Proposed initiatives would cap contingency fees

A nonprofit group that represents corporations introduced two statewide initiatives intended to limit the cap on contingency fees for plaintiffs' attorneys, and supporters plan to use disgraced attorney Thomas V. Girardi as Exhibit A.

The Civil Justice Association of California -- backed by oil, pharmaceutical, insurance, manufacturing, health care, and technology companies -- introduced two initiatives, including one that would limit contingency fees to 20% of any award. The second proposed initiative would require plaintiffs to provide a notice of their demands 60 days before filing a complaint.

Kyla Christoffersen Powell, president and CEO of the association, submitted the measures Wednesday. Once the attorney general's office issues a title and summary, proponents will try to collect 685,534 valid signatures by April to qualify for the November 2022 ballot.

"California's current legal system puts the interests of trial lawyers ahead of injured consumers entirely too often," she wrote in a statement.

The defense and plaintiffs' bar are already gearing up for an expensive political fight.

This is not the first time corporate interests, though not the Civil Justice Association of California, have placed an initiative on the California ballot that would limit plaintiffs' attorney contingency fees.

In 1988, voters defeated Proposition 106, which would have limited attorney fees in tort cases on a sliding scale, from 25% for lawsuits under $50,000 to no more than 10% for a recovery over $100,000.

In March 1996, voters defeated Proposition 202, which would have limited the amount plaintiffs' lawyers could have collected to 15% of a settlement offer, with additional attorney fees allowed only on amounts higher than that offer. That initiative failed by 51% to 49%.

Another proposed initiative was dropped in 2005, and various attempts to pass bills also have failed in the Legislature.

Plaintiffs' attorneys' associations and consumer advocate groups blasted the initiatives as a plan by corporate interests to prevent poor and middle-class people from pursuing expensive lawsuits.

"It's putting one's thumbs on the scales of justice so justice isn't the end result," Robert Herrell, executive director of the Consumer Federation of California, said in a phone interview Thursday.

Powell previewed one of the organization's campaign talking points by highlighting the scandals surrounding Girardi, the longtime plaintiffs' attorney who is in bankruptcy after a judge in Illinois found he had failed to pay his clients their settlements.

"The recent reports of Tom Girardi having embezzled millions from his clients for many years and failed oversight by the State Bar of California is one of the biggest scandals in the state's legal history," she wrote Thursday.

Powell said a dozen other states have statutes that limit contingency fees and said many cases in California state courts settle with plaintiffs' attorneys getting as much as 40% of the settlement.

But Herrell countered that contingency fees are often the only way for individuals to pursue claims against large corporations that have a lot of resources to fight lawsuits and seek to make the cases as expensive as possible.

"It inevitably leads to a not insignificant percentage of people throwing up their hands and giving up," he said. Defendants "just want these cases to not exist."

Advocates of the measure say they modeled the 20% number on a limit in the Federal Tort Claims Act for lawsuits against the federal government.

The Consumer Attorneys of California, however, said the 20% limit only applies to a small subset of claims against the federal government.

"This is nothing but a breathless attempt by an organization desperate for political relevance to tip the scales of justice in favor of America's most heinous corporate entities: big tobacco, the fossil fuel industry, and Wall Street banks," Nancy Drabble, CEO of the plaintiffs' lawyers organization, wrote in a statement.