Brickman questions Dietz et al.'s analysis of effective hourly rates on a number of grounds.227 Much of Brickman's critique is ill-founded, or simply wrong.228
Brickman's first criticism is that figures based upon which Dietz et al. calculated the effective hourly rate rely upon the recall of the lawyers.229 However, more problematic than the
recall issue is the fact that few of the contingent fee lawyers probably kept time records; as a result, the hours worked on a case is frequently an estimate at best. What we do not know is whether this estimate tends to be low or high; obviously, if lawyers underestimate time, the calculation of the effective hourly rate will be high, and if they overestimate time, the calculation will be low. I know of no evidence one way or the other that would allow us to decide in what way, if any, the hours estimate is biased.
Brickman's second criticism is that the figures given for typical effective hourly rate is the mean, and the mean can be misleading if the data are highly skewed (i.e., a small number of extreme values can shift the mean toward those extreme values). Dietz et al. present both mean ($47) and median ($50) figures for the hourly rates charged by defense lawyers;230 the similarity
of these figures reflects the lack of skew in hourly rates (the rates ranged from $36 to $60). Why the authors reported the mean effective hourly rate is not clear.
231Elsewhere in his article, Brickman considers the mean/median problem with regard to jury verdicts and notes that average awards were "skewed by a few very large awards"; Brickman, supra note 5, at 101 n281. Why he thinks that the possibility of skew strengthens his critique of Dietz et al. is entirely unclear.
232
Brickman, supra note 5, at 132. 233
The opposite could be true if the additional amount of time required by medical malpractice cases was sufficient to reduce the effective hourly rate below that earned in other kinds of cases.
234
See Dietz et al., supra note 100, at 116.
It is unlikely that the mean would be lower than the median in effective hourly rates.231 For
example, take the following hypothetical set of 95 cases:
rate 0 10 25 40 50 60 80 100 125
occurrence 25 10 10 10 10 10 10 5 5
For these 95 cases, the mean and the median are virtually identical: 39.7 and 40.0 respectively. Now if we add to this some big winners— one each at 150, 250, 500, 1000, and 2500— the median remains unchanged at 40.0 but the mean more than doubles to 81.7.
Brickman's third criticism of reliance on Dietz et al. is that one cannot extrapolate from medical malpractice cases to all contingent fee cases. This is certainly true, but as Brickman himself points out jury verdicts in medical malpractice cases tend to be much larger than in many other types of cases.232 If anything, this would mean that we should expect typical effectively
hourly rates to be higher in medical malpractice than in other areas. That is, the figures in Dietz et al should be greater than that which would be true of all contingent fee cases.233
I should mention one last point raised by Dietz et al. but ignored by Brickman. Dietz and his colleagues noted that defense lawyers reported a lower proportion (46-62%) of plaintiff wins than did plaintiffs' lawyers (80-84%).234 This may mean, as Dietz et al. point out, that the
estimated mean effective hourly rate is high because it undercounts the true proportion of zero outcomes.
235
I would note that while Brickman criticizes data on effective hourly rates earned by contingent fee lawyers, he accepts at face value the hourly rates quoted by hourly fee lawyers.
236
Brickman, supra note 5, at 134.
My conclusion from a careful assessment of the Dietz et al. study and Brickman's critique of it is that it is a reasonable estimate of the return earned by plaintiff's lawyers in medical malpractice cases in the early 1970s. It could be somewhat low or somewhat high, but it is probably not off in an extreme fashion one way or another. One further caveat I would note is that the stated hourly rates by defense lawyers may be somewhat misleading. The insurance industry is reputed to be successful in getting defense attorneys to bill at a relatively low rate; however, attorneys are often said to compensate for the low rate by using procedures such as unit billing (i.e., presuming that an activity takes a minimum amount of time, such as any letter written requires at least 1 hour to write) or other means to build up hours in a way that a contingent fee lawyer would not do. As one lawyer with a general litigation practice said to me:
We give our insurance company clients a very good rate because they bring a lot of work to us. But we charge them for every minute, and they pay by return mail.
This may mean that the differential between quoted hourly rates by defense lawyers and effective hourly rates earned by contingent fee plaintiffs' lawyers is smaller than Dietz et al. suggest.235
CLRP Data
Brickman's key critique of the figures (or, more accurately, my "figure" because he only seems to consider the overall median, $42) from the CLRP study is that they seem inconsistent with some data on lawyer's incomes and hourly rates.236 In particular, he cites data from an
237
Another indication of the constituency served by Altman and Weil is that few academic law libraries get the Altman and Weil reports because they are extremely expensive. My local law librarian suggested that I call one of the big firms in Milwaukee only a firm like that was likely to spend the money to purchase the report. hourly rate of $96 while the average reported rate for all litigators was $130. Altman and Weil also found that the average annual income of insurance defense lawyers is $135,516 compared to $163,134 for plaintiffs' lawyers. He asks how my figures can be correct if plaintiffs' lawyers actually do better than defense lawyers.
His comparison is problematic for a variety of reasons. First, the hourly rate figures for plaintiffs' lawyers are useless because they include uncritically hourly rates quoted by lawyers who do most of their litigation on a contingent fee basis; the hourly fee figure is a paper figure that probably has little relationship to reality. Second, the Altman and Weil figures are much higher than any others I have seen; as I discussed above, I have looked at economic surveys done for or by a number of state bars, and none report figures as high as those reported by Altman and Weil. Part of the reason for this is that Altman and Weil report means while most other studies report medians; the result is that Altman and Weil's figures are probably skewed by a small number of high income lawyers. However, even when this is taken into account, the firms that respond to Altman and Weil (from my examination of several of their reports) seem to be on the upper end in terms of income.237 In some ways, the fact that the mean income of plaintiffs'
lawyers is higher than the mean for defense lawyers may simply reflect a relatively small proportion of very high incomes.