, the bill would create an unconstitutional roadblock because "an impediment [is created] when the fees are capped. "

    Attempted amendment

    In its current incarnation, MCL 600.919 provides: "The measurement of the compensation of members of the bar is left to the express or implied agreement of the parties subject to the regulation of the supreme court. "

    It further stipulates that "[a]ny agreement for such compensation, or for reimbursement of any expenses, incident to the prosecution or defense of any claim by any party is wholly void if such professional employment was solicited by the member of the bar or by any person acting on his behalf or at his request, unless the services of such member of the bar were first requested by such party. "

    In other words, attorneys and their clients may agree to any form and amount of payment, as long as it falls within the Michigan Supreme Court's requirements and the lawyer did not directly seek out the client.

    Accordingly, since the only restriction the high court has placed on the bar comes in the form of Michigan Court Rule (MCR) 8.121 - which limits contingency fee agreements to no more than "one-third the amount recovered" - Michigan's attorneys have been relatively free to make fee arrangements with a client based on individual circumstances.

    But, for the past three years, some legislators have challenged the status quo.

    Specifically, on Sept. 9, 2004, former Rep. Shelley Taub (R-Bloomfield Hills) introduced House Bill 6179, which was co-sponsored by 30 of her colleagues and sought to limit contingency fees garnered in medical malpractice cases to no more than one-fourth of the amount recovered.

    Though her first bill didn't survive committee, Taub was undeterred and introduced a similar bill less than one year later.

    This time, she broadened her scope to include all personal injury and wrongful death claims, and proposed a more graduated pay scale. That is, in House Bill 5024, she called for contingency fees to be limited to one-third of the first $300,000 recovered, one-fourth of the next $700,000, 15 percent of the next $4 million and 10 percent of anything over $5 million.

    Despite the modifications, however, Taub's bill again stalled in committee, eventually dying when the 2005-06 legislative session ended.

    Rep. Bruce Caswell (R-Hillsdale) was the next legislator to pick up the cause, and on Feb. 13, 2007, he introduced House Bill 4267, which - like its predecessors - sought to cap contingency fees on all personal injury and wrongful death claims on a sliding scale.

    Perhaps looking to boost support for the caps, Caswell increased the limits to one-third of the first $1 million, 15 percent of the next $4 million, and 10 percent of any amount recovered over $5 million.

    Currently, Caswell's bill sits before the House Judiciary Committee, and only time will tell whether it meets a similar fate as its predecessors.

    Across the board

    Even though members of the plaintiffs' bar and the defense bar generally spend their days on opposite sides of the fence, comments made by representatives of both the Michigan Trial Lawyers Association (MTLA) and the Michigan Defense Trial Council (MDTC) indicate that litigators across the state oppose House Bill 4267.

    According to Terrence J. Miglio, president of the MDTC, the bill "is unnecessary and appears to be a political attempt to suggest that there is something wrong or defective with the civil trial system or with lawyers that represent clients within that system. "

    What's more, he said, the MDTC also does not support HB 4267 because "the fee relationship between a plaintiff and his or her attorney is already addressed by MCR 8.121. "

    And, Miglio suggested, "any change in the rules governing [that] relationship ... should emerge from a process that includes considerable input from lawyers, such as the procedure for amending the court rules. "

    Meanwhile, MTLA president Jesse M. Reiter added that "contingency fees - which have been around in this country for nearly 200 years - allow people to have access to the courts in order to discourage harmful, negligent and reckless conduct and to be compensated [when] they have been injured by such conduct. "

    In Reiter's estimation, not only would the caps proposed in HB 4267 "deter people with just claims from being able to hold those who have harmed [them] responsible," but the caps would also "interfere with the free market system" that currently determines fees.

    As such, he said, "there is bipartisan opposition to [the] unfair, unjust proposal."



National Association of Criminal Defense Lawyers (NACDL)
1660 L St., NW, 12th Floor, Washington, DC 20036
(202) 872-8600 • Fax (202) 872-8690 • assist@nacdl.org