A recent article by law professor Nora Freeman Engstrom in the Georgetown Journal of Legal Ethics explains why personal injury “settlement mills” exist and why, if you have a serious personal injury case, you should make sure that your lawyer is not running a settlement mill (hat tip Point of Law and Drug and Device Law for the original post).
A “settlement mill” is a law firm that handles a high volume of cases, usually specializing exclusively in a certain niche like car accident cases. These law firms, relying mainly on paralegals and administrative assistants, settle an astounding number of cases. In short, they focus on quantity and not quality. They aren’t interested in trying cases because, with the volume of cases that they have, there’s just no time for jury trials.
Why do these settlement mills exist? Prof. Engstrom theorizes that it’s because the insurance companies actually like settlement mills, despite having to fork over money to them in settlements. Professor Engstrom writes that insurance companies and settlement mills “share two sets of overlapping interests: speed and certainty.” Both insurers and settlement mill lawyers want to close out cases quickly – the insurers to take the case off their books and the lawyers so that they get paid.
The desire for certainty that insurers and settlement mills share comes in the form of certainty about damages. An insurance company doesn’t want a case to get to jury trial where a jury can award virtually any amount in damages for pain-and-suffering; it wants the certainty of a pre-trial settlement that caps its liability. Likewise, the lawyers at settlement mills want the certainty of a settlement rather than rolling the dice in a trial they’ll spend hundreds of hours preparing for but might ultimately lose.
As a result of their overlapping interests, settlement mills and insurance companies work out a tacit bargain: the insurance companies pay out small settlements of say $2,500-$5,000 to the settlement mills even in questionable cases. What they get in exchange is the certainty that the serious case, the one that might be worth millions in front of a jury, will almost assuredly never get to trial.
How can you tell if your lawyer is running a car accident settlement mill? Engstrom’s article identifies a number of characteristics of settlement mills, but they’re often hard for an outsider, such as a client, to assess. One red flag that she does mention is a so-called tiered contingency agreement. Under a tiered contingency agreement, the fee that you pay your lawyer goes up if your lawyer has to take the case to trial. If your lawyer offers you a tiered contingency agreement, run, don’t walk, away.
In addition to Engstrom’s warning about tiered contingency fee agreements, I’ve come up with a few more tips about how to spot a settlement mill:
- The law firm is very neat and organized. This one may sound a little funny. Don’t you want a lawyer who’s organized? Well, you want a lawyer who’s on the ball, but that doesn’t necessarily go hand in hand with having an office that’s immaculate at all times. But settlement mills are. They have to be ultra-efficient to handle the volume of cases that they do. That means they have to have an incredibly organized office. From the outside, it looks like they’re running a tight ship but all it really means is that they’re interested in turning over your case and moving on to the next one.
- They use a lot of specialized software. Companies come to me all the time trying to sell me legal software. I never buy any of it because I have no interest in buying and learning a piece of software that will save me a few seconds a day. Plus, most of what I do is too diverse for specialized software to be of much use to me. But in law offices that focus on a high volume of the same kind of cases, proprietary software is a necessary time-saver. So, for example, most title attorneys who do a great deal of residential closings have software programs that do a lot of the work for them. So too a lot of personal bankruptcy lawyers. The same holds true for the auto accident settlement mill lawyer.
- If you get to talk to a lawyer, the lawyer always calls you back instead of immediately taking your call. At a settlement mill, a paralegal or administrative assistant is doing most of the work on your case. And the settlement lawyer has way too many cases to have time to personally take your phone call. So it will be virtually impossible to get your lawyer on the phone. But for me, the dead giveaway is when you finally get to the end of your rope and go ballistic on the lawyer’s secretary, forcing her to talk to you on the telephone. You won’t be patched through by the secretary directly to the lawyer; the lawyer has so many clients that she knows nothing about you or your case and has to refresh her memory with the case file before calling you back to speak to you.
Today, the Transportation Department announced that the number of fatal car accidents caused by distracted driving declined in 2009. Nevertheless, the percentage of fatal car accidents caused by distracted driving remained steady at sixteen percent because the overall level of fatal accidents declined as well, to the lowest number since 1950.
My interest kindled by his blog, I’ve been reading Tom Vanderbilt’s book “Traffic: Why We Drive The Way We Do (And What It Says About Us.” It’s a fascinating quasi-anthropological study of the role of the automobile in our everyday lives. The book touches on a number of subjects, from road rage to city planning. But of greatest interest to most personal injury lawyers is his analysis of some of the surprising risk factors that play into many car accidents. Passengers would be wise to heed Vanderbilt’s advice: “Don’t drive in a pick-up truck with a beer-drinking divorced doctor on Super Bowl Sunday.”
Why shun doctors? They seem like a responsible lot; why are they at a greater risk of being involved in a car accident? The researchers don’t know for sure. Some possible theories include: 75 percent of doctors are male (and males are more likely to be involved in car accidents than women); doctors spend a lot of time driving in urban areas, dispensing advice via cell phone; and, last but not least, doctors may be more fatigued than the average driver (a New England Journal of Medicine study showed that interns working an extended shift are ten percent more likely to be involved in a car accident on their way home).
The Super Bowl Sunday risk factor is a famous result that was actually discovered by a doctor – Stanford researcher Donald A. Redelmeier – who was profiled in The New York Times last week for his quirky but illuminating public health research. Dr. Redelmeier’s findings that car accident fatalities spike by forty-one percent on Super Bowl Sunday prompted the National Highway Traffic Safety Administration to launch a program aimed at getting fans to stay off the road. Before the game on Super Bowl Sunday, the roads are as safe as any other time. During the game, there are actually fewer car accidents than normal because so many people are off the road, watching the game. But after the game (twenty times more beer is consumed on Super Bowl Sunday than a typical Sunday), the number of car accidents goes through the roof. Fans of the losing team – who perhaps were drowning their sorrows in alcohol (or who perhaps left the party right after the game, rather than staying to celebrate and thereby sobering up) – are much more likely to be involved in a Super Bowl Sunday car accident than fans of the winning team.
Divorce or a recent separation is linked with a fourfold increase in car crashes. The reasons for this are murky. But the research is consistent with other research showing that the never-married are much more likely to be in a car accident than the married-with-children. Having children makes you more likely to buckle up and more likely to drive cautiously (especially while the children are in the car).
Pickup trucks are another surprising car accident risk factor. More pickup truck drivers die per 100 million registered vehicles than any other style of car. Given pickup trucks’ size, you’d think that pickup truck drivers would be among the least likely to die in a car accident. But research has shown that a car’s size is of almost no importance when the car or truck collides with a fixed barrier like a tree or a bridge support. Some of the risk of pickup trucks may be connected to the fact that far more men than women drive pickups and men are much more likely to be involved in a car accident. Men also are much less likely to wear a seatbelt. Beyond those possible contributing factors, statisticians have a hard time sussing out why pickups are so dangerous.
So, whatever the reasons, don’t drive with a divorced doctor in a pick-up truck on Super Bowl Sunday.
Lawmakers in Indiana are puzzled by a new study showing that students who take driver’s ed classes are four times more likely to be involved in a car accident than those who don’t take the classes and instead merely take the license exam.
The study has led some lawmakers to propose that driver’s ed classes be overhauled. The curriculum has not been changed in 30 years.
The study seems counterintuitive but it’s easy to think of a few reasons why it might be true:
1.) The students who can afford to pay for driver’s ed classes are wealthier on average than the students who don’t take the classes and therefore are likelier to own their own car, leading them to rack up more mileage and causing them to be involved in more car accidents. The students who don’t take driver’s ed are poorer on average and therefore have less access to cars, causing them to be involved in fewer car accidents.
2.) The students who can’t afford to take driver’s ed worry that they are lesser-prepared than their driver’s ed counterparts and overcompensate by logging more hours practicing with family members or other (free) driving instructors. (This could easily be the case in a state like Massachusetts where driver’s ed only requires twelve hours of behind-the-wheel time. In Massachusetts, however, driver’s ed classes are mandatory for all drivers under eighteen.).
3.) Driver’s ed programs self-select for bad drivers: the students who enroll in driver’s ed are students who realize they need it. Driver’s ed coaches them up but doesn’t bring them to the same level as peers with better driving abilities (the least plausible explanation).
Today the BBC commemorated the 114th anniversary of Great Britain’s first fatal car crash with a feature story on the accident that claimed the life of Bridget Driscoll.
The story, retold through the conflicting testimony offered at the inquest into Driscoll’s death, is fascinating. Apparently, the car, driven by Arthur Edsall, had a top speed of four miles an hour, due to a governor that limited the car’s top speed.
How did Bridget Driscoll fail to get out of the way of a car traveling at the snail’s pace of four miles an hour? According to one witness at the inquest, Driscoll, “bewildered” by the strange sight of an automobile, froze in place in the roadway. Other testimony seemed to suggest that Edsall, who had only a few weeks’ experience behind the wheel, did not how to steer and may have inadvertently steered into Driscoll.
Of course, new technologies continue to cause accidents. This week brought news that Dr. Frank Ryan, a famed Hollywood plastic surgeon, drove off a cliff in Malibu while trying to upload a picture of his dog to Twitter. Nowadays it seems we’re not so bewildered by the operation of a car; we’re more likely to get in trouble by thinking we can multitask while doing it.
In January, on the heels of the terrifying tale of a state trooper and his family killed in a crash caused by their out-of-control Lexus, more reports of sudden uncontrolled acceleration problems with Toyotas began pouring in. Of course, skeptics were quick to point out that reports of uncontrolled acceleration problems with Toyotas resembled past claims of acceleration problems with various makes and models that had come to naught, especially the Audi acceleration flap of the early 1980s.
Since no one could point to any mechanism in Toyota’s (computerized) accelerators that would cause uncontrolled acceleration, these skeptics insisted that the problem must be driver error. At the time, I cautioned that we should keep an open mind – that the block box computer programs that regulate Toyotas’ acceleration and braking could conceivably have a bug, the same sort of bug that caused the Great Northeast blackout of 2003.
This week, the acceleration skeptics got welcome news as the National Highway Traffic Safety Administration announced its preliminary findings: in all of the Toyota acceleration cases investigated thus far, driver error has been found to be the cause of the braking failures. Yes, pedal misapplication – hitting the accelerator instead of the brake – is the leading culprit at this point in time.
Meanwhile this week came another story, a story about malfunctioning black boxes. Wall Street traders and government regulators are still probing the May 6 “flash crash” in which the Dow Jones inexplicably plunged nearly 1,000 points within a couple hours. Of course the bulk of stock trading is done by computers running proprietary algorithms that Wall Street banks have invested many more billions in than Toyota has spent engineering the computer systems in its late model cars. Investigators probing these trades are finding the black box computer algorithms used by traders produced bizarre “crop circle” graphs over the course of the flash crash.
It seems one might draw some parallels between the 2010 “flash crash” and an older stock market mystery that occurred around the same time as the 1980s Audi debacle: the Black Monday 1987 stock market crash that some chalk up to computer trading.
My position on the Toyota uncontrolled acceleration phenomenon has always been the same: when people complain that their cars (increasingly controlled by complex computer systems) are going haywire, we should take them seriously and investigate thoroughly because even the best-engineered systems can behave unpredictably. If investigation reveals that root of the problem is not a defectively designed product, but rather human-fueled hysteria, then so much the better for society.
I just wish the same people who are so quick to point to human error in the driver’s seat would be as quick to recognize human error in some of Wall Street’s follies.
In one of his “Markets in Everything” blog posts, Tyler Cowen introduces us to the (perhaps apocryphal) “Ticket Free” insurance – an insurance policy that drivers can obtain in addition to their primary liability policy that will pay for any tickets they get and the insurance surcharges associated with these tickets.
Ticket Free offers three different policies. The “Mini” exclusively pays for speeding tickets.The “Classic” covers other moving violations, such as illegal u-turns and running red lights and the “Enthusiast” covers everything from excessive window tint to having an excessively loud car stereo.
Although the fact that Ticket Free’s website no longer seems to be operational and it apparently never was registered with the California insurance commissioner suggests that it was pretty fly-by-night, this sort of insurance policy apparently is available in some Scandanavian countries, if blogging commenters are to be believed.
Needless to say, this sort of “ticket insurance” would be a bad idea for American roadways. As the comments to this blog post by law professor David Bernstein (himself recently ticketed) suggest, there are myriad ways that reckless drivers can get out of tickets – even citations issued on the basis of that gold standard of speed detection “lidar.”
The underenforcement of our traffic safety laws causes more numerous and more serious car accidents to occur. Let’s hope that just forcing traffic scofflaws to take time out of their day to show up to traffic court has some deterrent effect on them.
About ten 2010 car models come equipped with “lane departure correction” – a feature that automatically corrects the steering of drivers who veer outside their lane.
It seems like the next safety breakthrough, the next invention that, like the seat belt or the airbag, will prevent a million car accident deaths. But will it? Economist Alex Tabarrok is not convinced. He sees the “Peltzman effect” at work in NHTSA testing of the feature.
The “Peltzman effect” is a social science term used to describe the new risks that drivers take once they obtain new safety features – risks that offset, in whole or in part, the increase in safety provided by the new safety feature. Readers of this blog have previously seen the Peltzman effect at work in our posts about football helmets. Football helmets offer protection against head injuries, which encourages players to play more aggressively, ultimately leading to more head injuries.
One case study in the Peltzman effect is the twenty year old woman in the NHTSA study of lane departure technology who told NHTSA investigators that she would love to have the lane departure feature in her own car because then she could drive home after a night of drinking, instead of having to stay at a friend’s house. The new safety gains offered by the lane departure feature will be, at least partially, offset by the new risks this young woman will take in attempting to drive home while intoxicated.
Fortunately, the pessimistic tale of the Peltzman effect does not appear to be the whole story. The more careful statistical analysis carried out in the article that Tabarrok links to suggests that the safety gains from lane correction will not be canceled out by new risks and that, in fact, auto lane correction will prove a net safety benefit for drivers.
As a side note, I hope to have the opportunity in the next few weeks to blog about a book that Tabarrok co-authored a few years ago: Judge and Jury: American Tort Law On Trial. The book bears on a lot of what I’ve blogged about one thing. Its section on juries and how jury composition determines the size of awards provides some great insights that can help to explain why Massachusetts jury verdicts vary so widely by county. Also, contra the suggestion of some tort reform blogs (that have accused me of misrepresenting economists’ support for our tort system), Tabarrok is another mainstream market economist who gives our tort system a largely clean bill of health.
Before leaving for the weekend, here are some topics that I wish I had time to blog about the past week or two:
- Should Medicare and Medicaid reimburse doctors when they commit medical errors classified as “never events“? Is the categorization of “never events” fair?
- Would having your doctor warn you about the dangers of texting while driving reduce the number of accidents caused by texting?
Be careful on the roads and with fireworks and have a happy and safe Fourth of July.