Fee Caps – And the Harm to the Patient that Results

There is a lot of talk about capping fees in medical malpractice cases.  Fees are already capped, of course, at one-third of the recovery, but the health care industry wants further limitation on fees charged to plaintiffs in successful cases.

Why?  Because they’re not stupid.  They understand that a lower  fee cap means that fewer cases will be filed and those that are filed will be filed by less qualified lawyers.  Why?  Because lawyers generally will not file cases when they cannot earn a fair return for their efforts on the case.  And more qualified lawyers will file still fewer cases because they can earn a better return on other types of work.  Reduced filings mean reduced indemnity payments and defense costs, which means more profits for insurers, which presumably will lead to reduced insurance rates.  Filings by less qualified lawyers means more defense wins, which means more profits for insurers, which once again will presumably lead to reduced insurance rates.

What about statutory limitations on fees paid to defense counsel?  Wouldn’t that save defendant’s money?  Of course it would, but that would affect the quality of the lawyer who is willing to defend malpractice cases.  A very good or great lawyer will not be willing to work for below-market rates.

But doesn’t  fee caps for patient’s lawyers and no fee caps for defense lawyers that mean that medical malpractice defendants will be able to hire better lawyers than patients?  And doesn’t it mean that those lawyers will be able to do more work on each case making it more difficult for the plaintiff’s lawyer to economically prosecute the case successfully?  Exactly. 

I was provoked to write this post by an article I read in the December 8, 2008 edition of the  National Law Journal.  White & Case of New York has one or more partners who charge $1260 per hour (that’s over $20 per minute).   It’s lowest associate rate is $365 per hour (that is more than 10 cents per second for a first-year lawyer) and the highest associate rate is $665 per hour.

The numbers were reported for only two Tennessee firms.  Baker Donelson’s rates  for partners range from $230 to $525 per hour and $120 -$330 for associates.  Bass Berry’s rates for partners range from $240 to $575 per hour and $180 to $310 for associates.

Let me be clear on three points.  I know that Tennessee defense lawyers don’t earn the big bucks for defending medical malpractice cases.  However, they do get the freedom to charge the market rate, something plaintiff’s lawyers are prohibited from doing (because of the fee cap, the market is not allowed to work).

Second, I could care less what big law firms charge for their services.  Once again, the market sets the rates, and one could hardly suggest that big-law’s clients are not sophisticated consumers of legal services and therefore make informed decisions about what they should pay.  Big-law charges what it charges, big-law clients pay what they pay, and the world goes on.

My only point is that the market should be permitted to work, hampered only by the ethical responsibilities on lawyers as set forth our disciplinary rules.     Further fee regulation will only hamper the ability and willingness of high-quality lawyers to represent patients in medical malpractice cases.  Indeed, the current fee cap already contributes to the rejection of meritorious cases that cannot be economically pursued.  This leaves injured patients harmed twice -first by the health care system, and second by the legal system.