I hope that the following comments help focus the issues, so as to
help you guys wrap up this question. I'll apologize in advance for not
getting into the "corporate" issue raised in the first request for
clarification.
I. Illinois
The general rule for the assignment of actions in Illinois is set
forth in Kleinwort Benson North America v Quantum Financial Services,
181 Ill. 2d 214; 692 N.E.2d 269 (1998) (citations omitted):
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At common law, many actions were neither assignable nor survived the
death of a claimant. Eventually, however, the law in this area changed
and provided that certain actions would survive the death of a
claimant and pass to the claimant's estate. ... In turn, the personal
representatives of a decedent were essentially perceived as assignees
of the decedent's property. ... Thus, historically, survivability and
assignability were treated similarly because, in both instances, a
claim was being transferred from one entity to another. Based on this
historical development, in determining assignability, this court has
considered whether the action would survive the death of the owner.
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That particular case involved the assignment of an action for fraud.
The defendant argued that, while an assigned fraud claim could support
an award of actual damages, a punitive damages claim would not have
survived the death of the claimant and thus would not be assignable.
The Illinois Supreme Court disagreed: "We hold that the former
shareholders of Quantum may properly seek punitive damages after
Quantum's assignment of the fraud claim to them."
Note that it is not necessary for the plaintiff to be deceased for the
plaintiff to assign the claim. If the cause of action would survive
the plaintiff's death, the cause of action would ordinarily be
assignable even if the plaintiff remains alive. (The type of cause of
action that usually survives a plaintiff are typically business or
economic torts, as opposed to personal injury (not resulting in
death). I did not delve enough into Illinois law to find where its
boundaries lie.
II. Texas
The general rule regarding assignment of causes of action in Texas is
set forth in Gray v Estell, 2001 Tex. App. LEXIS 1887 (2001)
(Unpublished) (citations omitted):
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The general rule in Texas is that causes of action, including personal
injury actions, are assignable absent a statutory bar. ... The
assignee may maintain the suit in the assignor's name. ... The
assignee may recover either in his own name or in that of the
assignor. ...
However, the Texas Supreme Court and this Court have held some
assignments invalid despite the language of section 12.014 indicating
all causes of action are assignable. ... Texas courts may invalidate
assignments on the basis of public policy considerations.
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Thus, as Texas does not follow the typical common law restrictions on
assignment of claims, it is necessary to research specific causes of
action in relation to public policy. It may be possible to find these
answers in a legal encyclopedia; otherwise, case law research must be
done on each cause of action.
The case alluded to above, regarding an attempt to assign a
malpractice case, is Mallios v Baker, 11 S.W.3d 157; 43 Tex. Sup. J.
254 (1998). "Mallios propounded only the second theory -- that Baker's
legal malpractice claim is barred because he purportedly assigned it
to Herron and that such an assignment contravenes public policy. But
even assuming Mallios is correct that the agreement between Baker and
Herron violates Texas public policy, an issue we do not decide today,
the question remains whether that invalidity would entitle Mallios to
a take-nothing judgment on Baker's malpractice claim."
III. "Class Actions"
A class action normally arises where a law firm, on behalf of a
plaintiff or group of plaintiffs, proposes to a court that it certify
a class of plaintiffs who have suffered similar injury from the same
set of events. If a class is certified, typically most members of the
class only then find out about the litigation, as they are given
notice of the action and their rights.
It is possible for a law firm to prosecute an action even on behalf of
multiple plaintiffs - even a large group of plaintiffs - while
representing those plaintiffs in their individual capacity. If this is
done, there is no necessity to get a class certified by the court, and
the action does not take the form of a "class action".
IV. "Contingent Fees"
Some states have hard caps on contingent fees. Michigan, for example,
caps contingent fees at 1/3 of the total recovered in a cause of
action. There are some states which have no limit other than
"reasonableness", although typically in those states contingent fees
stop at around 50%. Research of the ethical rules of Texas and
Illinois should reveal the limits on contingent fees for those states,
although in fairness to richard I think that researching those limits
would fall outside the scope of the original question. |
