§ 140.007.Attorney's Fees in Recovery Action

The common fund principle, written into statute.

Subsection (a): a payor whose interest is not actively represented by an attorney in the action shall pay the covered individual’s attorney a fee determined under an agreement between them, plus a pro rata share of expenses.

Subsection (b): absent such an agreement, the court shall award the attorney, payable out of the payor’s share of the total gross recovery, a reasonable fee for recovering the payor’s share — not to exceed one-third of it.

The justification needs little explaining. The payor’s money is produced by the injured person’s lawyer, who investigated, sued, and negotiated. A payor that contributed nothing and takes a share of the proceeds is being enriched by that work.

Subsection (c) handles the payor who does participate. Where the payor’s attorney actively participates in obtaining a recovery, the court shall award and apportion between the two attorneys a fee out of the payor’s subrogation recovery — considering the benefit accruing to the payor from each attorney’s service, with the total capped at one-third.

So the one-third ceiling is constant; what changes is who divides it.

"Actively participates" is the test, and it is a real one. A payor cannot avoid the fee by filing an appearance and doing nothing — the apportionment turns on benefit accruing from each attorney’s service.

Read this with the recovery cap, which already reduces each figure by fees and procurement costs where the individual is represented. The two work together so the individual’s share is measured after the cost of producing it.