The Economics of Plaintiff-Side Personal Injury Practice

42 Pages Posted: 4 Aug 2009 Last revised: 12 Sep 2015

See all articles by David A. Hyman

David A. Hyman

Georgetown University Law Center

Bernard S. Black

Northwestern University - Pritzker School of Law; Northwestern University - Kellogg School of Management; European Corporate Governance Institute (ECGI)

Charles Silver

University of Texas at Austin - School of Law

Date Written: September 11, 2015

Abstract

Little is known about the economics of plaintiff-side law firms, which typically work on a contingency fee basis. We begin here to fill that gap. We report on the fees received by 124 plaintiff-side personal injury firms located in four states (Illinois, Texas, and two additional undisclosed states), and estimate the impact of various statutory fee caps on those firms. At all of the firms, cases with modest fees may help to keep the lights on, but occasional “blockbuster” cases account for an overwhelming percentage of earned fees. A one-third contingency fee is the most common arrangement, but is not always collected ex post; when recoveries are low, firms often reduce or waive their fee. The estimated effect of caps on contingency fees varies, depending on cap design and the mix of cases a firm handles. But many fee caps dramatically affect the economics of plaintiff-side personal injury practice.

Keywords: contingency fee, personal injury, medical malpractice, tort reform

JEL Classification: K13, K32, K41

Suggested Citation

Hyman, David A. and Black, Bernard S. and Silver, Charles M., The Economics of Plaintiff-Side Personal Injury Practice (September 11, 2015). Northwestern Law & Econ Research Paper No. 13-22; U of Texas Law, Law and Econ Research Paper No. 512; Illinois Program in Law, Behavior and Social Science Paper No. LBSS13-28. Available at SSRN: https://ssrn.com/abstract=1441487 or http://dx.doi.org/10.2139/ssrn.1441487

David A. Hyman (Contact Author)

Georgetown University Law Center ( email )

600 New Jersey Avenue, NW
Washington, DC 20001
United States

Bernard S. Black

Northwestern University - Pritzker School of Law ( email )

375 E. Chicago Ave
Chicago, IL 60611
United States
312-503-2784 (Phone)

Northwestern University - Kellogg School of Management

2001 Sheridan Road
Evanston, IL 60208
United States
847-491-5049 (Phone)

European Corporate Governance Institute (ECGI)

Brussels
Belgium

Charles M. Silver

University of Texas at Austin - School of Law ( email )

727 East Dean Keeton Street
Austin, TX 78705
United States
512-232-1337 (Phone)
512-232-1372 (Fax)

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