A New York state bill could help reduce legal costs for small business owners.
Filed in 2014, A5190 would limit contingent fees to attorneys in cases related to property damage and personal injury.
“Small and large businesses are impacted by the high cost of litigation,” says NFIB/New York State Director Mike Durant. Those costs range from litigation to settlements to insurance fees.
In a state such as New York, one of the most litigious in the nation, this kind of tort reform could help save small business owners money.
“The contingent fee system invites abuse because it encourages lawyers with a financial interest in the outcome of a case to try meritless claims or ask for unreasonably high awards,” according to the American Tort Reform Association. “Contingent fees are generally one-third of a total award, even when, as is often the case, attorneys bear no risk in taking a case. Attorneys today seek out cases that can be settled easily, with little work, or can be decided under no-fault laws. The one-third contingent fee pay-off for seeking such cases is disproportionate and discourages lawyers from taking more difficult, work-intensive, cases.”
At present, contingency fees total 33 percent of the amount recovered plus expenses. And the state limited contingency fees in medical malpractice, which has already produced savings.
“There is a movement under way to limit contingency fees in other tort actions as well,” Durant says.