The Economics of Plaintiff-Side Personal Injury Practice
42 Pages Posted: 4 Aug 2009 Last revised: 12 Sep 2015
Date Written: September 11, 2015
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: Suggested Citation