Arkansas Senate Passes Proposal To Limit Lawsuit Awards And Attorneys' Fees

Feb 17, 2017

The Arkansas Senate on Thursday voted 21-10 to approve a resolution, SJR8, which places limitations on attorneys’ fees and a $250,000 cap on awards in injury lawsuits. The proposed constitutional amendment also transfers courtroom rulemaking authority from the state Supreme Court to the Legislature.

The measure could end up as one of three the Legislature sends to voters for consideration on the 2018 general election ballot. If passed, it would take effect in 2019.

[Hear a report by Arkansas Public Media with even more details.]

The proposal limits attorney’s contingency fees to 33.3 percent of the net amount of recovery in a lawsuit. It would allow the Legislature to establish penalties if contingency fees exceed the percentage and set a different maximum percentage in the future through a two-thirds vote.

The measure mandates that punitive damages in lawsuits shall not exceed $250,000. Punitive damages in lawsuits could not exceed three times the amount of compensatory damages. The limitations would not apply if the harm caused by the defendant in a lawsuit was found to be purposeful. The General Assembly would be able to raise the caps with a two-thirds vote.

The proposal also limits non-economic damages, defined in the resolution as “damages that cannot be measure by money” to include “pain and suffering, mental and emotional distress, loss of life or companionship, visible result of injury, or physical impairment.” The non-ecomic damages limit would be set at $250,000 dollars for each claimant. A limit of $500,000 in awards would apply to beneficiaries of a deceased person.

The measure also allows the Legislature to adjust limitations based on inflation and deflation with a simple majority vote.

Another provision of the bill addresses rulemaking on courtroom “pleading, practice and procedure.” The power to write court rules now rests with the Arkansas Supreme Court, but SJR8 transfers that authority to the Legislature.

The resolution’s primary sponsor, Republican Sen. Missy Irvin of Mountain View, opened her presentation on the Senate floor by suggesting that the legislation would be an economic boon.

“This is pro-growth policy that of civil justice reform that will make Arkansas more competitive in winning businesses and investments to our state, which will add more jobs for our citizens. It will grow our economy into a robust engine for greater economic development all across the state of Arkansas,” Irvin said.

Irvin and other supporters of the legislation have argued that businesses in the state are burdened by the uncertainty that they may be held liable in potentially costly lawsuits involving workers or patrons. Placing the limitations on lawsuit awards would remove that uncertainty and attract more industries to locate in the state, they say.

“As soon as the voters vote on this legislation, we can guarantee there will be more businesses attracted [here]. Right now we’re an island in the sea of different places [that have similar laws]. We’ll become a beacon to attract businesses,” Republican Sen. Trent Garner of El Dorado said while defending the bill.

In a floor debate lasting nearly an hour, Republican Sen. Jeremy Hutchinson of Benton criticized the provisions on rulemaking, saying the Legislature “didn’t have the time to study all the ramifications.” He agreed there should be caps on lawsuit award amounts because, he said, “companies need to have some way to forecast what their exposure is going to be.”   

But Hutchinson, a lawyer, was most critical of the section limiting attorney’s contingency fees to a third of the net amount of the recovery in a lawsuit. He said the Legislature shouldn’t mandate what a clients and lawyers decide among themselves.

“Those are two private parties contracting with each other,” Hutchinson said. “God forbid we do this when it comes to the sale of furniture. We would never, never say, I’m not going to let a furniture salesman make three percent or 33 percent. We would never in a million years, I hope. That’s called price fixing. It’s socialism, folks.”

Others were more critical of transfer of power over court rulemaking. Democratic Sen. Will Bond of Little Rock called the move a “wholesale takeover of the judiciary.”

“Sometimes around here we have a hard time running committee meetings. Right? Now we want to take over a whole entire state court system,” Bond said.

Democratic Sen. Linda Chesterfield of Little Rock characterized the limitations on awards as a jab at the most vulnerable.

“It just amazes me that every time we start talking about something that’s going to hurt the little guy, we call it reform. This is something that is not reform…It’s about putting a number on the value of human life,” she said.

Chesterfield also criticized the court rulemaking provisions for throwing a system of checks out of balance.

“We [the Legislature] are usurping the authority of the courts. Who is going to check us?” she asked.

But the resolution’s primary sponsor, Republican Senator Missy Irvin of Mountain View, argued the transfer of authority would empower citizens. She characterized SJR8 as a reversal of Amendment 80 of the Arkansas Constitution, which voters passed in 2000. It gave the Supreme Court authority to determine jurisdiction, processes and court rulemaking. The Legislature had previously held those powers.

“Any legislation does run the risk of the Supreme Court saying no to this legislative body. The legislative body is the people’s body. We are a citizen legislature….I heard this was a wholesale takeover of the judicial system. No. This is not a wholesale takeover of the judicial system. What they did with Amendment 80 was a wholesale takeover to the legislative branch,” Irvin said.

One Democrat joined 20 Republicans in voting for the proposal. Three Republicans joined seven Democrats in voting against it. Three members chose not to cast a vote and one member was not present. The measure now heads to the House of Representatives, where more than 50 members are cosponsors.