ATTORNEYS; MEDICAL MALPRACTICE;

ATTORNEYS;

OLR Research Report


October 28, 2003

 

2003-R-0794

ATTORNEY’S FEES

By: George Coppolo, Chief Attorney

You asked for some examples of how the contingency fee statute works and for some examples at various damage amounts. You also asked whether this statute covers expenses and overhead.

SUMMARY

Connecticut has a statute that establishes a sliding scale on contingency fees attorneys may charge clients who file a medical malpractice claim (CGS 52-251c). This law establishes an upper limit on contingency fees attorneys may collect from their clients based on the amount of the settlement or judgment. It allows 33 and 1/3% of the first $ 300,000, 25% of the next $ 300,000, 20% of the next $ 300,000, 15% of the next $ 300,000 and 10% of amounts exceeding $ 1,250,000. (This sliding scale applies to any lawsuit to recover damages resulting from personal injury, wrongful death, or property damage involving contingency fees, not just to medical malpractice cases. )

CGS 52-251c specifies that the contingency fee limitation does not apply to “disbursements” or “costs” the law firm incurs in connection with handling the case. It does not define these terms. Typically in a medical malpractice case, costs and disbursements appear to include such things as fees and travel expenses for medical experts and witnesses, court filing fees, jury fees, medical record copying costs, service of process fees, and expenses the attorney incurs in connection with the investigation of the case and consulting with witnesses and potential witnesses and in deposing potential witnesses.

CGS 52-251c specifies that “ordinary office overhead and expense” are not included as disbursements or costs, but not define the term. Apparently “ordinary office overhead and expense” applies to such things as office rent, heat and lights, and law office-employee costs. Thus, an attorney apparently could not bill the client extra for a portion of the rent for his office or the wages he pays his staff.

Table 1 shows how the statutory formula would work for each of four hypothetical awards. In addition to showing the actual amount of fees the statute allows the attorney to collect, the table also shows the resulting percentage of the total award the attorney’s fees constitute, the amount the client would receive, and the resulting percentage the client receives.

Table 1: Attorney’s Fees for Various Damage Awards

Damage Award or Settlement

Contingency Fee the Law Allows

Percentage of Total Award to Attorney

Amount Client Receives *

Percentage of Total Award to Client

$ 100,000

$ 33,333

33. 33%

$ 66,667

66. 67%

$ 500,000

$ 150,000

30%

$ 350,000

70%

$ 1,000,000

$ 250,000

25%

$ 750,000

75%

$ 5,000,000

$ 660,000

13. 2%

$ 4,540,000

86. 8%

$ 10,000,000

$ 1,160,000

11. 6%

$ 8,8840,000

88. 4%

* As previously noted, this amount is reduced by the amounts the attorney spent on the case for such things as expert witnesses and travel.

Our statute is silent as to whether a client can waive the contingency fee limits that the statute imposes. One Superior Court case addressed this issue. Judge Vertefeuille held that tort victims could waive their right to the protections afforded by the contingency fee law. She also decided the plaintiff's waiver was valid, and the fee arrangement the plaintiff entered into with her attorney was reasonable (In re Estate of Salerno, 42 Conn. Supp. 526 (1993)). This case is summarized in a recent OLR Report (2003-R-0664). The Salerno decision is not binding on any one other than the parties in that case.

Reportedly, some firms have charged clients who waive the protection of the statutory limit, a flat 33 1/3% or 40% contingency fee. Table 2 shows the difference in the attorney fees a lawyer may collect under the statutory sliding scale, as opposed to a flat 33 1/3% or 40% fee.

Table 2: Fee Scale Comparison

Damage Award or Settlement

Contingency Fee the Law Allows

33 1/3% Contingency Fee

40% Contingency Fee

$ 100,000

$ 33,333

$ 33,333

$ 40,000

$ 500,000

$ 150,000

$ 166,667

$ 200,000

$ 1,000,000

$ 250,000

$ 333,333

$ 400,000

$ 5,000,000

$ 660,000

$ 1,666,667

$ 2,000,000

$ 10,000,000

$ 1,160,000

$ 3,333,333

$ 4,000,000

CALCULATION OF ATTORNEY’S FEES FOR EACH HYPOTHETICAL AWARD OR SETTLEMENT

In Table 1 we presented the amount an attorney would be allowed to collect under our contingency fee law for five hypothetical damage awards or settlements— $ 100,000, $ 500,000, $ 1,000,000, $ 5,000,000, and $ 10,000,000. Following is a break down of how the fee was calculated for each hypothetical amount by using the sliding scale the law imposes.

Table 3: $ 100,000 Award or Settlement

Award or Settlement

Legal Fees

$ 100,000 x 33. 33% =

Total Fees $ 33,333

Table 4: $ 500,000 Award or Settlement

Total Fees

Legal Fees

$ 300,000 x 33. 33% =

$ 100,000

Next $ 200,000 x 25% =

$ 50,000

Total $ 500,000

Total Fees $ 150,000

Table 5: $ 1,000,000 Award or Settlement

Award or Settlement

Legal Fees

$ 300,000 x 33. 33% =

$ 100,000

Next $ 300,000 x 25% =

$ 75,000

Next $ 300,000 x 20% =

$ 60,000

Next $ 100,000 x 15% =

$ 15,000

Total $ 1,00,000

Total Fees $ 250,000

Table 6: $ 5,000,000 Award or Settlement

Award or Settlement

Legal Fees

First $ 300,000 x 33. 33% =

$ 100,000

Nest $ 300,000 x 25% =

$ 75,000

Nest $ 300,000 x 20% =

$ 60,000

Next $ 300,000 x 15% =

$ 45,000

Next $ 3,800,000 x 10% =

$ 380,000

Total $ 5,000,000

Total Fees $ 660,000

Table 7: $ 10,000,000 Award or Settlement

Award or Settlement

Legal Fees

First $ 300,000 x 33. 33% =

$ 100,000

Nest $ 300,000 x 25% =

$ 75,000

Nest $ 300,000 x 20% =

$ 60,000

Next $ 300,000 x 15% =

$ 45,000

Next $ 8,800,000 x 10% =

$ 880,000

Total $ 10,000,000

Total Fees $ 1,160,000

GC: ro