HBA-CMT H.B. 24 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 24 By: Corte Civil Practices 3/27/2001 Introduced BACKGROUND AND PURPOSE Over the past several years, the Texas Legislature has shown a willingness to pursue tort reform issues. Trial lawyers generally work for contingency fees that are based on a certain percentage of winnings or settlements of cases. Often these fees can be more than 30 percent of the money offered or received in the suit. This causes some lawyers to pursue large sums of money by convincing their clients to sue for every possible damage that can be brought in the case. Reducing the number of these lawsuits could result in lower rates for goods and services by reducing some of the liability insurance burden that companies feel they have to carry to settle suits with lawyers. House Bill 24 caps an attorney's contingency fees to no more than 15 percent of a client's compensation. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS House Bill 24 amends the Civil Practice and Remedies Code to limit the amount of contingency fees an attorney is authorized to collect after a settlement or settlement offer is accepted. The bill requires an attorney representing a client for a contingent fee to send by United States certified mail a written demand for compensation to each allegedly responsible party known to the attorney. All demands are required to be mailed simultaneously. The bill establishes the information to be included in the demand. The bill requires a claimant's attorney who discovers additional parties on or before the 90th day after the demand for compensation has been mailed to mail simultaneously a written demand to the additional parties, as well as each allegedly responsible party and claimant. If an attorney discovers after the 90th day any additional alleged responsible parties, an attorney is not required to send a demand, nor will the attorney be subject to the fee limitations unless the failure to discover additional parties was a result of a breach of the applicable standard of care. H.B. 24 sets forth provisions stating when a settlement offer becomes a qualified settlement offer. The bill authorizes an allegedly responsible party to amend a qualified settlement offer or make an additional qualified settlement offer before any offer is accepted and before the expiration of the stipulated 60-day period. The amended or additional settlement offer is required to include certain material evidence, basis for claims, and other applicable information. The bill provides that an allegedly responsible party is not required to respond to a demand for compensation or to make a qualified settlement offer. H.B. 24 limits the amount of contingent fees a claimant's attorney is allowed to collect from a claimant who does or does not accept a qualified settlement offer. H.B.24 prohibits a claimant's attorney from receiving a fee greater than 15 percent of the claimant's recovery if the attorney does not make a demand for compensation, omits from the demand material required information that is in the possession of the attorney or readily available to the attorney, or fails to communicate a qualified settlement offer. This bill does not apply to a claim for which an attorney is not retained or for which a contingent fee is not charged, or to a claim for workers' compensation benefits. The fact that a demand for compensation was or was not made, the fact that a qualified settlement offer was or was not made, or the amount of a demand or settlement offer is not admissible for any purpose in an arbitration or judicial or other proceeding between a claimant and an allegedly responsible party. EFFECTIVE DATE September 1, 2001.