TV law firm “settlement mills” blasted in legal ethics journal

TV advertising law firmsLawyers and paralegals who had previously worked at personal injury firms that advertise heavily on television, billboards and bus placards have told me many tales about the business model of those firms.

They have told me how lawyers may be responsible for 600 cases at a time, with 100 or more in litigation.

They have told me how young lawyers in some of those firms are paid only for work on cases they settle before suit, so they have an extreme vested interest in taking whatever an insurance adjuster is willing to offer at that early stage, selling the client’s interest short. They have told me how in some firms non-attorneys employees actually negotiate with claims adjusters with no substantial attorney involvement. They have told me how those firms threaten clients that if they do not accept the insurance company’s pre-suit offer, they may be required to pay the other side’s attorney fees, long before suit is filed or the defense invokes the “offer of judgment” rule that would make that even theoretically possible.

That is a business model but not the practice of law as I know it. Every time I have accepted a case after a client left one the the big advertising firms, I have found that with moderate amount of real lawyer work, I have been able to increase the recovery 8 to 10 times beyond what a lawyer or paralegal at the prior firm had been pressuring the client to accept. It appeared that the case handling strategy at those firms was “sign ’em and flip ’em.”

Run-of-the-Mill Justice” by Stanford Law professor Nora Freeman Engstrom, published in Georgetown Journal of Legal Ethics in 2009, analyzed the practices of “settlement mill” law firms — those that “advertise aggressively, sign a higher percentage of callers to contract, delegate more duties to non-lawyers, file fewer lawsuits, and take far fewer cases to trial” than legitimate law firms and attorneys.

Over the past three decades, no development in the legal services industry has been more widely observed and less carefully scrutinized than the emergence of firms I call “settlement mills”—high-volume personal injury law practices that aggressively advertise and mass produce the resolution of claims, typically with little client interaction and without initiating lawsuits, much less taking claims to trial. Settlement mills process  tens of thousands of claims each year. Their ads are fixtures on late-night television and big-city billboards.

These settlement mills differ from conventional law practices because they settle everything, and do so without the negotiator having the benefit of “(1) first-hand information about verdicts obtained in comparable cases, (2) detailed information about the intricacies of the particular claim, and (3) the proven willingness and ability to take the claim to court.”

Settling all cases  — including the catastrophic cases —  cheaply in relation to the value the cases would have at trial, the settlement mills lack the ability to credibly move cases to jury trial, but offer insurance companies quick, cheap settlements.

Attorneys at settlement mills handle an extraordinarily high number of cases, necessarily treating them in “cookie cutter” fashion. Consequently, they spend “little time engaged in legal research, investigating claims, and preparing pleadings.” The article reports that “one Georgia settlement mill attorney reports that she personally settled approximately 600 to 700 claims in a thirteen-month span.” That is absolutely consistent with what I have been told by a number of lawyers who had left such firms.

Client screening and even settlement negotiations are delegated to non-lawyers. Cases may go from intake to settlement without any attorney contact. That is consistent with what paralegals who once worked at such firms have told me.

Many of these settlement mills seldom file suit or investigate cases, and almost never take a case to trial or refer to a firm that is capable of doing so.

Negotiations with insurance adjusters may take no more than ten minutes, and then clients are pressured to take whatever it offered. (Thus the slogan “one call that’s all” may be literally true — one call to the insurance company is all you get.)

Such settlement mills prey upon uneducated and unsophisticated people who don’t know any better than to respond to heavy TV advertising. Since TV advertising lawyers are stigmatized among lawyers and judges, the attorneys in those firms no longer feel bound by a need to maintain good reputations in the profession. Thus, there is no need to do good work for clients in order to maintain a strong reputation among other attorneys. If a lawyer relies solely upon heavy advertising to produce clients, reputation and relationships do not matter. All they need is a heavy advertising budget and a steady flow of unsophisticated, unsuspecting clients to sell down the river.

They negotiate claims on the basis of formulas that have little to do with the value of cases if they were taken to trial.

The article concludes that insurance companies like settlement mills because they settle quickly and cheaply, even in catastrophic cases, without litigation.

Bar organizations can do little about law firms that operate in this manner because federal courts bar tough regulation of legal advertising. Their operations operate “under the radar” because most of them almost never file their cases in courts. They are the kudzu of the legal system, operating in a manner generally contrary to the interest of their clients and the public, and just as hard as kudzu to limit.

 

Ken Shigley is a past president of the State Bar of Georgia (2011-12) and past chair of the American Association for Justice Motor Vehicle Collision, Highway and Premises Liability Section (2015-16).  He is one of only 18 Georgia lawyers with double board certification in Civil Trial Advocacy and Civil Pretrial Advocacy, and lead author of Georgia Law of Torts: Trial Preparation and Practice (Thomson Reuters, 2010 – present).    Mr. Shigley has extensive experience representing parties in trucking and bus accidents  products liability, catastrophic personal injury, wrongful death, brain injury, spinal cord injury and burn injury cases. 

 

  • Ken,
    Great post. I’ve written about Professor Engstrom’s article as well. The practices of these “settlement mills” are shameful. Like you, we routinely hear horror stories from the victims of these settlement mills. I can only imagine the number of these firms you must see in a large legal market like Atlanta.