SECTION 1. FINDINGS AND DECLARATION OF PURPOSES
Lawyers who represent injured persons often charge a fee based on a percentage of the amount
recovered. Contingent fees of up to 40% are not uncommon. The people of the State of California
find that excessive contingent fees deprive injured persons of too much of the money intended to
compensate them for their injuries. Further, such excessive fees create an economic incentive
for lawyers to file false or frivolous claims driving up the cost of insurance for all Californians.
SECTION 2. LIMITATION ON LAWYER CONTINGENT FEES
Section 6146.5 is added to the Business and Professions Code to read:
(a) An attorney shall not contract for or collect a contingency fee in connection with a
tort claim or a claim for personal injury or wrongful death, excluding a claim covered by
Section 6146, in excess of twenty percent (20%) of the amount recovered for a claimant.
(b) The "amount recovered" results from subtracting the cost of settling or prosecuting
the claim from the entire sum to be paid through settlement, arbitration or judgment.
(c) A contingency fee means any compensation, however calculated, that is payable only
if an amount is recovered or an amount of liability is avoided.
(d) A contract that provides that a claimant shall pay, on a contingency basis, for services,
other than attorney services, in connection with the settlement or prosecution of a claim
specified in subdivision (a) is contrary to public policy and is void and unenforceable.
(e) No attorney shall refer any client to anyone for services in connection with a claim
specified in subdivision (a) if that attorney or any member of the attorney’s firm or
immediate family would benefit directly or indirectly from that referral.
(f) The amount recovered when a claim specified in subdivision (a) is made against multiple
defendants shall be the total of the amounts recovered against all defendants less the cost
of settling or prosecuting the claim against all defendants.
(g) The fee limitation in subdivision (a) of this section may not be waived.
(h) The provisions of this section shall apply to the relationship between attorneys
practicing in California and their clients, including claims filed in a federal court,
to the maximum extent permitted by federal law.
SECTION 3. GENERAL PROVISIONS
(a) Severability: If any provision of this act or application thereof to any person or
circumstance is held invalid, that invalidity shall not affect other provisions or applications
or the act which can be given effect without the invalid provision or application, and to this
end the provisions of this act are severable.
(b) Amendment: The provisions of this act may be amended by the Legislature to further its
purposes by a statute passed in each house by roll call vote entered in the journal, two thirds
of the membership concurring. All other provisions of this act may only be amended by a statute
that becomes effective when approved by the electorate.
(c) Conflicting Measures: The People recognize that more than one measure dealing with matters
set forth in this measure may be on the ballot at the same time. It is the intent of the voters
in passing this measure that the provisions that relate to similar matters in any other measure
on the same ballot be considered, for purposed of subdivision (b) of Section 10 of Article II
of the California Constitution, to be in conflict. As for those matters that are not similar to
matters in any other measure on the same ballot, the voters intend that those matters be made
operative and are severable pursuant to Section 9 of this measure.