In Nevada, a battle continues to brew over personal injury lawyer fees, and it’s not just a fight between lawyers and lawmakers. Indeed, I’m even fighting with myself over it. Very tough issue.
It’s a debate about fairness, consumer protection, and whether free-market principles support or oppose capping what attorneys can charge in contingency fee cases.
For decades, personal injury lawyers have operated on a system where they only get paid if they win.
That sounds fair, but here’s the catch: their fees often reach 30%, 40%, or even more of a client’s settlement.
So if someone wins a $100,000 settlement, but their lawyer takes 40%, the person who was actually injured is left with just $60,000.
Caps on contingency fees, supporters argue, would stop lawyers from taking an excessive cut. Instead of 40%, a cap could limit fees to 25% or even 20%.
That means more money in the pockets of accident victims and less in the pockets of high-powered “billboard” personal injury firms.
But this isn’t just about consumer protection. It’s about fixing a broken system.
Some experts argue that the legal industry unfairly benefits from a market failure: clients don’t always understand what they’re agreeing to.
Lawyers have the upper hand in negotiations, and without caps, they can charge whatever they want. A cap, supporters say, would ensure fair pricing and transparency.
Adding to the problem, the legal system is extremely complicated.
Most victims have little to no legal experience and are already overwhelmed by their injuries, medical bills, and lost wages. Many don’t even know where to start or what their rights are.
This makes them vulnerable to manipulation and being taken advantage of by attorneys who see an opportunity to take a larger share of their settlement.
Nevada Businesses Stand to Gain
Small business owners fear frivolous lawsuits – which drive up their costs, which in turn drive up costs for consumers. But in a way, it’s even worse for large corporations.
Personal injury attorneys often target them for their “deep pockets,” hoping to score a bonanza regardless of actual culpability. Some prominent examples…
- The infamous McDonald’s hot coffee case: In 1992, Stella Liebeck sued McDonald’s after spilling hot coffee on herself. The jury awarded her $2.9 million in punitive damages, despite the fact that coffee is typically served hot.
- Opioid manufacturer lawsuits: Opioid manufacturers were sued for “deceptive marketing,” alleging that the companies were responsible for the opioid crisis even though the direct cause was misuse by individuals.
- Ford Pinto case: Plaintiffs only sued Ford Motor Company for defects in the Ford Pinto rather than also suing the engineers involved in its design. This strategy targeted Ford’s deep pockets rather than potentially liable individuals with fewer resources.
- Tracy Morgan and Walmart case: Comedian Tracy Morgan sued Walmart after a crash involving a Walmart truck driver, even though the driver was primarily at fault. This case exemplifies vicarious liability, where employers are held responsible for their employees’ actions.
High legal fees only encourage more such litigation. Lower fees could mean fewer unnecessary lawsuits, keeping costs down for employers and consumers alike.
Capping fees would also force lawyers to work smarter, not just longer.
If they know they can’t take a huge cut, they’ll have to streamline cases and avoid dragging things out. That could mean quicker settlements and less backlog in Nevada’s courts.
After all, a drawn-out legal battle doesn’t help anyone – except the lawyers billing for more hours.
What Critics Say
Of course, not everyone is on board – especially personal injury attorneys.
Opponents argue that fee caps could discourage lawyers from taking on tough cases, especially those against big insurance companies.
“Many of my clients would have been significantly harmed and treated unfairly by insurance companies and the system if they had not had the opportunity to be represented by competent counsel,” a local Henderson attorney wrote to me.
He added that “I have never spent a dime on TV advertising,” which puts him at a marketing disadvantage with the “billboard” attorneys who spend a fortune drumming up new clients with the windfalls they’ve reaped from previous clients.
If attorneys make less, opponents of reform argue, they might only take “sure-win” cases, leaving some injury victims without representation.
Personal injury lawyers also say their fees cover the risk they take. Since they only get paid if they win, they argue that high percentages are justified.
Legitimate concerns. But when you look at how fouled up the lawsuit abuse system is, I’m not sure it’s compelling.
Conservatives typically oppose government interference in pricing. But when a market is broken – when there’s too much power on one side – sometimes change is needed to restore balance.
And our legal system is definitely broken.
Just like we have rules against price gouging in emergencies, some say it’s fair to limit legal fees that can feel like legalized extortion. This isn’t government overreach so much as it’s about making the system work the way it should.
And consumer protection fee caps aren’t exactly a new idea. There are plenty of existing examples where fees are restricted. For example…
- Credit card fees: Regulations often cap late payment fees, annual fees, and foreign transaction fees charged by credit card companies.
- Overdraft fees: The Consumer Financial Protection Bureau (CFPB) recently finalized a rule to cap overdraft fees for large banks and credit unions. This new regulation is scheduled to take effect in October 2025.
- ATM withdrawal fees: Some jurisdictions limit ATM withdrawal fees to protect consumers from excessive charges.
- Social Security representation fees: The Social Security Administration imposes caps on fees that representatives can charge for assisting claimants. As of November 30, 2024, the fee cap is set at $9,2003.
- University fees: Some governments implement caps on university tuition fees or fee increases to control the cost of higher education.
- Utility prices: Price-cap regulation is used to establish an upper limit on the prices that utility providers can charge for their services.
In addition, during his 2024 presidential campaign, Donald Trump expressed support for capping credit card interest rates at around 10%.
Specifically, Trump stated, “We’re going to cap it at around 10%. We can’t let them make 25 and 30 percent” – referring to the banks that issue credit cards.
So there are precedents and arguments for capping attorney fees. But as always, the devil is in the details.
Is it the right solution for Nevada? Maybe yes, maybe no. But one thing is certain: Nevadans deserve a system that’s fair for everyone, not just the lawyers.
This article was written with the assistance of AI. Please verify information and consult additional sources as needed.
