Medical Malpractice Litigation and the Market for Plaintiff-Side Representation: Evidence from Illinois

Abstract

How concentrated is the market for medical malpractice (“med mal”) legal representation? Do successful plaintiffs’ lawyers start off with better cases to begin with, do they add more value to the cases they handle, or both? How do top plaintiffs’ lawyers market their services, and where did they go to school? How large are the “wages of risk” –the compensation to plaintiffs’ lawyers for working on contingency? How often do plaintiffs proceed pro se, and with what results? We address these questions using a dataset of every insured med mal case closed in Illinois during 2000-2010. We show that most plaintiffs have a lawyer. We quantify the market share, case mix, and amount recovered by the 1,317 law firms that handled med mal cases in our sample, stratify firms into four tiers, and assess differences across tiers. We find that the market for plaintiff-side med mal representation is both un-concentrated and highly stratified. At all firms, a small number of cases account for a heavily disproportionate share of total recoveries.We use the extensive covariates in our data to (imperfectly) address sample selection, and estimate the effect of having a lawyer and of law firm tier on outcomes. Controlling for observable claim characteristics, having a lawyer predicts large increases in the probability of prevailing and expected recovery. Higher-tier firms have only modestly higher success rates, but substantially higher expected recoveries. However, the differences shrink and are statistically insignificant when we compare top tier to second tier firms. This suggests that there are substantial benefits to having a lawyer – and a higher tier lawyer -- but diminishing marginal returns at the top of the market. Assuming that there is some unobserved case selection, our findings provide a plausible upper bound on the “value-added” by different tiers of plaintiffs’ lawyers.