Contingent Fee System Research Articles

MEDICAL MALPRACTICE AS A TORT IN THE U.S., AS A CRIME IN ITALY: FACTORS, CAUSES, PATHS AND OUTCOMES

The aim of the paper is, firstly, to try to understand the reasons for the different approaches to medical malpractice in two legal systems taken as models: the U.S., where professional negligence is almost exclusively subject of tort law; Italy, where criminal law instruments are instead widely used. The different extent of criminal responsibility for negligence and omission seems connectable to different political and cultural models: individualistic liberalism, on the one hand, solidarist statism and communitarianism, on the other hand; in juridical terms, to the ideal contrast between the reactive State and the active State; to the different approach to the relationship between subject and body, dominical-individual versus collectivist-social; with a tendential "privatization" of the health-good, in the US model, and a "socialization" of the good-health itself, in the Italian model. Secondly, the paper tries, in a comparative perspective, to evaluate these different approaches, in terms of access to justice, paths and outcomes of the two models. The article attempts to highlight the strengths and the weaknesses of the contingent-fee system in the U.S. tort arena, and of the criminal justice system as "free legal aid" in Italy: a balanced solution should also allow victims hindered by the costs and the length of civil actions the possibility of using these latter form of protection, avoiding that criminal justice is exploited for compensatory purposes. Indeed, tort law more easily can meet compensatory claims, due to the lower probative standard required, the preponderance of evidence, rather than the beyond any reasonable doubt standard, required in criminal law. Also in terms of outcomes, the main problems arising in the two systems need to be tackled: the problem of few persons compensated, allowing a greater number of injured parties to access to justice and obtain fair compensation; the problem of symbolic criminal convictions (observed in the Italian experience), avoiding the automatic use of suspended penalties and monetary penalties as substitute of penalties weighing on professional practice and freedom, since these automatic mechanisms limit the preventive effectiveness of the criminal sanction and run the risk of creating discrimination on a census basis.

Do Poor People Sue Doctors More Frequently? Confronting Unconscious Bias and the Role of Cultural Competency

There is a perception that socioeconomically disadvantaged patients tend to sue their doctors more frequently. As a result, some physicians may be reluctant to treat poor patients or treat such patients differently from other patient groups in terms of medical care provided. We (1) examined existing literature to refute the notion that poor patients are inclined to sue doctors more than other patients, (2) explored unconscious bias as an explanation as to why the perception of the poor being more litigious may exist despite evidence to the contrary, and (3) assessed the role of culturally competent awareness and knowledge in confronting physician bias. We reviewed medical and social literature to identify studies that have examined differences in litigation rates and related medical malpractice claims among socioeconomically disadvantaged patients versus other groups of patients. Contrary to popular perception, existing studies show poor patients, in fact, tend to sue physicians less often. This may be related to a relative lack of access to legal resources and the nature of the contingency fee system in medical malpractice claims. Misperceptions such as the one examined in this article that assume a relationship between patient poverty and medical malpractice litigation may arise from unconscious physician bias and other social variables. Cultural competency can be helpful in mitigating such bias, improving medical care, and addressing the risk of medical malpractice claims.

“It is no longer viable from a practical and business standpoint”: damage caps, “hidden victims”, and the declining interest in medical malpractice cases

This article investigates two propositions concerning the effects of a key tort reform measure in the United States – non-economic damage (i.e., pain and suffering) caps in medical malpractice cases. The first says plaintiffs' lawyers, who rely on contingency fees, will stop representing certain clients in such cases. The second goes farther, saying lawyers will handle fewer malpractice cases generally. Using survey and interview data from plaintiffs' lawyers in Texas, the article presents strong evidence for both propositions. In doing so, it provides an excellent illustration of the theoretical idea of plaintiffs' lawyers as rational actors constantly adjusting their practices – their businesses – to changes in their working environment. The findings show how a cap on non-economic damages affects the practices of plaintiffs' lawyers by limiting damages to a degree that significantly alters the incentive structure that lies at the heart of the contingency fee system.

'The Juice Simply Isn't Worth the Squeeze in Those Cases Anymore:' Damage Caps, 'Hidden Victims,' and the Declining Interest in Medical Malpractice Cases

This paper empirically investigates two overlapping propositions: that plaintiffs' lawyers will stop handling certain clients in medical malpractice cases in the face of caps on non-economic damages; and/or that plaintiffs' lawyers, particularly those who specialize in medical malpractice, will handle fewer malpractice cases generally. Relying primarily on material from in-depth interviews conducted with Texas plaintiffs' lawyers after Texas enacted a $250,000 cap on non-economic damages in 2003 and from a mail survey of Texas plaintiffs' lawyers conducted in 2006, the article shows there is strong evidence for both propositions. In doing so, the findings provide an excellent illustration of the theoretical idea of plaintiffs' lawyers as relatively rational actors who are constantly trying to adjust their practices - their businesses - to changes in their working environment and that those adjustments can have wide-ranging consequences. Understanding this is crucial for assessing the effects of tort reform. The findings show how tort reform - here a specific change in the formal law - affects the practices of plaintiffs' lawyers by limiting damages to a degree that significantly alters the incentive structure that lies at the heart of the contingency fee system. If the damage recovery potential is limited too severely in light of the costs and risks for a particular type of case, plaintiffs' lawyers may well avoid those cases, thereby diminishing meaningful access to the rights the law provides.

The Medical Malpractice Insurance Crisis, Again

The real crisis presented by the breakdown of our malpractice litigation and insurance system is that the wrong people are getting most of the money. Often, the people who sue have substantial injuries but dubious liability claims, while many people with legitimate claims can't even assert them. As a result, many doctors are angry and resentful toward patients who bring frivolous claims, and many patients with legitimate but unredressed grievances are disgusted by their lack of access to justice. The sad result is a breakdown in confidence and trust between doctor and patient. And that produces a perception of poor quality health care, as well as a dysfunctional community. If you want to understand what this latest malpractice insurance crisis is about, a good way to start would be to dissect that phrase: medical malpractice insurance crisis, because what we are dealing with is, in fact, three separate but related developments. The component is entirely a function of expectations. In the last sixty years, the public's expectations of its health care system have risen dramatically, thanks to advances in science and the longer life expectancy and better quality of life they have delivered. But that generates great anger when the profession fails to deliver. For example, forty years ago, virtually no one sued a neurosurgeon. If you were going to a neurosurgeon, you were almost certainly going to die, and if there was anything the neurosurgeon could do to defer that result, you were enormously grateful. As the technology and capability of neurosurgery developed, expectations of the specialty grew as well. Neurosurgeons at least have the advantage of treating very sick patients, individuals who fully comprehend the gravity of their circumstances. Contrast this with the lot of the obstetrician, whose patients have the same expectation: a happy and healthy baby. They experience the physician's failure to meet that with the greatest imaginable disappointment. It is the distance that the obstetric malpractice plaintiff travels from the reasonable expectation of a perfect outcome to the devastating fact of a neurologically impaired newborn that fuels the intensity of brain damaged baby lawsuits. In this regard, doctors are victims of their own success and their failure, or inability, to communicate to their patients that they can't guarantee a good outcome in every case. The malpractice part of the malpractice insurance crisis is rooted in a flawed system for adjudicating negligence claims for which no one is currently held responsible. For any malpractice claim to move through the courts, be it meritorious or frivolous, the active support of three players is required. First, the potential malpractice plaintiff must find a lawyer. Because of the expense of prosecuting malpractice cases, the typical method for finding a lawyer is the lure of the contingent fee system, whereby plaintiff's lawyers, who are professional gamblers, agree to prosecute an action on behalf of a plaintiff and charge no fee unless the action ends in a financial award. Say what you will about this system, without it no one other than the wealthiest members of our society could use the courts to adjudicate civil grievances. Advocates of the current system argue that the contingent fee system helps discourage cases that lack merit. If plaintiffs' attorneys must invest substantial amounts of time and money in a case, they have a strong motivation to accept only meritorious cases likely to produce a significant recovery. But this is only partly true. Although rational self-interest filters out many potential legal actions, the criteria typically applied by the plaintiffs' counsel to case selection favor less meritorious cases with great economic value over more meritorious claims with limited compensable injury. The second critical player in the malpractice litigation process is the plaintiff's expert. …

Aligning the Interests of Lawyers and Clients

The potential conflict of interest between lawyers and clients is well known. If a lawyer is paid for his time regardless of the outcome of the case, the lawyer may wish to bring the case even when it is not in the best interest of the client, may spend more hours working on the case than the client would want, and may reject a settlement when the client would be better off if it were accepted. Alternatively, if the lawyer is compensated according to the conventional contingent fee arrangement - under which he is paid a fraction of any trial award or settlement but bears all of the cost of litigation - the lawyer may have an insufficient incentive to bring the case, may spend too little time working on it if it is brought, and may encourage a settlement when the client would be better off going to trial. In this article we propose a method of compensating lawyers that overcomes the conflict of interest between the lawyer and the client. Our system is a variation of the conventional contingent fee system, but, in contrast to that system, we would have the lawyer bear only a fraction of the cost of litigation - the same fraction that the lawyer obtains of the award or settlement. We demonstrate that when the fraction of the cost that the lawyer bears equals the fraction of the award or settlement that he obtains, he will have an incentive to do exactly what a knowledgeable client would want him to do with respect to accepting the case, spending time on the case, and settling the case. Under our modified contingent fee system, a third party would compensate the lawyer for a certain fraction of his costs, in return for which the lawyer would pay that party an up-front fee. In this way, the client would not bear any costs, even if the case is lost, just as under the conventional contingent fee system.

Aligning the Interests of Lawyers and Clients

August 2001 Aligning the Interests of Lawyers and Clients A. Mitchell Polinsky and Daniel L. Rubinfeld * Abstract: The potential conflict of interest between lawyers and clients is well known. If a lawyer is paid for his time regardless of the outcome of the case, the lawyer may wish to bring the case even when it is not in the best interest of the client, may spend more hours working on the case than the client would want, and may reject a settlement when the client would be better off if it were accepted. Alternatively, if the lawyer is compensated according to the conventional contingent fee arrangement — under which he is paid a fraction of any trial award or settlement but bears all of the cost of litigation — the lawyer may have an insufficient incentive to bring the case, may spend too little time working on it if it is brought, and may encourage a settlement when the client would be better off going to trial. In this article we propose a method of compensating lawyers that overcomes the conflict of interest between the lawyer and the client. Our system is a variation of the conventional contingent fee system, but, in contrast to that system, we would have the lawyer bear only a fraction of the cost of litigation — the same fraction that the lawyer obtains of the award or settlement. We demonstrate that when the fraction of the cost that the lawyer bears equals the fraction of the award or settlement that he obtains, he will have an incentive to do exactly what a knowledgeable client would want him to do with respect to accepting the case, spending time on the case, and settling the case. Under our modified contingent fee system, a third party would compensate the lawyer for a certain fraction of his costs, in return for which the lawyer would pay that party an up-front fee. In this way, the client would not bear any costs, even if the case is lost, just as under the conventional contingent fee system. Stanford University and National Bureau of Economic Research; and University of California, Berkeley, respectively. Polinsky's research was supported by the John M. Olin Program in Law and Economics at Stanford Law School. Rubinfeld's research was undertaken in part while he was a visitor at New York University Law School. We received helpful comments from Joseph Bankman, Kevin Clermont, Douglas Cumming, Andrew Daughety, Winand Emons, Frank Easterbrook, Nuno Garoupa, Robert Hall, Jennifer Reinganum, Steven Shavell, and Kathryn Spier.

The Breast Implant Fiasco

This article, a review essay of Marcia Angell's Science on Trial, begins by discussing the history of breast implant litigation. The implant litigation was not driven by scientific evidence, but by political posturing by self-proclaimed consumer activist Sidney Wolfe, FDA Commissioner David Kessler, and others, sensationalistic media coverage, public opinion inflamed by revelations that implant manufacturers had not followed up on concerns about the potential health effects of silicone, and a contingency fee system that encourages speculative litigation. Once plaintiffs' attorneys won a few big, early victories through superior lawyering, reliance on junk science, and emotional appeals to juries, this attracted investment by other attorneys and created an irrepressible flood of litigation. Next, this article discusses reforms of the American tort system that would reduce attorneys' financial incentives to bring scientifically-dubious claims. First, courts should establish and enforce strict standards for the admissibility of scientific evidence. Second, the contingency fee system should be replaced with the British conditional fee system. Finally, trial procedures should be reformed to increase the probability that fact-finders will arrive at scientifically-correct judgments. Finally, this article considers and rejects recent proposals to allow plaintiffs in toxic tort cases to recover damages for their illnesses without proof of causation if there is proof of defendant's negligence. Instead, the article proposes a legislative solution, akin to whistle-blower statutes and qui tam provisions, that would permit individuals to bring an action in a federal tribunal against a company that is negligently putting the health of the public at risk.

The Breast Implant Fiasco

This article, a review essay of Marcia Angell's Science on Trial, begins by discussing the history of breast implant litigation. The implant litigation was not driven by scientific evidence, but by political posturing by self-proclaimed consumer activist Sidney Wolfe, FDA Commissioner David Kessler, and others, sensationalistic media coverage, public opinion inflamed by revelations that implant manufacturers had not followed up on concerns about the potential health effects of silicone, and a contingency fee system that encourages speculative litigation. Once plaintiffs' attorneys won a few big, early victories through superior lawyering, reliance on junk science, and emotional appeals to juries, this attracted investment by other attorneys and created an irrepressible flood of litigation. Next, this article discusses reforms of the American tort system that would reduce attorneys' financial incentives to bring scientifically-dubious claims. First, courts should establish and enforce strict standards for the admissibility of scientific evidence. Second, the contingency fee system should be replaced with the British conditional fee system. Finally, trial procedures should be reformed to increase the probability that fact-finders will arrive at scientifically-correct judgments. Finally, this article considers and rejects recent proposals to allow plaintiffs in toxic tort cases to recover damages for their illnesses without proof of causation if there is proof of defendant's negligence. Instead, the article proposes a legislative solution, akin to whistle-blower statutes and qui tam provisions, that would permit individuals to bring an action in a federal tribunal against a company that is negligently putting the health of the public at risk.

Medical Malpractice and the Tort System-Reply

In Reply.— I appreciate the concerns expressed by Drs Kalenak and Meyerowitz. These letters raise specific malpractice issues that I did not address in my article, but also suggest the need to consider that medical malpractice litigation is only one aspect of the broader relationship between law and medicine. Both Drs Kalenak and Meyerowitz raise the issue of the contingency fee system as a potential cause of medical malpractice claims and awards. Although I have not conducted the analysis suggested by Dr Kalenak myself, recent work by Sloan et al 1 and earlier work by Danzon 2 provide some insight. Both studies, using multiple regression techniques on different data sets, concluded that neither attorneys per capita nor limitations on contingency fee arrangements had statistically significant effects on claim frequency or award severity. As to attorney density, Danzon concluded that for every 10% increase in attorney density, malpractice award severity rose

Litigation‐produced pain, disease and suffering: An experience with congenital malformation lawsuits

AbstractThe exponential rise in malpractice litigation is due to attitudes and happenings in the medical, legal and lay sectors of our society. Evaluation of congenital malformation lawsuits provides a unique opportunity to evaluate the process of litigation. Because the cases are rarely meritorious, the litigation process is detrimental to the plaintiff, society and frequently unfair to the defendant. There is no area of our legal system with such a high percentage of innocent defendants. When the family of a malformed infant becomes orchestrated by an attorney into a position of devoting their energy to winning a lawsuit, many high priority family responsibilities may be ignored and important ethical standards are distorted. To win at all costs may be appropriate for a football team but it can be detrimental to a family. The family enters the litigation arena unaware of the lengthiness of the litigation process and ignorant of the fact that only a small portion of the malpractice premium dollar ever reaches the patient. The plaintiffs are not the only participants who lose their objectivity and lower their ethical standards. The quality and veracity of the testimony of expert witnesses has deteriorated to the point that drastic corrective measures have to be instituted. It is believed that recommendations for solving the malpractice crisis, which are based on the experience with congenital malformation lawsuits, should have applicability to the overall malpractice problem and must involve changes in the medical, legal and lay sectors of our society. These recommendations are discussed in detail. It must be recognized that it is difficult to alter the laws and procedures that are not of benefit to the legal profession because so many legislatures are dominated by elected officials who happen to be attorneys. But it is emphasized that of all the recommendations put forth, the one having the greatest beneficial effect on the present malpractice crisis would be the elimination of the contingency fee system and replacing it with no‐fault compensation or legal‐fee insurance. The contingency fee system provokes and promotes malpractice litigation. The process of litigation rarely solves the patient's problems and frequently develops into a disease all its own.

Contingent Fee System

To the Editor.— I disagree with McCabe ( 219 :756, 1972) that the contingent fee system is superior to what I recommended ( 218 :1301,1971). My proposed law would practically eliminate vexatious litigation, the bonanza of the American Trial Lawyers Association; at the same time it would care for the poor man with a justifiable complaint. He would be furnished with a lawyer and the necessary funds to sue the wrongdoer. Further, my proposal, which is the law that they have in most of the civil law countries of mid-Europe (not in England), does not outlaw the contingent fee system. Nevertheless, with this law the contingent fee arrangement will no longer be a major factor in promoting malpractice suits, as most physicians think it does at present. The contingent fee system does not deter baseless claims as McCabe contends; it does just the opposite. It promotes vexatious litigation. Thus far, physicians have

Contingent Fees and Malpractice

To the Editor.— I read, with much interest, Van Zante's LETTER with regard to contingent legal fees. The contingent fee system is certainly less than perfect. I feel sure that all attorneys would prefer to be paid on the basis of time spent and not on result accomplished. However, the contingent fee opens the courts to all who have been wronged, regardless of their ability to pay, and is far superior to the system which was suggested by Van Zante in his LETTER. The system he suggests closely follows the procedure in England where contingent fees are illegal. The contingent fee system does deter baseless claims. I can think of no better way to prevent the institution of a meritless claim than to tell the lawyer that he will not be paid for his time and effort and may well be obligated to pay for the preparation of the case

Reports of the Board of Trustees on the Malpractice Problem

Three reports 1 of the Board of Trustees of the AMA on the malpractice problem are of interest to its membership. The first noted that since World War II professional liability has become a matter of growing concern to the medical profession, with an increased tendency of people to sue doctors and with more frequent and higher jury awards. One reason for the increase in malpractice claims has been, ironically, the increased skills of modern physicians, leading the public, encouraged by glowing articles in the lay press of new wonder drugs and miracle operations, to expect successful treatment in all cases, When expectation is not fulfilled the patient is prone to seek redress for malpractice. Another major reason is the contingent fee system where the lawyer receives one-third to one-half of the amount recovered, while the patient pays no legal fees if the case is lost. If the verdict is