Contingency Fee

The contingent fee system is the key to the courtroom for thousands of Americans. It allows people who suffered an injury to bring a suit without having to have the money up front to pay their attorney. Rather than charging for legal services by the hour, an attorney agrees to accept a portion of any recovery in the case, usually one-third.

If the plaintiff receives no compensation, the attorney receives nothing—not even reimbursement for the costs of litigation. Since attorneys bear all the financial risk if there is no recovery or if the recovery does not cover their costs, they act as gatekeepers – not accepting frivolous or unjustified lawsuits. Attorneys also strive for efficiency, since extra costs come from their bottom line, rather than the client’s pocket.

Damages

There are two major types of damages:

  1. Compensatory Damages: Compensatory damages compensate a plaintiff—one who brings a lawsuit—for injury or loss. Compensatory damages are subdivided into two types, economic and non-economic damages.
    • Economic Damages compensate plaintiffs for losses that are easily measured by money, such as lost wages, repairs to a car, the cost of hospital care, etc.
    • Non-economic Damages compensate real injuries and losses that are not easily quantified by a dollar amount. They are often as important or more important to the injured person as the losses that can be directly converted into dollars. Also known as quality-of-life damages, this compensation covers the most severely injured patients, such as people who are paralyzed and can’t use the bathroom without assistance or a child who is brain damaged and will never have a chance to attend school, get married and work.Note: Non-economic damages are the only compensation a jury can provide for the injury itself, as opposed to reimbursement of out-of-pocket expenses like lost wages and medical bills. Non-economic compensation is often more important to those who do not work outside the home, such as the elderly, children, and homemakers. That’s because plaintiffs who do not work outside the home cannot collect a lost wages portion of economic damages. The “worth” of a homemaker’s work inside the home is not easily measured by a dollar amount, and would only be compensated through non-economic damages.
  2. Punitive Damages: A jury awards a plaintiff punitive damages to punish a defendant for willfully malicious wrongful acts that go beyond mere negligence. Unlike compensatory damages, which are awarded to make the plaintiff “whole,” punitive damages are awarded to damages are assessed to punish and deter bad behavior (such as fraud, for instance). Punitive damages are awarded very rarely (in only about 3% of cases). However, punitive damages deter corporations from engaging in actions they know will hurt people—such as placing defective products on the market.

Damages Cap

A damages cap is a law that limits the amount a jury can award for damages, no matter what the facts of the case are. Some state legislatures have enacted caps in civil cases and some have not. Some caps are only for specific kinds of cases, such as medical malpractice. Some caps limit non-economic damages only, and some limit punitive damages.

In a jurisdiction that caps damages, the amount a jury or judge awards is reduced to the amount of the cap—even if the jury or judge thinks the plaintiff should be awarded more than the cap to be made “whole” again, or if the circumstances of the case show that the defendant should be punished with a high punitive damage award. There is generally no way to raise a damages award beyond the cap, which is written into law.

Here is an example of a cap of $250,000 on non-economic damages:

Injuries/Losses

Original Jury Award (what the juries think should be awarded)

Award After Legislature’s Cap (what the plaintiffs go home with)

Person AAfter being hit by a drunk driver, Person A’s car caught fire. Her husband (a passenger) was killed, she was burned and left disfigured, and she lost the use of her right arm. She was a homemaker, and can no longer work. $1.2 million non-economics $250,000 non-economics
Person BAfter being hit by a drunk driver, Person B suffered two broken legs, had to have surgery to repair them, and was forced to wear a full body cast for 2 months. $250,000 non-economics $250,000 non-economics

 

In the case above, Person A, who suffered worse injury than Person B, nonetheless takes home the same amount of compensation for her losses as Person B. Even though the jury thought Person A deserved far more compensation, the jury’s judgment was overruled by a cap put in place by the legislature long before Person A’s case ever arose.

Joint and Several Liability

In a case where two or more defendants caused injury, and it may not be possible to assess which defendant caused which part of the injury, plaintiffs can call on the principle of joint and several liability. Joint and several liability means that two or more defendants each are responsible for paying the plaintiff the entire amount of compensatory damages. So if A and B negligently injure C, either A or B can fully compensate C.

The Ford Explorer/Firestone tire rollover case is an example of joint and several liability protecting victims. In these cases, it is almost impossible to quantify how much of any rollover was caused by a defective tire, or how much was caused by faulty automotive design. Was it 50%-50% in each case? Or 60%-40%? It is impossible to know.

Under joint and several liability, a victim in a Ford/Firestone case can be fully compensated by either of the defendants. Then, defendants can later work them out between themselves who is more at fault for a plaintiff’s injuries. The important thing is that the plaintiff is not deprived of compensation because the guilty parties blame each other. Without joint and several liability, a plaintiff might never be made whole.

Liability

Liability is legal responsibility under civil law. In the context of personal injury tort law, liability refers to being legally responsible for an injury or loss.

Negligence

Negligence is the failure to use such care as a reasonably prudent and careful person would use under similar circumstances. If a person is negligent and an injury results, the person may be liable to pay damages for that injury.

“Pain and Suffering” Damages

Non-lawyers frequently refer to non-economic damages as “pain and suffering” damages or damages for “emotional distress.” This is incorrect. Non-economic damages (see definition above) compensate for many things that are not easily measured in terms of money, including physical harms such as the loss of a limb, blindness, loss of fertility, or loss of the ability to work. Many trial lawyers believe that referring to non-economic damage verdicts simply as compensation for “pain and suffering” or “psychic injury” trivializes the real harms non-economic damage verdicts are meant to compensate.

Preemption

Under the Constitution, federal law is superior to state law, and can therefore preempt state laws that are inconsistent. Often federal laws are written to provide complete preemption of state laws. In liability bills, however, preemption is almost always “one-way.” This means that state laws that are more pro-consumer are wiped out; but state laws that are more pro-defendant remain law. This unfairness means that, despite claims to the contrary, a federal product liability bill will not result in uniform laws, because state laws that are more anti-consumer than the federal law still stand.

Statute of Limitations

A statute of limitations is an arbitrary time limit that cuts off a plaintiff’s ability to file a case after a certain period of time. Statutes of limitation can begin to run at various points after the event that is the subject of the action took place. Some statutes of limitations run from the date of the injury, even if the injury is not detected until much later.

For instance, one type of medical malpractice is for a surgeon to leave a sponge or surgical instrument in the body of a patient. This may not be noticed by the patient for several years, until the object begins to deteriorate or irritate the body. If the patient lives in a jurisdiction where, for instance, a 2-year statute of limitations runs from the date of the injury (when the surgery took place), and the sponge is not discovered until the beginning of the third year, the patient is left without recourse, and there is no way to hold the careless surgeon who caused the injury accountable, because the statute of limitations has run.

Statute of Repose

A statute of repose is an arbitrary time limit that cuts off liability for products beyond a certain age. For instance, a 15 year statute of repose would wipe out a corporation’s responsibility for putting a faulty product on the market if the fault does not show up for 15 years. If the fault injures a person in the 16th year, the negligent manufacturer or designer cannot be held accountable. This is the case even with products (such as machine tools) that have a useful life of 30 years or more.

Tort

Barron’s Law Dictionary defines a tort as “a civil [as opposed to criminal] wrong or injury resulting from a breach of legal duty that exists by virtue of society’s expectations regarding interpersonal conduct.”

A tort arises when all four of the following elements occur:

  • a defendant has a duty to a plaintiff (for instance, to ensure that a product is safe for use)
  • the defendant has breached that duty (for instance, the product has been made unsafe) and
  • the breach is the cause of an injury (or loss)

If, for instance, a defendant manufactures an unsafe product and sells it to a customer, but no injury or loss occurs, there has been no tort.

*Taken from the American Association for Justice webpage, at www.atlanet.org