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

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  • David A. Hyman
  • Mohammad Rahmati
  • Bernard S. Black
  • Charles Silver

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 data set 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 amounts recovered by the 1,317 law firms that handled med mal cases in our sample, stratify the firms into four tiers, and assess differences across tiers. We find that the market for plaintiff‐side med mal representation is both unconcentrated 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 to estimate the effect of having a lawyer and law firm tier on outcomes. Controlling for observable claim characteristics, having a lawyer predicts a large increase in the probability of prevailing and the estimated recovery. Higher‐tier firms have only modestly higher success rates, but substantially higher estimated recoveries. However, the differences shrink and are statistically insignificant when we compare first‐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.

Suggested Citation

  • David A. Hyman & Mohammad Rahmati & Bernard S. Black & Charles Silver, 2016. "Medical Malpractice Litigation and the Market for Plaintiff‐Side Representation: Evidence from Illinois," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 13(4), pages 603-636, December.
    • Handle: RePEc:wly:empleg:v:13:y:2016:i:4:p:603-636
    DOI: 10.1111/jels.12127
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    References listed on IDEAS

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    1. Mohammad Rahmati & David A. Hyman & Bernard Black & Charles Silver, 2016. "Insurance Crisis or Liability Crisis? Medical Malpractice Claiming in Illinois, 1980–2010," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 13(2), pages 183-204, June.
    2. Stephen J. Spurr, 1990. "The Impact of Advertising and Other Factors on Referral Practices, with Special Reference to Lawyers," RAND Journal of Economics, The RAND Corporation, vol. 21(2), pages 235-246, Summer.
    3. Spurr, Stephen J, 1987. "How the Market Solves an Assignment Problem: The Matching of Lawyers with Legal Claims," Journal of Labor Economics, University of Chicago Press, vol. 5(4), pages 502-532, October.
    4. Imbens,Guido W. & Rubin,Donald B., 2015. "Causal Inference for Statistics, Social, and Biomedical Sciences," Cambridge Books, Cambridge University Press, number 9780521885881, November.
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