BILL NUMBER: AB 2371 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Bates
FEBRUARY 19, 2004
An act to amend Sections 6147 and 6157.2 of, and to add Section
6147.1 to, the Business and Professions Code, relating to attorneys.
LEGISLATIVE COUNSEL'S DIGEST
AB 2371, as introduced, Bates. Attorneys: Legal Consumers'
Protection Act.
Existing law requires an attorney who contracts to represent a
plaintiff on a contingency fee basis, in any case other than a
contract for recovery of workers' compensation benefits, to provide
specified information to the plaintiff at the time the contract is
entered into.
This bill would enact the Legal Consumers' Protection Act, which
would require a contingency fee attorney to make certain disclosures
and reports to a potential or existing client regarding (1) chances
of success in the case, (2) estimated and actual attorney hours, (3)
estimated fees, and (4) other fee information. The act would
prohibit an attorney, or his or her representative, from making
unsolicited contact with a potential claimant for at least 45 days
after an event resulting in personal injury or death that could give
rise to a cause of action. The act would also give the consumer the
right to request an objective review of a contingency fee by a court
or bar association committee, and to seek specified remedies against
an attorney violating any of the above provisions.
Existing law provides for certain limitations on attorney
advertising, including an offer of representation on a contingent
basis unless it includes a statement advising whether the client will
be held responsible for any costs advanced by the attorney when no
recovery is obtained.
This bill would also require the statement to disclose whether
costs advanced will be added to the fee if the litigation is
successful, and, if the statement uses the word or phrases "free,"
"no legal fee," "no fee," "no expense," or another similar phrase,
requires the statement to include whether or not the client will be
responsible for costs associated with litigation and to include the
contingency fee or range of fees that will be charged by the attorney
if the litigation is successful. The bill would also define terms.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. This Act shall be called and may be cited as the Legal
Consumers' Protection Act.
SEC. 2. The Legislature finds and declares all of the following:
(a) For the average person, the legal process is confusing and
expensive. Where damages are sought, the contingency fee system
allows an individual to defer expenses and thus obtain legal
representation that otherwise might be prohibitively costly. Like
consumers of any service, legal consumers can make meaningful choices
only when they are empowered with information in advance of entering
into a representation agreement with an attorney. Consumers under
sales pressure or otherwise emotionally distraught may find their
ability to make rational choices impeded. For this reason, consumer
protection statutes contain provisions such as a "cooling off" period
during which a contract can be rescinded.
(b) One of the ways that the system fails to protect legal
consumers is in allowing attorneys to contact potential clients as
soon as they have been injured or have lost a loved one. Immediately
after an injury or loss, a potential client is not in a position to
bargain in a fair and equitable manner with an experienced
contingency fee lawyer. For that reason, federal law prohibits
lawyers from soliciting clients in air crash cases for 45 days. A
person who has been injured in a hotel fire or an auto accident is no
less vulnerable to such solicitation than a victim of an air crash.
This bill would simply extend to all California consumers of legal
services the same protection from solicitation that already exists as
a matter of federal law for victims of airplane accidents and their
families.
(c) Similarly, advertisements aimed at attracting potential
contingency fee clients should be informative and unambiguous. Yet
many ads provide little information to potential clients, and, in
many ads by lawyers, the word FREE predominates. Other vital
information, such as the potential cost of the representation to the
consumer, if provided at all, may appear in much smaller print at the
bottom of the page. Consumers may be led to believe that they will
be receiving something for nothing. California, a state in which
false and deceptive trade practices are not tolerated, should assure
that legal advertisements provide consumers of legal services with
adequate information.
(d) Legal consumers should also be provided with enough
information regarding the contingency fee agreement to enable them to
make informed choices regarding their legal options. Before a
client signs a contingency fee contract, the attorney should be
required to present the terms of the contingency fee representation
in writing to the client in clear and simple language. In
California, when someone takes his or her car to be repaired, he or
she has a right to a written estimate of the cost of the work before
any work is performed and an accounting of the work done and
additional costs, such as parts supplied. Consumers of legal
services deserve the same basic protections that are given to
consumers of auto repair services.
(e) Current law takes a step in the right direction by requiring
attorneys to put contingency fee agreements in writing and to provide
consumers with information such as the fee percentage and how costs
will be deducted from the settlement or verdict. Consumers need more
information, however, before deciding whether to enter into a
contingency fee contract with an attorney. Clients also need to be
informed regarding the likelihood of success of a claim and the
amount of time and effort that an attorney is going to invest in the
case. This will allow the consumer to make a reasoned judgment about
whether the contingency fee is fair under the circumstances.
(f) The purposes of this act are to provide a Legal Consumers'
Protection Act for every injured person in California who may need
the services of a contingency fee lawyer, to promote the free flow of
information between injured consumers and contingency fee lawyers,
and to lessen economic burdens on the public.
SEC. 3. Section 6147 of the Business and Professions Code is
amended to read:
6147. (a) An attorney and any of his or her representatives
shall not make unsolicited contact with a potential claimant for at
least 45 days after an event resulting in personal injury or death
that could give rise to a cause of action by that claimant.
(b) An attorney who contracts to represent a client on a
contingency fee basis, shall, at the initial meeting, disclose to the
potential client his or her right to receive a copy of the statement
described in subdivision (c).
(c) An attorney retained by a claimant on a contingency fee basis
shall, at least five days prior to the signing of a contingency fee
contract but not later than 30 days after the initial meeting,
provide a duplicate copy of a disclosure statement, signed by both
the attorney and the potential client or the potential client's
guardian or representative, to the potential client or to the
potential client's guardian or representative. The disclosure
statement shall be in writing and shall include the following
information:
(1) The estimated number of hours of the attorney's services that
will be spent in settling the claim and the estimated number of hours
of the attorney's services that will be spent handling the claim
through trial.
(2) (A) The attorney's contingency fee rate for services regarding
the claim and any conditions, limitations, restrictions, or other
qualifications on that fee that the attorney deems appropriate.
(B) A statement as to how disbursements and costs incurred in
connection with the prosecution or settlement of the claim will
affect the contingency fee and the client's recovery.
(C) All other fee agreements to be made concerning the claim,
including the amount to be paid to any co-counsel associated with the
case or any agreement to refer the client to another attorney in
exchange for a referral fee.
(3) The estimated likelihood of success on the merits or of a
settlement of the case.
(d) An attorney who contracts to represent a client on a
contingency fee basis shall, at the time the contract is entered
into, provide a duplicate copy of the contract, signed by both the
attorney and the client, or the client's guardian or representative,
to the plaintiff, or to the client's guardian or representative. The
contract shall be in writing and shall include, but is not limited
to, all of the following:
(1) A statement of the contingency fee rate that the client and
attorney have agreed upon.
(2) A statement as to how disbursements and costs incurred in
connection with the prosecution or settlement of the claim will
affect the contingency fee and the client's recovery.
(3) A statement as to what extent, if any, the client could be
required to pay any compensation to the attorney for related matters
that arise out of their relationship and that are not
covered by their contingency fee contract. This may include any
amounts collected for the plaintiff by the attorney.
(4) Unless the claim is subject to the provisions of Section 6146,
a statement that the fee is not set by law but is negotiable between
attorney and client.
(5) If the claim is subject to the provisions of Section 6146, a
statement that the rates set forth in that section are the maximum
limits for the contingency fee agreement, and that the attorney and
client may negotiate a lower rate.
(b)
(e) A client retaining a lawyer on a contingency fee basis shall
be afforded three working days in which to rescind the contract for
any reason.
(f) An attorney retained by a client on a contingency fee basis
shall keep accurate records of the time spent on the client's case
and, during the pendency of the claim, shall give monthly reports to
the client on time spent, work performed, and progress made in the
case.
(g) An attorney retained by a client on a contingency fee basis
shall, within a reasonable time not later than 30 days after the
claim is finally settled or adjudicated, disclose in a written
statement to the client the following information:
(1) The actual number of hours of attorney services performed in
connection with the claim.
(2) The total amount of the contingency fee for attorney services
performed in connection with the claim.
(3) The actual fee per hour of the attorney's services performed
in connection with the claim, determined by dividing the total
contingency fee by the actual number of hours of attorney services.
(h) A client has the right to request an objective review of a
contingency fee by a court or a bar association committee to ensure
that it is reasonable and fair under the circumstances, based on
factors including, but not limited to, all of the following:
(1) Whether liability was contested.
(2) Whether the amount of damages was clear.
(3) How much actual time an attorney reasonably spent on the case.
(i) The following remedies shall apply to a violation of this
section:
(1) Failure to comply with any provision of this section
renders the agreement voidable at the option of the
plaintiff client , and the attorney shall
thereupon be entitled to collect a reasonable fee.
(c)
(2) A client to whom an attorney fails to disclose information
required by this section may, as an alternative to or in addition to
the remedy in paragraph (1), bring a civil action for damages in the
court in which the claim was or could have been brought.
(3) An attorney who intentionally fails to disclose to a client
any information required by this section shall additionally be liable
for exemplary damages.
(i) The remedies provided for in this section shall be in addition
to, and not in lieu of, any other available remedies or penalties.
(j) This section shall not apply to contingency fee
contracts for the recovery of workers' compensation benefits.
(d) This section shall become operative on January 1, 2000.
SEC. 4. Section 6147.1 is added to the Business and Professions
Code, to read:
6147.1. For purposes of Sections 6147 and 6157.2, the following
terms have the following meanings:
(a) "Attorney" means any natural person, professional law
association, corporation, or partnership authorized under the
applicable laws of this state to practice law.
(b) "Attorney services" means the professional advice of,
counseling of, or representation by an attorney. "Attorney services"
do not include other assistance provided, directly or indirectly, in
connection with an attorney's services, such as administrative or
secretarial assistance, overhead, travel expenses, witness fees, or
preparation by a person other than the attorney of a study, analysis,
report, or test.
(c) "Claim" means a civil action for wrongful death or personal
injury brought in a court of this state.
(d) "Claimant" means any of the following:
(1) A natural person who brings a claim.
(2) If a claim is brought on behalf of a deceased person's estate,
the personal representative of the deceased person or the estate.
(3) If a claim is brought on behalf of a minor or incompetent,
that person's parent, guardian, or personal representative.
"Claimant" does not include an artificial organization or legal
entity, including, but not limited to, a firm, corporation,
association, company, partnership, society, joint venture, or
governmental body.
(e) "Contingency fee" means the cost or price of an attorney's
services determined by applying a specified percentage, which may be
a firm fixed percentage, a graduated or sliding percentage, or any
combination thereof, to the amount of a settlement or judgment
obtained on a claim.
(f) "Initial meeting" means the first conference or discussion
between a client and an attorney, whether by telephone or in person,
of the details, facts, or basis of a claim.
(g) "Retain" means the act of a claimant in engaging an attorney's
services, whether by express agreement or impliedly by seeking and
obtaining the attorney's services.
SEC. 5. Section 6157.2 of the Business and Professions Code is
amended to read:
6157.2. No advertisement shall contain or refer to any of the
following:
(a) Any guarantee or warranty regarding the outcome of a legal
matter as a result of representation by the member.
(b) Statements or symbols stating that the member featured in the
advertisement can generally obtain immediate cash or quick
settlements.
(c) (1) An impersonation of the name, voice, photograph, or
electronic image of any person other than the lawyer, directly or
implicitly purporting to be that of a lawyer.
(2) An impersonation of the name, voice, photograph, or electronic
image of any person, directly or implicitly purporting to be a
client of the member featured in the advertisement, or a
dramatization of events, unless disclosure of the impersonation or
dramatization is made in the advertisement.
(3) A spokesperson, including a celebrity spokesperson, unless
there is disclosure of the spokesperson's title.
(d) A statement that a member offers representation on a
contingent basis unless the statement also advises whether a client
will be held responsible for any costs advanced by the member when no
recovery is obtained on behalf of the client and whether the
cost shall be added to the fee if the litigation is successful. If
the statement uses the word "free," or the phrases "no legal fee,"
"no fee," "no expense," or any other phrases indicating that services
are provided at no cost to the client, the statement must also
provide, in the same size print as the above statement, a statement
regarding whether or not the client will be responsible for the costs
associated with litigation and the possible range of contingency
fees that will be charged by the attorney if the client does recover
. If the client will not be held responsible for costs, no
disclosure is required.