On October 6, 2021, the Civil Justice Association of California (CJAC) submitted two measures to the Attorney General for title and summary, the first step in getting an initiative on the November 2022 statewide ballot.
Pre-Lawsuit Notice Measure
This measure would create a 60-day window for injured consumers to obtain recovery from whomever harmed them before filing a lawsuit and, if unable to obtain recovery during the 60 days, they may bring a lawsuit, but the attorneys’ fees would be capped at 20% of the amount their clients recover.
This measure would be known as the “Pre-Lawsuit Notice and Opportunity to Settle Act.” Section One of the measure contains nine findings and declarations, including that justice in our civil courts can be delayed or denied due to the large volume of cases; some consumer claims can be resolved easily, without resort to litigation; lawyers are incentivized by the potential award of significant attorneys’ fees; consumer interests should be placed ahead of plaintiffs’ lawyers; and, the federal government caps attorneys’ fees at 20% of the amount recovered.
Section Two of the measure would require notice and a reasonable opportunity to resolve legal disputes before a lawsuit can be filed. It would add Chapter 0.5 (commencing with Section 310) to Part 2, of Title 2, of the Code of Civil Procedure. First, any claimant seeking a monetary remedy, monetary penalty, or corrective remedy from another person would be required to provide that person with notice and a reasonable opportunity to resolve the matter prior to commencing a civil action against that person in court.
Second, the notice would have to be in writing and directed by the claimant or claimant’s attorney to the person or persons to be sued. The notice must be personally served or sent by certified mail, return receipt requested, to the person’s residential address, or to the person’s designated agent for service of process. Next, the notice must prominently state that it is a: “NOTICE OF LEGAL CLAIM AND OPPORTUNITY TO RESOLVE PRIOR TO COMMENCING A LAWSUIT IN COURT.”
The notice would have to state the time period for which the offer to settle will remain open for acceptance, which cannot be less than 60 calendar days from the date the notice is personally served or received by certified mail. The notice must state the entire amount of monetary payment requested, or corrective remedy requested. It must also provide the name of any other person who has been or will be provided notice for the same claim. The notice must state facts known to the claimant establishing the person’s responsibility, and provide a detailed description of all known and reasonably anticipated damages, restitution, or injuries sustained.
In addition, the notice must provide any evidence in any form supporting the claim for damages or injuries, state the claimant’s legal basis for seeking a monetary remedy, and state that the claimant or the claimant’s attorney will, upon request, provide or make available for inspection within 14 calendar days any evidence in the claimant’s possession. By filing the notice, the statute of limitations applicable to the claim is to be tolled during the notice period. Failure to comply with this section is grounds for a demurrer to a complaint filed against a defendant who was not provided the notice required.
Moreover, an attorney would be prohibited from contracting for or collecting a contingency fee in excess of twenty percent of the amount recovered for the claimant if the claimant files a civil action in court following the expiration of the notice period required. This section would not apply to any claim that is subject to a limit on attorney contingency fees that existed on January 1, 2021. Finally, the measure would define the terms “amount recovered,” “claimant,” “contingency fee,” “corrective remedy,” “monetary remedy,” and “statutory claim.”
Section Four (should actually be Three) of the measure has general provisions, such as a severability clause.
Legal Fees Measure
This measure would limit the amount of contingency fees charged by attorneys.
This measure would be known as the “Consumer Legal Fee Protection Act.” Section One of the measure contains ten findings and declarations, including that accessing justice includes having high-quality legal representation; lawyers representing injured consumers often take 40% or more of a recovery; this is done through contingency fee arrangements; contingency fees are not competitive; lawyers are not incentivized to resolve cases quickly and fairly; injured parties pay too much to their lawyers; consumer interests should be placed ahead of plaintiffs’ lawyers; the federal government caps attorneys’ fees at 20% of the amount recovered; and, a similar cap should be adopted in California.
Section Two of the measure would add Section 6147.1 to the Business and Professions Code in order to prohibit an attorney from contracting for or collecting a contingency fee in excess of twenty percent of the amount recovered for the claimant. The measure would also define the terms “amount recovered,” “claimant,” “contingency fee,” “monetary remedy,” and “statutory claim.”
This section would not apply to any claim that is subject to a limit on attorney contingency fees that existed on January 1, 2021. Finally, the measure contains a severability clause.