Summary: S.1861 — 104th Congress (1995-1996)All Information (Except Text)

There is one summary for S.1861. Bill summaries are authored by CRS.

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Introduced in Senate (06/11/1996)


Title I: Early Offer and Rapid Recovery

Title II: Fairness in Legal Fees

Title III: Applicability and Rule of Construction

Legal Reform and Consumer Compensation Act of 1996 - Title I: Early Offer and Rapid Recovery - Amends the Federal judicial code to grant any potentially allegedly responsible party, after an occurrence that may give rise to a civil action or claim in Federal or State court to recover damages for personal injury, the option to offer, within a specified period, to compensate a claimant for reasonable (including future) economic loss, including a reasonable attorney's fee, less collateral benefits.

Authorizes States to establish a minimum dollar value for defined classes involving death or serious bodily injury. Grants a claimant the option of accepting such value payable in lump sum or accepting the benefit specified above.

Allows the offer to include other allegedly responsible parties upon their request or consent. Makes future economic losses payable as such losses occur. Provides for binding arbitration of disputes regarding the relative contributions of participants to the offer.

Allows a claimant to reject an offer of compensation and bring a civil action to recover economic (including future economic) loss, less collateral benefits, with the amount of collateral benefits determined by the court in a pretrial proceeding. Makes evidence of the amount of economic loss for which collateral benefits have been, or will be, paid to the claimant inadmissible in subsequent proceedings. Limits recovery for noneconomic losses.

Makes this title inapplicable to accidental bodily injury caused by the operation or use of a motor vehicle in claims involving an uninsured motorist or a personal protection insured.

Title II: Fairness in Legal Fees - Provides that, for purposes of this title, a fiduciary relationship commences when a claimant consults an attorney who agrees to represent the claimant in exchange for a contingent fee.

(Sec. 204) Requires contingent fee agreements to include alternate hourly rate fees. Specifies that if a contingent fee attorney has not entered into a written agreement with the claimant at the time of retention setting forth the attorney's hourly rate, a reasonable hourly rate is payable, subject to specified limitations.

(Sec. 205) Requires: (1) a contingent fee attorney pursuing a claim, at any time after retention, to send a demand for compensation by certified mail to an allegedly responsible party, setting forth the material facts relevant to the claim, including the basis for the claim, the nature of the injury, and certain medical records and documentation; and (2) a claimant's attorney to mail copies of each such demand to the claimant and to every other allegedly responsible party.

Finds a contingent fee that exceeds ten percent of any settlement or judgment after reasonable expenses have been deducted to be unreasonable and excessive if the attorney sent a timely demand for compensation but omitted material information in his or her possession or readily available at the time of filing.

(Sec. 206) Sets forth provisions regarding: (1) time limits for, and requisite contents of, a response setting forth a settlement offer; (2) consequences of failure to include prescribed material with such offer; (3) inadmissibility of demands, responses, and failure to respond to demands for compensation; (4) the effect of a pre-demand settlement offer; (5) limits on pre-retention offers (i.e., offers to settle a claim made to a claimant not represented by an attorney at the time of the offer); and (6) post-retention offers (i.e., settlement offers in response to demands for compensation made within the time constraints, and conforming to this title, made to a claimant represented by a contingent fee attorney) in situations where a pre- retention offer has and has not been made.

(Sec. 213) Finds that: (1) contingent fees are unreasonable and excessive unless charged against the difference between an unaccepted post-retention offer and the judgment or settlement ultimately obtained by a claimant; and (2) a contingent fee attorney who charges a fee that contravenes this title has charged an unreasonable and excessive fee.

(Sec. 214) Requires a contingent fee attorney, upon receipt of any settlement or judgment and prior to its disbursement, to provide the claimant with a written statement detailing how the proceeds are to be distributed.

(Sec. 216) Makes this title inapplicable to specified situations involving: (1) evaluations and collections; (2) agreements in which certain offers are not made; and (3) motor vehicle accidental bodily injury.

Title III: Applicability and Rule of Construction - Makes title I or II of this Act inapplicable in a State that enacts a statute that cites the authority of this section and declares that the State elects that the title not apply.