In the article, “Run of the Mill Justice”, Nora Freeman Engstrom of Stanford Law School interviewed lawyers and paralegals at the "settlement mill" law firms, as well as studying their not-infrequent disciplinary files. What she found would look quite familiar to anybody involved in the securities class-action business: A small group of goal-directed players who engage in repeated rounds of the same game.
Her conclusion is surprising, but logical. Law firm "settlement mills" work because insurance companies like them. The financial "benefit" to insurance companies in just the incentive they hope for in personal injury cases.
Insurance companies choose to cooperate with settlement mills, in part because settlement mills appear willing to settle the largest claims — which present the highest chance of a catastrophic verdict — at an attractive discount. In addition, settlement mills and insurance companies share two sets of overlapping interests: speed and certainty. Insurers, it appears, cooperate with settlement mills, in even marginal cases, because cooperation is profitable. It is attractive to insurance companies to pay a settlement mill less than they believe they would have to pay a law firm that is not a settlement mill.
The article (hat tip to Drug and Device Law for bringing it to my attention) offers a fascinating tour through a little-scrutinized arm of the legal industry in which lawyers with little or no courtroom experience use advertising to draw in unsophisticated clients and process their claims at industrial levels of efficiency. Many of the claims involve “soft-tissue” injuries like neck sprains, which insurance-company research has shown tend to multiply in value when a lawyer is involved.
The problems arise, and opportunity for insurance companies arise, because settlement mill lawyers have no intention of filing suit---and the insurance companies know it. (Engstrom cites one Louisiana firm that tried four cases in a year and lost all of them, before deciding that was no way to make money in the law.) As she suggests, insurance adjusters know this. So they are more than willing to pay hundreds of questionable soft-tissue claims at $2,500 or $5,000 a pop to insure that the truly dangerous accident case, the kind the right jury might decide was worth substantially more, to an injured person, gets settled along with the rest. (Of course, the injured person never receives this information.)
Statistics show the trend. From 1992 to 2001 the number of accident suits filed in 17 states representing 53% of the U.S. population fell 14%, while the actual number of accidents rose. Insurance companies tell you that the US is "lawsuit crazy". these statistics tell quite a different story. the number of accidents has substantially increased, yet the number of lawsuits has substantially decreased. Lawsuit crazy? Hardly.
There are winners and losers in this game, Engstrom writes. The winners are the settlement-mill lawyers, who make nice incomes despite having subpar legal skills. the insurance companies also win, by paying less on claims to victims represented by settlement mill lawyers. The losers are the people injured in the accidents, and they never even know it. they are told that their case is not worth much, that a lawsuit will be expensive and take a long time. They end up consenting to low settlements "just to go away."
There are now so many of these mills, whose advertising engulf both TV and radio advertising. In addition, there are many law firms who know virtually NOTHING about personal injury cases, yet are willing to accept them in the hopes of making quick money.
How do you know the difference between a good, experienced lawyer and the others? The simple response: Ask. Ask the lawyer if he is experienced. Ask what percentage of his practice is devoted to personal injury. Ask if he files lawsuits and how many he has been involved in. Ask if he tries cases in court--and how many. Most importantly, ask if your lawyer is a Certified Specialist in Personal Injury and Wrongful Death. (Note: Less than 1% of all Arizona attorneys are Certified Specialists.).
It is sometimes difficult to choose the right attorney for your case. Most importantly, above all else, you should feel comfortable with your attorney. Asking the above questions should help.
