Wednesday, January 17, 2007

Economics of trial counsel, Part 1

Many firms who handle plaintiffs cases don't try the cases themselves. Not everybody knows how, some don't want to do it anymore, sometimes the "trial guy" has left the firm, and sometimes there are unsolvable calendar conflicts. What considerations should go into employing outside trial counsel?

Why? Some cases have to be tried because the offer is zero or near zero, or because a liability verdict must be taken before an offer will be made (this applies in bifurcated trial jurisdictions, unified trials have different issues). Most cases reach their maximum settlement value at the time of trial. Not at the last "pre-trial conference", but when the carrier knows the trial IS actually happening and the plaintiffs are proceeding. This might be during jury selection, or right after, or when assigned to a trial part, or after opening, or after some plaintiff testimony. Whenever the exact time is for a partiular case, the biggest single jump in value is some time after the "trial" starts. I put that in quotes because to me, the trial starts when the attorney who is trying the case is in Court selecting a jury. It is often tempting for the attorney of record to hang in as long as possible and settle the case at the last moment before he'd have to either try the case himself or get a trial lawyer in there. We all know why attorneys do this.....to avoid that "turning point". The point where they are giving up a third (or more) of the fee. Waiting like this is a big mistake.....let me count the ways:

1. The good trial attorneys may not accept the case at this late juncture (more on this in Part 2), or the attorney you want may not be available.

2. You may have overlooked something a trial attorney would have done to maximize the value, and now it's too late.

3. You may spring this on the client so late, and so ineptly, that the client does not have confidence in your trial attorney.

4. You may think you have maximized the settlement, when you don't know how much better the trial attorney would have settled for, AND THEN, your client refuses to accept the offer.

5. You develop a reputation as someone who doesn't try his cases (or bring in trial counsel), and your offers reflect this.

It is true that sometimes the attorney of record will net less of a fee after the trial counsel comes in. Simple example: You had an offer of $15,000, so a fee of $5000 was yours, with $10,000 to the client (putting aside disbursements). You bring in trial counsel and settle the case for $18,000, with fees of $4000 to you, $2000 to trial counsel and $12,000 to the client. So, the client did $2000 better and you did $1000 worse. But the thing is, this is the RIGHT way to do things, and WAY more often, the trial attorney boosts that $15,000 to offer to $45,000, and you and the client both benefit.

Of course, trial counsel is able to do this when you bring them in early enough to help you....

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