A rule amendment that would allow personal injury lawyers in contingency fee cases to obtain, with client consent, outside assistance to resolve complex subrogation and lien resolutions passed the Bar Board of Governors.
The board, at its recent Sarasota meeting, approved the recommendations of a special committee for the changes to Rule 4-1.5 and its comment. Board member Jay Cohen, who headed the special committee, explained that the board had earlier proposed an amendment on this issue, but it was rejected by the Supreme Court.
The issue arises when tort lawyers work to settle cases and face complex negotiations to resolve medical and other liens, which may include intricacies of Medicaid and Medicare laws and rules. Cohen said one lawyer inquired about hiring a second, experienced lawyer to resolve those issues, with the second lawyer being paid a percentage of the amount saved for the client. The problem is even though the second lawyer would save the client money, the fee paid to that lawyer could raise the percentage of fees paid over the maximums allowed under Rule 4-1.5, which governs contingency fees.
The Bar, Cohen said, originally proposed that such extra fees be allowed, but the Supreme Court rejected that and ruled that the original lawyer, as part of the contingency contract, was responsible for resolving the lien and subrogation issues.
The special committee met again, Cohen said, and revised its proposals. The revamped amendment says that the contingency fee lawyer now should handle “routine” lien and subrogation issues, and defines what is considered routine and what is complex.
The rule also proposes “that it would be in the best interests of the clients . . . if in those matters in which the lien is deemed complex — such as Medicaid, Medicare, Medicare set aside, all of those kinds of matters — an underlying tort lawyer retained another lawyer to handle that resolution and if a fee is generated, it ought not to be added to the underlying tort lawyer’s fee so that it could end up ever being rendered or deemed excessive [under Rule 4-1.5],” Cohen said.
The amendment specifies that “no fee shall be exchanged between the underlying tort lawyer and the lien resolution lawyer. In other words, no referral fee is paid to the underlying tort lawyer for having another lawyer handle the resolution of the liens,” he said.
The client also must give informed consent to the referral.
Cohen said the rule is a “win-win” because it relieves the contingency lawyer from dealing with complex lien negotiations that he or she may not be qualified to handle and overall it saves clients money by getting the best representation for those negotiations.
The board unanimously approved the proposed amendment, which now goes to the Supreme Court.