Opinion
No. 01-12.
March 12, 2002.
On order of the Court, this is to advise that the Court is considering an amendment of Rule 8.121 of the Michigan Court Rules. The proposed amendment is based on a recommendation by the Civil Division of the Wayne County Circuit Court. Before determining whether the proposal should be adopted, changed before adoption, or rejected, this notice is given to afford interested persons the opportunity to comment. The Court welcomes the views of all who wish to address the form or the merits of the proposal or to suggest alternatives. Before adoption or rejection, the proposal will be considered by the Court at a public hearing. Notice of future public hearings will be provided by the Court and posted on the Court's website, www.courts.michigan.gov/supremecourt.
Publication of this proposal does not mean that the Court will issue an order on the subject, nor does it imply probable adoption of the proposal in its present form.
[The present language of Rule 8.121 would be amended as indicated below.]
Rule 8.121 Contingent Fees in Claims or Actions for Personal Injury and Wrongful Death
(A)-(B) [Unchanged.]
[Alternative A]
(C) Computation. The amount referred to in subrule (B) shall be computed on the net sum recovered after deducting from the amount recovered all disbursements properly chargeable to the enforcement of the claim or prosecution of the action. In computing the fee, the costs as taxed and any interest included in or upon the amount of a judgment shall be deemed part of the amount recovered. In the case of a settlement payable in installments, the amount referred to in subrule (B) shall be computed using the present value of the future payments. If the defendant will purchase an annuity contract to fund the future payments, "present value" is the actual cost to the defendant of purchasing the annuity contract. If the defendant will make the future payments directly, "present value" is the amount that an entity of the same financial standing as the defendant would pay for an annuity contract.
[Alternative B]
(C) Computation.
(1) The amount referred to in subrule (B) shall be computed on the net sum recovered after deducting from the amount recovered all disbursements properly chargeable to the enforcement of the claim or prosecution of the action. In computing the fee, the costs as taxed and any interest included in or upon the amount of a judgment shall be deemed part of the amount recovered.
(2) In the case of a settlement payable in installments, the amount referred to in subrule (B) shall be computed using the present value of the future payments.
(a) If the defendant will purchase an annuity contract to fund the future payments, "present value" is the actual cost to the defendant of purchasing the annuity contract. If the defendant will make the future payments directly, "present value" is the amount that an entity of the same financial standing as the defendant would pay for an annuity contract.
(b) If the court must review the settlement, the court must appoint an independent actuarial expert to certify the cost of the annuity contract. The court may base its findings on the expert's testimony or affidavit.
(D)-(G) [Unchanged.]
Staff Comment: This proposal is based on a recommendation by a special committee formed by the Civil Division of the Wayne Circuit Court. That committee's report, which can be viewed on the Michigan Supreme Court's website, provides additional background information.www.courts.michigan.gov. Follow the hyperlinks to "Court Rules Administrative Orders", "Rule Amendments", and then this item "01-12".
If the parties to a lawsuit agree to a settlement that includes future installment payments, subrule (C) requires that the "present value" of the future payments be used to calculate any contingent attorney fee. But various circumstances can cause uncertainty about how to determine present value. These alternative amendments would specify that "present value" means the defendant's actual cost to purchase an annuity contract that will make the future payments. Or, if the defendant will self-insure the future payment obligation, then "present value" is the amount that an entity of the same financial standing as the defendant would pay to purchase an adequate annuity contract.
Alternatives A and B differ only to the extent that Alternative B's subrule (C)(2)(b) would require the court to appoint an independent expert who would provide a sworn oral or written statement of "present value" as it would be defined.
The staff comment is published only for the benefit of the bench and bar and is not an authoritative construction by the Court.
A copy of this order will be given to the secretary of the State Bar and to the State Court Administrator so that they can make the notifications specified in MCR 1.201. Comments on these proposals may be sent to the Supreme Court clerk in writing or electronically by July 1, 2002. P.O. Box 30052, Lansing, MI 48909, or MSC_clerk@jud.state.mi.us. When filing a comment, please refer to file 01-12.