LEGAL ETHICS OPINION 1696     CONTINGENCY FEE ON MEDICAL PAYMENTS
                              WHEN THERE IS NO RELATIONSHIP
                              BETWEEN CLIENT AND INSURANCE CARRIER
                              MAKING THE PAYMENT

You have presented a hypothetical situation in which an attorney
represents a client in a personal injury claim.  The fee agreement
provides that the attorney will receive 30% of any amounts obtained
for the client, including medical payments coverage which might
exist under the tortfeasor's insurance.

Under the facts you have presented, you have asked the committee to
opine as to the propriety of the attorney applying a contingency
fee to medical payments obtained by attorney on behalf of the
client when there is no contractual or other relationship between
the insurance carrier and the client regarding medical payments
coverage.

During the course of representing the personal injury client, the
tortfeasor's insurance carrier ignores your two written inquiries
regarding the availability of medical expense coverage.  In
addition, you indicate that it was necessary to convince the
tortfeasor's insurance company that the medical treatment for which
payment is sought was "accident related" and "medically necessary." 

The appropriate and controlling disciplinary rules relative to your
inquiry are DR 2-105(A) & (C) which state respectively that "A
lawyer's fees shall be reasonable and adequately explained to the
client" and "A fee may be contingent on the outcome of the matter
for which the service is rendered, except in criminal cases or
other matters in which a contingent fee is prohibited by law.  A
contingent fee arrangement shall state the method by which the fee
is to be determined, including the percentage or percentages that
shall accrue to the lawyer in the event of settlement, trial, or
appeal, the expenses to be deducted from the recovery and whether
expenses are to be deducted before or after the contingent fee is
calculated.  Upon conclusion of a contingent fee matter, the lawyer
shall provide the client with a closing statement showing the fee
and the method of its determination."  Further guidance is
available in Ethical Considerations 2-19 and 2-20.

The committee has previously opined that it is improper for a
personal injury claimant's attorney to charge a contingency fee for
the collection of medical expense payments under the claimant's own
insurance policy if collecting the medical payments involved merely
the gathering and submission of the client's medical bills to the
carrier for payment.  Where the process is ministerial in nature
and payment by the insurer is automatic, the committee has
concluded that a contingency fee is unreasonable and improper. 
Legal Ethics Opinions 1641, 1461; DR 2-105(A).

In the facts you present, claimant's attorney is proceeding against
the tortfeasor's insurance policy for medical expense payments, not
the client's own insurance.  The tortfeasor's insurance carrier
ignored and later questioned the attorney's requests for medical
expense payments, making the task more difficult and requiring the
attorney to apply legal skills, knowledge, experience and advocacy
to effect a settlement.  Under these extenuating circumstances,
where the pursuit of medical payments becomes a more complex task,
a contingent fee arrangement may be appropriate.  LEO 1461, supra. 


This does not mean that a contingency fee arrangement is
appropriate for all medical expense claims made against third party
insurers.  The issue is whether the services of an attorney are
reasonably necessary to secure the payments from the insurance
company. 

In the facts you present, the committee believes that it would not
be improper to include the medical expense payments collected as
part of the gross recovery against which the contingency fee is
charged.

[DRs 2-105(A), 2-105(C); ECs 2-19, 2-20; LEOs 1461, 1641]

Committee Opinion
March 7, 1997