Medical Malpractice Litigation and the Market for Plaintiff-Side Representation: Evidence from Illinois

35 Pages Posted: 23 Jul 2014 Last revised: 13 Jul 2016

David A. Hyman

Georgetown University

Mohammad Hossein Rahmati

Sharif University of Technology

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

Multiple version iconThere are 2 versions of this paper

Date Written: June 25, 2016

Abstract

How concentrated is the market for medical malpractice (“med mal”) legal representation? Do successful plaintiffs’ lawyers start off with better cases to begin with, do they add more value to the cases they handle, or both? How do top plaintiffs’ lawyers market their services, and where did they go to school? How large are the “wages of risk” –the compensation to plaintiffs’ lawyers for working on contingency? How often do plaintiffs proceed pro se, and with what results? We address these questions using a dataset of every insured med mal case closed in Illinois during 2000-2010. We show that most plaintiffs have a lawyer. We quantify the market share, case mix, and amount recovered by the 1,317 law firms that handled med mal cases in our sample, stratify firms into four tiers, and assess differences across tiers. We find that the market for plaintiff-side med mal representation is both un-concentrated and highly stratified. At all firms, a small number of cases account for a heavily disproportionate share of total recoveries.

We use the extensive covariates in our data to (imperfectly) address sample selection, and estimate the effect of having a lawyer and of law firm tier on outcomes. Controlling for observable claim characteristics, having a lawyer predicts large increases in the probability of prevailing and expected recovery. Higher-tier firms have only modestly higher success rates, but substantially higher expected recoveries. However, the differences shrink and are statistically insignificant when we compare top tier to second tier firms. This suggests that there are substantial benefits to having a lawyer – and a higher tier lawyer -- but diminishing marginal returns at the top of the market. Assuming that there is some unobserved case selection, our findings provide a plausible upper bound on the “value-added” by different tiers of plaintiffs’ lawyers.

Keywords: med mal, personal injury, litigation, success rates, propensity score

JEL Classification: K13, K32, K41

Suggested Citation

Hyman, David A. and Rahmati, Mohammad Hossein and Black, Bernard S. and Silver, Charles, Medical Malpractice Litigation and the Market for Plaintiff-Side Representation: Evidence from Illinois (June 25, 2016). Illinois Program in Law, Behavior and Social Science Paper No. LBSS 14-14; Northwestern Law & Econ Research Paper No. 13-31; U of Texas Law, Law and Econ Research Paper No. 536. Available at SSRN: https://ssrn.com/abstract=2465098

David A. Hyman (Contact Author)

Georgetown University ( email )

Washington, DC 20057
United States

Mohammad Hossein Rahmati

Sharif University of Technology ( email )

Graduate School of Business and Economics
Sharif University of Technology
Tehran
Iran
+98-21-6604-9195 (Phone)

HOME PAGE: http://gsme.sharif.edu/~rahmati/

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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