§ 74.507.Award of Attorney's Fees

A two-step calculation answering a question the periodic payment scheme would otherwise leave open.

For computing the award of attorney's fees where the recovery will be paid in periodic payments, the court shall: place a total value on the payments based on the claimant's projected life expectancy; and reduce that amount to present value.

The difficulty is real. A contingent fee is a percentage of the recovery, and where the recovery is a stream of payments that may end at death, there is no obvious figure to take a percentage of.

The two steps pull in opposite directions, and that is deliberate. Projecting over life expectancy produces a large total; discounting to present value brings it back down. The result is what the stream is worth today.

Using life expectancy rather than the payment schedule matters. Most periodic payments terminate at death, so their actual total is unknowable in advance. Life expectancy supplies a determinate figure without waiting to see how long the claimant lives — which no one could do, since the fee is payable now.

Present value is the same measure used to decide whether the subchapter applies at all, so the court has already performed that exercise on the future damages award.