While the economy is in the midst of a recession Trial Lawyers are entering a sort of golden age. Statistically contingent fee lawyers have flourished during down times in our economy. During boom times juries are less sympathetic to the injured or wronged as they are feeling good and have sort of a get over it attitude and are less likely to award large awards. During down times jurors tend to empathize with the plaintiff as they feel less secure and at risk themselves. Amicus recently conducted an online poll of Plaintiff Lawyers and found that approximately 60% of lawyers who handle cases feel that they will do better economically in the coming years while just 20% anticipate doing worse.
Over the past 10 plus year’s insurance companies and defense firms had the luxury of delaying cases and dragging cases out even when they know they will ultimately lose the case just to weaken the trial bar. Insurance companies and big business no longer have the luxury of paying excessive defense bills just to drag out cases as far as possible. We are seeing firms more willing to settle in clear liability cases to stop the legal expenses. The other factor helping trial firms is the fact that the average defense firm is being severely hurt during this recession. Industry is no longer willing to pay large defense firms inflated billings and allow them to keep cases going just to keep billing. We are seeing a tremendous amount of layoffs among defense firms and billings are down drastically. In the past one of the defendant’s biggest advantages has been there deeper pockets and relatively unlimited resources. The tables have been turned and now the advantage lies with the trial bar.
Another tail wind for trial lawyers today is the fact that with the new administration tort reform has been taken off the table and in fact is expected to go back in the other direction and plaintiffs are expected to have their rights expanded. In addition to this recently the Supreme Court of the United States ruled in favor of consumers and against federal pre-emption in drug product liability cases. In addition there is talk of Congress unwinding Federal Pre-Emption in Medical Device cases.
The one negative we are seeing in this environment is that while companies are more apt to settle cases to stop the billing and move on we are seeing companies take as long as they are legally permitted to hold off on paying the agreed to settlement amount. If they have 60 days to pay, they will mail the check on the 60th day.
Today the majority of fixed costs of operating of running a law firm are dropping. (ie: rent, labor, experts, etc.) due to the recession while more and better quality cases are available to chose from.
Trial lawyers may see deeper peaks and valleys with their cash flow but overall will see more cases and of better quality generating higher verdicts and settlements. Fiscally savvy firms with strong financial discipline will be rewarded with higher overall margins and increasing net income over the coming years.