The injured party hires a lawyer to represent him or her on a contingency fee. If the plaintiff is successful, the plaintiff s attorney is paid a percentage of the amount awarded to the plaintiff, usually ranging from 25 percent to 50 percent. If there is no award, the lawyer earns no fee for the case. This practice arose because many injured parties cannot afford to hire attorneys at hourly rates or pay large retainers. Without a system that pays a winning attorney a share of the plaintiff s award, many injured individuals of limited means would go unrepresented.
State law limits the size of contingency fees only in medical malpractice cases.
California law requires attorneys to provide written contracts that specify, among other things, the agreed rate of their contingency fees and the extent to which the plaintiff may be required to compensate the attorney for matters not covered in the contract. The initiative would affect cases involving automobile accidents, defective products, environmental pollution, fraud, bad faith in insurance settlement offers, wrongful termination, sex discrimination, and government and private civil rights violations. The fees of the plaintiff s attorney would be limited to 15 percent in cases that settle early. If the early settlement demand were rejected, and a later settlement or award were provided in a larger amount, the lawyer s contingency fee would be 15 percent of the rejected settlement plus a negotiated amount based on the additional award. The fee of a plaintiff s attorney who failed to make an early settlement demand or provide required information would be limited to 15 percent of the eventual settlement amount.