We analyze effects of noneconomic damages caps and attorney fee limits (AFLs) on the ability of people injured by negligent physicians to retain qualified lawyers to represent them. We employ survey data from 965 plaintiffs' attorneys who reported likelihoods of accepting hypothetical meritorious cases described by scenarios. We estimate how willingness to accept such cases increases with the expected hourly fees associated with them, and the estimates suggest substantial effects and plausible tradeoffs. We conclude that caps and AFLs make it harder to retain counsel in various circumstances, and we present policy simulations elucidating how several factors combine to determine these effects.
[Show abstract][Hide abstract] ABSTRACT: Previous research and commentary have suggested that the American plaintiffs’ bar is heterogeneous, and populated by firms with a range of characteristics, portfolio management strategies, and client recruiting techniques. Medical malpractice has been characterized as a narrow specialty within an already specialized segment of the legal profession. The purpose of this study is to examine patterns of specialization among plaintiffs’ firms that handle medical malpractice cases or have an interest in doing so, using data from 965 plaintiffs’ attorneys who responded to a 2006 national survey. We find significant bivariate and multivariate associations between measures of specialization in medical malpractice and firm-level characteristics, including firm size, case-taking selectivity, use of dollar-value thresholds in screening cases, and fraction of clients living near the firms’ offices. Our results suggest that: (1) specialization in medical malpractice involves a somewhat different set of professional attributes than does specialization in plaintiff-side contingency work more generally; (2) specialization in medical malpractice is significantly associated with several of the firm-level characteristics listed above; but (3) specialization is nevertheless difficult to predict with any confidence from any of these characteristics, either singly or in combination.
[Show abstract][Hide abstract] ABSTRACT: Despite claims of a judicial funding crisis, there exists little direct evidence linking judicial budgets to court utilization. Using data on thousands of auto injuries covering a 15-year period, we measure the relationship between state-level court expenditures and the propensity of injured parties to pursue litigation. Controlling for state and plaintiff characteristics and accounting for the potential endogeneity of expenditures, we show that expenditures increase litigation access, with our preferred estimates indicating that a 10 percent budget increase increases litigation rates by 3 percent. Consistent with litigation models in which high litigation costs undermine the threat posture of plaintiffs, increases in court resources also augment payments to injured parties. We present suggestive evidence that these effects are driven by general expenditures rather than judicial salaries.
The Journal of Legal Studies 06/2011; 40(2):295-332. DOI:10.1086/658863 · 1.35 Impact Factor
[Show abstract][Hide abstract] ABSTRACT: Lawyers’ Contingent Fee (CF) rates are rather uniform, often one-third of the recovery. Arguably, this uniformity attests to collusion in the market, resulting in clients paying supra-competitive fees. This paper challenges this common argument.Uniform CF rates are not necessarily superior to negotiable ones; yet they provide clients with an important advantage. They result in clients making a defacto “take-it-or-leave-it” offer. It precludes lawyers from exploiting their private information about the lawsuit’s expected value and the amount of work it requires. The uniformity of CF rates enables clients to hire the best available lawyer, either directly, if clients know lawyers’ ranking, or indirectly, through the referral system. This uniformity thus fosters a positive assortative matching of lawyers and clients. Finally, the fact that both direct clients and clients obtained through paid-for referrals pay the same CF rate does not attest to cross-subsidization, as the cases a lawyer gets through referrals are quite different than those she gets directly.
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