Advisory Opinion 37
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State Disciplinary Board
Advisory Opinion No. 37
January 20, 1984
Attorney's Fees for Collecting PIP Benefits
Pursuant to the provisions of Rule 4-223 of the Rules and Regulations for the Organization and Government of the State Bar of Georgia (219 Ga. 873, as amended), the State Disciplinary Board of the State Bar of Georgia, after a proper request for such, renders its opinion concerning the proper interpretation of the Code of Professional Responsibility of the State Bar of Georgia.
Question Presented: Is it ethically proper for an attorney to take a contingent fee from a client's PIP benefits?
Opinion: The applicable ethical rules are DR 2-106 and Standard 31(b) of Bar Rule 4-102. Directory Rule 2-106 provides in part:
DR 2-106--Fees for Legal Services.
(A) A lawyer shall not enter into an agreement for, charge, or collect an illegal or clearly excessive fee.
(B) A fee is clearly excessive when, after a review of the facts, a lawyer of ordinary prudence would be left with a definite and firm conviction that the fee is in excess of a reasonable fee. Factors to be considered as guides in determining the reasonableness of a fee include the following:
(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;
(3) the fee customarily charged in the locality for similar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the circumstances;
(6) the nature and length of the professional relationship with the client;
(7) the experience, reputation, and ability of the lawyer, or lawyers performing the services; (8) whether the fee is fixed or contingent.
Standard 31(b) allow an attorney to "contract with a client for a reasonable contingent fee in a civil case" (emphasis added).
Under the Georgia Motor Vehicle Accident Reparations Act (O.C.G.A. §§ 33-34-1 through 13) all insurance policies must provide for compensation to injured persons, without regard to fault, for medical expenses, loss of wages, some expenses and burial expenses. This insurance coverage is generally known as PIP coverage. Payments of PIP benefits are required to be made within thirty (30) days after the insurance carrier receives reasonable proof of the fact and the amount of loss. All that is needed to file for PIP benefits is a simple, factual claim form.
The basis on which attorneys are allowed to take contingency fees is that the claim on which the attorney represents the client is itself contingent. Blacks Law Dictionary defines contingent as "possible, but not assured."
Except in unusual circumstances, the benefits paid under PIP coverage are assured. It is the opinion of this Board that the taking of a contingency fee for the filling out of routine, undisputed PIP claim forms is unreasonable and a violation of DR 2-106(B)(1) and Standard 31(b). An attorney may charge a reasonable fee for the attorney's time spent in processing a PIP claim.
In those unusual circumstances when the payment of PIP benefits is not assured, this Board does not wish to prohibit contingency fees in general. However, the attorney should examine the factors set out in DR 2-106(B) to determine whether a contingent fee arrangement would be reasonable.
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