By Robert Saavedra Teuton
The Nevadans for Fair Recovery ballot initiative seeks to cap contingency fees on all forms of recovery in all Nevada civil cases at 20 percent, after costs. Here are five areas of the legal community that the initiative will impact.
1. Clients
Currently, the typical contingency fee offered by civil attorneys is between 30 to 40 percent. See generally, NRCP 1.5, prohibiting lawyers from charging unreasonable fees. Even with this standard fee, it often makes little economic sense for an attorney to pursue small cases. Recognizing this, the legislature enacted NRS § 18.010(2)(a), which allows the prevailing party to recover attorney’s fees when that party “has not recovered more than $20,000.” However, § 18.010(2)(a) is at risk of being effectively abrogated by the ballot initiative because it resembles a contingency fee. Regardless of § 18.010(2)(a), small claimants will be most affected.
Claimants with medium or large claims may also be negatively affected, especially if their claims are particularly time-consuming or require significant costs to prove (think expert witnesses). And the 20 percent cap will further incentivize law firms to keep costs low and, consequently, resolve claims as quickly as possible. But if a claimant can find an attorney, the ballot initiative will probably allow them to take home more than they would have otherwise.
2. Courts
Courts should expect to see less cases that are typically funded on contingency fees, especially small-sized cases. Superficially, this looks like a benefit for our, often, overworked court system. But fewer cases also mean less revenue from filing fees on the cases that are, theoretically, easier to adjudicate and consume less court resources. Moreover, court expenses are fixed (salaried employees, infrastructure expenses, etc.), so taxpayers won’t be saving money via reduced court dockets.
3. Broader legal community
The preamble to the ABA Model Rules of Professional Conduct touts the benefits of a self-regulated legal community. The ballot initiative, however, is an extrinsic regulation. It’s an open question how impacted the broader legal community will be. Will lawyers as a whole benefit from a more positive reputation because some will be required to lower their fees (assuming there’s no workaround)? Will there be a race to the bottom in terms of billable hour rates when many plaintiff attorneys are forced to find other legal work? We will see.
4. Defense counsel
For practice areas like personal injury and labor, less plaintiffs mean less billable hours for defense counsel. But for the remaining cases, defense counsel can take comfort in knowing their adversaries are under increasing pressure to settle their claims quickly to preserve their profits—assuming their adversaries’ business models does not change.
5. Plaintiffs’ counsel
If the bill is successful, plaintiffs’ counsel in contingency fee-based practice groups will either have to switch to an hourly rate model, refrain from taking large numbers of small cases, or perish. For those switching to an hourly rate model, it may only make sense to take on small- and medium-sized cases if paid hourly fees, regardless of the case’s outcome, by litigation funders.
About the author
Robert Saavedra Teuton was born and raised in Las Vegas. He clerked for the Chief Justice of the Arizona Supreme Court, was an associate attorney at Burg Simpson, and is now an associate attorney at Ballard Spahr.
About the article
This article was originally published in the Communiqué (Jan. 2025), the official publication of the Clark County Bar Association. See https://clarkcountybar.org/about/member-benefits/communique-2025/communique-jan-2025/.
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