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Opinion 660

Question Presented

Does Professional Ethics Opinion 549 (August 2003), which addressed the calculation of a lawyer’s contingent fee in a workers’ compensation case, apply outside the context of workers’ compensation?

In Opinion 549, this Committee concluded that “a lawyer representing a workers’ compensation claimant in [a] third-party action pursuant to a contingent fee arrangement may not collect a fee from the client/claimant based on the gross recovery, part of which is required to be paid to the workers’ compensation carrier.” The question considered now is whether this conclusion applies to situations outside the workers’ compensation context in which a client’s recovery may be reduced by a subrogation claim.

For example, consider the case of an injured client who is insured under an individual health insurance policy. The policy in question contains subrogation and right-of-reimbursement provisions that appear to require the client to pay the insurer out of any recovery from the tortfeasor, without any reduction for attorney fees or expenses. In representing such a client under a contingent-fee agreement, may a lawyer collect a fee from the client based on the entire amount of recovery from the tortfeasor? Or must the lawyer deduct from the fee calculation the amount that the client, under the insurance policy, is obligated to reimburse the insurer?

Bluebook Citation

Tex. Comm. On Professional Ethics, Op. 660 (2016)