LAW REVIEW

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NEW YORK UNIVERSITY

LAW REVIEW

OLUME

86 O

CTOBER

2011 N

UMBER

ARTICLES

SUNLIGHT AND SETTLEMENT MILLS

ORA

REEMAN

NGSTROM

Accident compensation, and particularly auto accident compensation, is typically

thought to take one of two dichotomous forms: either no-fault or traditional tort.

Further, conventional wisdom holds that while pure no-fault may be an option in

theory, it is not one in practice. No pure no-fault auto regime has ever been enacted

in the United States, and states these days are repealing, rather than enacting, modi-

fied no-fault legislation. Yet something peculiar is happening on the ground. Far

out of the light of day, high-volume personal injury firms that I call “settlement

mills” are quietly achieving many of no-fault’s objectives—speeding recoveries,

lowering systemic costs, and delivering relatively standardized sums to an appar-

ently expanded set of clients—while ostensibly operating within traditional tort.

What settlement mills are accomplishing, then, is in some respects astonishing—and

certainly commendable. Yet, the fact settlement mills’ distinctive operations are out

of the light of day and rarely revealed to clients is problematic, raising profound

issues of informed consent and highlighting severe information deficiencies in the

market for legal services. A well-designed disclosure regime can preserve settlement

mills’ substantial benefits, ameliorate their unique costs, and, more broadly,

improve the tort system’s operation and address the vexing problem of attorney

choice.

* Copyright



2011 by Nora Freeman Engstrom, Assistant Professor, Stanford Law

School. My ongoing research on settlement mills is supported by a research grant from the

American Bar Association (ABA) Section of Litigation. However, the views expressed

here are not intended to represent ABA positions or policies. I am grateful to Agnes

Chong for excellent research assistance and to Richard Abel, Dmitry Bam, Samuel Bray,

David Freeman Engstrom, James Greiner, C. Scott Hemphill, Deborah Hensler, Daniel

Ho, Chimene Keitner, Herbert Kritzer, Robert Rabin, Deborah Rhode, and John Fabian

Witt, as well as participants in the Bay Area Civil Procedure Forum and Vanderbilt Uni-

versity Law School’s New Voices in Civil Justice workshop, for their insightful comments

on previous drafts. Finally, I am indebted to the current and former settlement mill

employees who cooperated with this project. All errors are mine.

805

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806 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

NTRODUCTION

................................................. 807

I. S

ETTLEMENT

ILLS

ISTINCT

OMPENSATION

ECHANISM

............................................ 814

A. The Usual Dichotomy: No-Fault Versus Traditional

Tort ................................................. 814

B. Settlement Mills as a Blended Mechanism ........... 816

1. The Texas Law Firm of Joe W. Weiss .......... 817

2. The California Law Firm of Jim Rogers ........ 821

II. C

OSTS AND

ENEFITS

................................... 824

A. Settlement Mills in Substance ........................ 824

1. Transaction Costs ............................... 824

2. Delay ........................................... 825

3. Court Congestion ............................... 826

4. The Litigation Lottery .......................... 827

5. Access to Justice ................................ 829

6. Fabricated or Exaggerated Claims ............... 833

B. Settlement Mills in Form: The Mill Masquerade ..... 835

1. Settling for Less: The Under-Compensation of

the Most Seriously Hurt ......................... 838

2. Unauthorized Practice of Law .................. 841

3. The Matter of Fees .............................. 845

III. T

EED FOR

EFORM

................................ 849

A. Disparate Justice, D´ej`a vu ........................... 850

B. The Trouble with the Current Regulatory

Architecture ......................................... 854

1. Disciplinary Controls ........................... 854

2. Liability Controls ............................... 856

3. Institutional Controls ............................ 858

4. Informal Controls: The Reputational

Imperative ...................................... 858

C. The “Pin-the-Tail-on-the-Donkey” Problem of

Attorney Choice ..................................... 859

1. Market Forces: Existing Insufficiencies and

Inefficiencies .................................... 860

2. Practitioner Referral Networks: An Illustration of

a Broken Market ................................ 862

IV. A P

ROPOSAL FOR

EFORM

............................. 865

A. Mandatory, Public Closing Statements .............. 866

B. Facilitating Client Use ............................... 868

C. Predictable Effects .................................. 871

1. How Would Lawyers and Law Firms Change

Their Conduct? ................................. 874

2. How Would Settlement Mills Fare? ............. 878

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 807

D. Some Pitfalls ........................................ 880

1. Singling Out Contingency Fee Practitioners ..... 880

2. Eroded Confidentiality of Settlements ........... 882

3. Undue Reliance on Gross Recoveries ........... 883

ONCLUSION

................................................... 884

“Let me tell you, so much goes on in a law firm that settles cases,

and it’s all out of the light of day.”

NTRODUCTION

In 1938, Karl Llewellyn wrote: “[S]pecialized work, mass-

production, cheapened production, advertising and selling—finding

the customer who does not know he wants it, and making him want it:

these are the characteristics of the age. Not, yet, of the Bar.”

Over a

half-century has elapsed since Llewellyn’s writing, and in these years,

the Bar, or at least a segment of it, has made up for lost time. Here, I

refer to firms that I have previously labeled “settlement mills.”

These

firms, on the far end of a continuum of contemporary personal injury

practice, advertise aggressively and settle what are usually low-stakes

personal injury claims in high volumes, typically with little attorney-

client interaction and without initiating lawsuits—much less taking

claims to trial. At these firms, mass-production methods are indeed

employed and law is unabashedly sold—even hawked on big-city

billboards and daytime TV. Settlement mills thus represent, and in

some ways typify, a rapid and profound shift in the delivery of legal

services in the United States. Whether the shift is for the better or the

worse is less clear and is the issue this Article begins to address.

The Article proceeds in four parts. Part I begins by introducing

settlement mills as providers of a relatively distinct, long overlooked,

and poorly understood form of accident compensation. Accident com-

pensation, and particularly auto accident compensation (in which

settlement mills specialize and which comprises the bulk of contempo-

rary tort litigation),

is typically thought to take one of two separate

and contrasting forms: no-fault or traditional tort. Debate over the

Telephone Interview with E.C. (Apr. 22, 2008). For the majority of interview cita-

tions, initials are used in lieu of names in order to preserve source confidentiality; sources’

real initials are used only with permission.

K.N. Llewellyn, The Bar’s Troubles, and Poultices—and Cures?, 5 L

& C

ONTEMP

ROBS

. 104, 115 (1938).

Nora Freeman Engstrom, Run-of-the-Mill Justice, 22 G

. J. L

EGAL

THICS

1485,

1486 & n.2 (2009).

Automobile accidents account for two-thirds of all personal injury claims and three-

fourths of all personal injury damage payouts. J

AMES

M. A

NDERSON ET AL

., RAND, T

U.S. E

XPERIENCE WITH

-F

AULT

UTOMOBILE

NSURANCE

: A R

ETROSPECTIVE

1 (2010).

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808 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

merits and demerits of each has raged for nearly a century.

More-

over, conventional wisdom holds that while pure auto no-fault con-

tinues to be discussed, its chances of enactment are bleak and getting

bleaker. No pure no-fault auto regime has ever been enacted in the

United States.

And though there was a flurry of legislative activity in

the 1970s as roughly two dozen states enacted “modified” or “add-on”

no-fault legislation, no new state has implemented a no-fault regime

since 1976; a handful of states have repealed their modified no-fault

legislation; and on California’s ballot in 1988 and 1996, it was resound-

ingly defeated both times.

In short, the no-fault movement has, it is

said, “breathed its last breath,” while traditional tort has triumphed.

From the early days of the automobile, various academics and policy makers have

criticized the tort system and advocated plans to replace it with some type of no-fault

compensation scheme. A few of these proposals include S

TAFF OF

OINT

CON

. C

OMM

108

ONG

., C

HOICE IN

UTO

NSURANCE

: U

PDATED

AVINGS

STIMATES FOR

UTO

HOICE

11 (Comm. Print 2003), C

OLUMBIA

NIV

. C

OUNCIL FOR

ESEARCH IN THE

., R

EPORT

Y THE

OMMITTEE

TUDY

OMPENSATION FOR

UTOMOBILE

CCIDENTS

216–17 (1932), R

OBERT

E. K

EETON

& J

EFFREY

O’C

ONNELL

, B

ASIC

ROTECTION FOR THE

RAFFIC

ICTIM

: A B

LUEPRINT FOR

EFORMING

UTOMOBILE

NSURANCE

34–69 (1965), and Weld A. Rollins, Letter to the Editor, A Proposal To Extend

the Compensation Principle to Accidents in the Streets, 4 M

ASS

. L.Q. 392, 395 (1919).

Pure no-fault regimes are in effect elsewhere, including Israel, New Zealand,

Sweden, Finland, and the Canadian provinces of Quebec, Manitoba, and Saskatchewan.

OBERT

H. J

OOST

, A

UTOMOBILE

NSURANCE AND

-F

AULT

§ 1:1, at 1-22 (2d ed.

2002).

Modified no-fault (sometimes called “partial” no-fault) retains a tort possibility (and,

with it, the possibility of non-economic damages) for the most seriously injured. States

identify seriously injured claimants in one of two ways. Some (notably New York and

Michigan) have a “verbal threshold,” meaning a claimant can seek compensation in tort if

his injury meets a statutory definition—if he suffers “permanent serious disfigurement,”

for example. M

ICH

. C

OMP

. L

AW S

. § 500.3135 (West 2002); cf. N.Y. I

. L

§ 5102(d)

(Consol. 2001) (providing statutory definition of “serious injury”). Other states impose

“dollar” or “monetary” thresholds, meaning that a claimant can seek compensation in tort

if his medical bills exceed a particular sum. A

NDERSON ET AL

., supra note 4, at 12. A

second, even more partial, type of no-fault plan is an “add-on” plan, which simply provides

limited no-fault benefits without restricting tort access. Id. at 14–15. For information about

the California initiatives and no-fault’s repeal in various states, see Harvey Rosenfield,

Auto Insurance: Crisis and Reform, 29 U. M

. L. R

. 69, 75 n.15, 83–86 (1998). Arizona

voters also rejected a no-fault ballot measure in 1990, with 85% of voters opposed. Final

Election Results: Alabama through Hawaii, USA T

ODAY

, Nov. 8, 1990, at A6. The explana-

tion for no-fault’s unpopularity is, of course, complicated, but prime culprits include the

fact that no-fault, as implemented in the United States, is associated with significantly

higher insurance premiums and arguably higher accident rates. See, e.g., Auto Insurance

Reform: Hearing Before the S. Comm. on Commerce, Science, and Transportation, 106th

Cong. 19–84 (1999) (statement of Ralph Nader, Consumer Advocate, Ctr. for Responsive

Law); A

NDERSON ET AL

., supra note 4, at xiii–xvi.

ENNETH

S. A

BRAHAM

, T

IABILITY

ENTURY

: I

NSURANCE AND

ORT

FROM THE

ROGRESSIVE

RA TO

9/11, at 100 (2008); see also A

NDERSON ET AL

., supra

note 4, at 2–3, 59 (tracing no-fault’s “rise and fall”); Robert L. Rabin, The Renaissance of

Accident Law Plans Revisited, 64 M

. L. R

. 699, 725 (2005) (observing that no-fault has

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 809

Yet something peculiar is happening on the ground. Beyond the

gaze of academics and policy makers, at least one corner of the legal

services industry, while ostensibly operating within traditional tort,

has quietly and improbably achieved many of no-fault’s benefits,

delivering to accident victims fairly certain and standardized sums at

relatively low systemic cost.

Drawing on extensive documentary evi-

dence (primarily records from disciplinary and malpractice proceed-

ings) and interviews with numerous former attorneys and non-

attorney employees, I use case studies of two law firms—Joe Weiss of

Texas and Jim Rogers of California—to illustrate and analyze settle-

ment mill operations in detail.

Part II considers some of the advantages and disadvantages of the

settlement mill paradigm by evaluating mills first in substance and

then in form. As noted, in substance, settlement mills have managed

to shed a number of tort’s most maligned attributes and achieve many

of no-fault’s laudable goals: They arguably expand access to compen-

sation, reduce court congestion, and offer their clients relative speed,

predictability, and certainty, all at fairly low systemic cost. On the

other hand, at least one problem that plagues traditional tort—

fraud—seems to be exacerbated, perhaps significantly. Settlement

mills, in substance, thus get an imperfect, but passing, grade.

The form settlement mills take is far less satisfactory. Straddling

traditional tort and no-fault, settlement mills represent a blended

form of accident compensation, where, rather than being refined and

granular, cases are processed using “[v]ery systematized”

become something of “a dead letter”); Rosenfield, supra note 7, at 86 (documenting no-

fault’s “demise”).

The prevalence of settlement mill representation is an important question that merits

further inquiry, although there are some indications that settlement mills represent a non-

trivial number of claimants throughout the United States. See Engstrom, supra note 3, at

1517–21 (discussing settlement mills’ prevalence).

See infra notes 43 and 67 (regarding Weiss sources and Rogers sources, respectively).

I have conducted thirty-two additional telephone interviews of current and former settle-

ment mill attorneys and non-attorney employees, which inform the conclusions drawn

herein. Initials are used in lieu of names in order to preserve source confidentiality;

sources’ real initials are used only with permission. As with any interview survey (and

particularly given this non-random source sample), the descriptions below should be

viewed with some skepticism since individuals’ recollections may be outdated, colored by

incomplete recall, or tainted by any number of additional biases. In addition, different

sources sometimes painted very different portraits of law firm operations. In a few

instances, I made credibility determinations (while noting the disagreement); more com-

monly, I simply pointed out the contested nature of the assertion. A final note is that the

generalizability of the data is uncertain because it comes from a limited number of sources

and firms.

Telephone Interview with F.M. (Apr. 29, 2008).

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810 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

“cookie-cutter”

procedures. At these firms, sources report: “There’s

too many clients and you can’t really give them individual atten-

tion,”

and “[m]ost of the process is very mechanical in terms of what

goes out and what goes in.”

Clients are rarely met; lawsuits are

rarely filed; facts are rarely investigated; and settlement values are

often calculated using formulaic going rates, which only very roughly

correlate to the actual gravity of injury the claimant has sustained.

Settlement mills’ “assembly-line” resolution of claims thus represents

quite a departure from the intimate, individualized, and fact-intensive

process thought to underlie traditional tort.

Some settlement mill cli-

ents, however, do not seem to know that they are signing up for any-

thing other than old-fashioned conventional counsel, raising profound

issues of fairness and informed consent.

This plays out in three principal ways. First, clients with minor,

routine injuries appear to be reasonably well served by settlement

mills’ mechanistic processing, where some compensation is all but

assured and is relatively quickly and predictably obtained.

But some

clients with serious injuries sign up for settlement mills’ services, and

these clients are, for a host of reasons, almost undoubtedly short-

changed. Second, settlement mills delegate extensively to non-

attorney personnel, sometimes without clients’ blessing and perhaps

to clients’ detriment. Third, settlement mill fees are—on a percentage

basis—as high as or higher than those charged by conventional

counsel, even though the service provided is decidedly low risk, no-

frills, and sometimes even provided by non-lawyer personnel, sug-

gesting the collection of unlawful rents.

In sum, settlement mills offer a service. It is, I believe, a valuable

service. But it is, in many respects, a different service than that offered

Transcript of Record at 335, In re Sledge, 859 So. 2d 671 (La. 2001) (No. 00-DB-135)

[hereinafter Sledge Disciplinary Transcript] (testimony of Lawrence David Sledge at

hearing before Louisiana Attorney Disciplinary Board).

Sworn Statement of S.S. 58 (Aug. 19, 1998).

Telephone Interview with T.H. (Apr. 15, 2008). “The whole idea is volume,” another

former settlement mill lawyer explained, “not necessarily one particular case.” Telephone

Interview with N.M. (June 3, 2008).

Compare Telephone Interview with R.J. (Apr. 8, 2008) (“I might as well have been

working on an assembly line.”), with P

ETER

H. S

CHUCK

, A

GENT

RANGE ON

RIAL

: M

ASS

OXIC

ISASTERS IN THE

OURTS

263 (1987) (describing traditional tort’s individual

attorney-client relationship as one of “intimate contact and consultation” where “lawyers

. . . educate their clients, respond to their wishes, and litigate faithfully and vigorously”).

This observation echoes Jerry Van Hoy’s observation concerning franchise law firms,

which resemble settlement mills in important respects. See Jerry Van Hoy, Selling and

Processing Law: Legal Work at Franchise Law Firms, 29 L

& S

’

. 703, 727

(1995) (“[C]lients whose problems fit into the production systems appear to be well served

by franchise law firms.”). For a comparison of settlement mills and franchise law firms, see

Engstrom supra note 3, at 1491 n.19.

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 811

by conventional counsel, and there is little reason to believe that

settlement mill clients—particularly unsophisticated clients with high-

value claims—have intentionally selected or consented to this alterna-

tive regime.

Part III addresses the need for reform. The organized Bar has

traditionally relied on disciplinary, liability, and institutional mecha-

nisms to assure adequate attorney quality. These three formal controls

are, however, extraordinarily ill-equipped to counter the problems

settlement mills pose. Augmenting and potentially eclipsing those

formal mechanisms, the Bar has traditionally placed great faith in an

informal control—namely, reputation—to restrain lawyers’ selfish

impulses. “The most worthy and effective advertisement possible,

even for a young lawyer,” Canon 27 initially advised, “is the establish-

ment of a well-merited reputation for professional capacity and

fidelity to trust.”

This informal control—what I call the “reputa-

tional imperative”—is typically quite potent because most lawyers,

and particularly personal injury lawyers (due to the one-shot nature of

clients’ complaints), cannot survive or succeed unless they sign new

clients; to sign new clients, most lawyers rely heavily on referrals from

fellow practitioners; and a good reputation is usually a prerequisite to

referral receipt.

The reputational imperative, when it works, thus

deters self-dealing in individual cases and, over time, ensures that the

practices of lawyers with a reputation for hard work and ethical con-

duct flourish, while the practices of lawyers with a reputation for

shirking on preparation and shortchanging clients founder.

The problem, though, is that the Supreme Court’s 1977 opinion in

Bates v. State Bar of Arizona,

by outlawing bans on lawyer adver-

tising as incompatible with the First Amendment, permits mass

ANONS OF

ROF

’

THICS

Canon 27 (1908).

Lawyer referrals are many plaintiffs’ lawyers’ most important source of business. See,

e.g., Stephen Daniels & Joanne Martin, “It’s Darwinism—Survival of the Fittest”: How

Markets and Reputations Shape the Way in Which Plaintiffs’ Lawyers Obtain Clients, 21

& P

’

377, 383 tbl.3 (1999). Attaining referrals, meanwhile, requires a reputation

for excellence and success. See id. at 386–87 (describing lawyer referrals as requiring a

reputation among one’s peers for being able to finance and win substantial cases); Sara

Parikh, How the Spider Catches the Fly: Referral Networks in the Plaintiffs’ Personal Injury

Bar, 51 N.Y.L. S

. L. R

. 243, 247, 271–72, 283 (2006) (highlighting how attorney

referral markets promote and reward attorney quality); Charles Silver & Lynn A. Baker,

Mass Lawsuits and the Aggregate Settlement Rule, 32 W

AKE

OREST

L. R

. 733, 777

(1997) (“To attract cases, lawyers who rely on referrals for income need to cultivate reputa-

tions for superior performance.”).

See H

ERBERT

M. K

RITZER

, R

ISKS

, R

EPUTATIONS

AND

EWARDS

: C

ONTINGENCY

EGAL

RACTICE IN THE

NITED

TATES

66–67 (2004) (“A lawyer who settles cases

too cheaply will have trouble maintaining the reputation necessary to create the flow of

potential clients that is in the lawyer’s long-term interest.”).

433 U.S. 350 (1977).

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812 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

advertisers to make an end-run around reputationally based business.

As one Louisiana settlement mill partner (whose firm reportedly set-

tled some 30,000 claims during its fifteen-year existence) has

explained, “I always thought it was crazy to have a referral system

where you’re relying on Aunt Nessy’s neighbor’s postman’s baker to

send you a case [when instead] I get on television, I tell people to call

me, and they do.”

Blunting the reputational imperative, aggressive

advertising creates a gaping hole in the regulatory architecture—

which some settlement mills artfully exploit.

As settlement mills help to illustrate, there are many kinds of per-

sonal injury lawyers. Clients must choose among them. And the type

of representation a client will receive—and even, studies suggest, the

size of recovery she will obtain—hangs precariously in the balance.

Choosing a lawyer wisely is thus extremely important. It is also, as we

will see, extremely difficult. While data are available to help patients

pick doctors, investors pick stocks, parents choose schools, passengers

select airlines, and diners choose restaurants, even the most basic

information on attorney quality remains stubbornly elusive.

When

coupled with the advent of aggressive attorney advertising, this means

that prospective personal injury clients are bombarded with lawyers’

often self-serving (and, as we will see, sometimes misleading) claims

without any objective, verifiable data to sort through the chatter.

Penny Font, Disbarred, But Not Disbranded, B

USINESS

EPORT

COM

(May 18, 2009),

http://www.businessreport.com/news/2009/may/18/disbarred-not-disbranded-lgl1/ (quoting

E. Eric Guirard).

These problems are somewhat ameliorated by practitioner referral networks, dis-

cussed infra at Part III.C.2. But, as discussed below, the literature may overstate the net-

works’ reliability, and, even if they do generally channel the best cases to the most able

practitioners, much value is lost along the way.

Air travelers can consult on-time arrival, baggage handling, and safety records when

purchasing airline tickets; parents can peruse public school report cards when buying a

home; diners can review hygiene grading systems when selecting a restaurant; investors can

study quarterly and annual reports when picking stocks; and patients, in some states, can

review practitioner profiles when entrusting their care to a particular physician. Admit-

tedly, this information sometimes varies in quality and utility. See, for example, David Weil

et al., The Effectiveness of Regulatory Disclosure Policies, 25 J. P

’

NALYSIS

& M

GMT

155, 159 (2006) and infra notes 25 and 299 for information regarding transparency efforts

in health care.

See Crowe v. Tull, 126 P.3d 196, 209 (Colo. 2006) (en banc) (“In many cases, the

unsophisticated consumer will have only an attorney’s or law firm’s own representations of

the quality of services with which to decide whether or not to retain that attorney or

firm.”); Sandra L. DeGraw & Bruce W. Burton, Lawyer Discipline and “Disclosure

Advertising”: Towards a New Ethos, 72 N.C. L. R

. 351, 383 (1994) (“In selecting a

lawyer, the only data concerning quality that is functionally available to most prospective

client-consumers comes from the self-serving advertising of lawyer-vendors and from the

general practice of lawyer licensing by the courts.”).

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 813

To ameliorate many of the problems settlement mills present and

to improve attorney selection in the personal injury arena more gener-

ally, I propose in Part IV a reform measure loosely patterned on a

rule adopted in parts of New York and similar to some recently

enacted reforms in the health care industry.

Specifically, I propose

that state supreme courts require contingency fee practitioners to file

closing statements at the conclusion of each representation where per-

sonal injury or wrongful death claims are asserted. These closing state-

ments would then be made public on the Internet, where they would

be searchable by lawyer, law firm, or other selected criteria (median

gross recovery attained, for example). The public availability of

closing statements would help to empower individual personal injury

clients by allowing them to become more sophisticated consumers of

legal services. Over time, this reform measure has the potential not

only to help individual clients choose lawyers more wisely, but also to

improve the civil justice system more broadly by, among other things,

helping to level the playing field between sophisticated and unsophis-

ticated claimants, deterring the assertion of fraudulent and exagger-

ated claims, limiting deceptive attorney advertising, and helping

researchers and policy makers devise and evaluate more thoughtful

policy reforms. Last, but not least, closing statements have the poten-

tial to curb settlement mills’ worst abuses, while preserving their core

advantages.

When allowing attorney advertising more than three decades ago,

the Bates Court cautioned, “If the naivet ´e of the public will cause

advertising by attorneys to be misleading, then it is the bar’s role to

assure that the populace is sufficiently informed as to enable it to

place advertising in its proper perspective.”

So far, the Bar has

unfortunately failed at this task. As a consequence, clients—especially

low-income clients without lawyers in their social and familial net-

works—are left to choose personal injury lawyers more or less at

random. And as Llewellyn pointed out many years ago, if a client

picks a lawyer at random, “it means chancing it” because “the condi-

tions of metropolitan legal business make it no simple thing to reach

into the grab-bag and pull out a lawyer who is able.”

If clients are

picking lawyers based on information presented in the marketplace, as

at least some are, it is incumbent on the legal profession to ensure that

at least some objective, credible information about lawyer quality

See Kristin Madison, The Law and Policy of Health Care Quality Reporting, 31

AMPBELL

L. R

. 215, 216–21 (2009) (discussing the recent transparency revolution in

the health care industry).

433 U.S. 350, 375 (1977).

Llewellyn, supra note 2, at 116.

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814 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

exists therein. The risk of harm is obvious and the existence of settle-

ment mills—or, more precisely, certain of their practices—shows that

the harm has come to pass.

ETTLEMENT

ILLS

ISTINCT

OMPENSATION

ECHANISM

A. The Usual Dichotomy: No-Fault Versus Traditional Tort

As noted above, accident compensation is typically thought to

take one of two contrasting forms: no-fault or traditional tort.

The

traditional tort approach (the fault approach) relies on a case-by-case

determination of liability and damages and is the most familiar. Tradi-

tional tort is, at least formally, individualized—grounded in “the pri-

macy of the individual claimant.”

This individualization has obvious

advantages, but it has well-documented drawbacks too. The fault

system, for starters, requires a third party actually to be at fault—a

feature that leaves many accident victims uncompensated. Next, even

Samuel Issacharoff & John Fabian Witt, The Inevitability of Aggregate Settlement: An

Institutional Account of American Tort Law, 57 V

AND

. L. R

. 1571, 1602 (2004) (“[T]he

literature on automobile accidents has been largely preoccupied with the contrast between

such public no-fault compensation systems and the law of tort.”).

CHUCK

, supra note 15, at 263. For the classic description of the traditional tort

approach, see id. at 262–68. The above description is admittedly stylized, and I am not the

first to observe that, particularly when claims are plentiful and stakes are small, traditional

tort’s formal commitment to fault and individualized justice tends to yield—and, quite crit-

ically, settlement mill practitioners are not the only practitioners for whom this is true.

Others also doubt the extent to which tort law in action displays the commitment to indi-

vidualism emphasized by formal doctrine. See, e.g., H. L

AURENCE

OSS

, S

ETTLED

UT OF

OURT

: T

OCIAL

ROCESS OF

NSURANCE

LAIMS

DJUSTMENTS

134–35 (1970)

(noting that the individual treatment of insurance claims is inefficient and unmanageable);

Howard M. Erichson, Beyond the Class Action: Lawyer Loyalty and Client Autonomy in

Non-Class Collective Representation, 2003 U. C

. L

EGAL

F. 519, 526 (studying non-class

collective representation); Issacharoff & Witt, supra note 28, at 1618–34 (amassing and

analyzing historical data involving “mature torts”); John Fabian Witt, Bureaucratic

Legalism, American Style: Private Bureaucratic Legalism and the Governance of the Tort

System, 56 D

AUL

L. R

. 261, 268–69 (2007) (introducing the “convergence thesis”); see

also M

ICHAEL

D. G

REEN

, B

ENDECTIN AND

IRTH

EFECTS

: T

HALLENGES OF

ASS

OXIC

UBSTANCES

ITIGATION

255 (1996) (“It is no secret to those even modestly

familiar with the personal injury system that the ideal of individualized adjudication, with

respect for and attention to the details of the claim, faithful attorney-agents reflecting the

interests and desires of the clients, and arbiters listening carefully and respectfully to the

claims and stories of the parties is a myth.”); Tom Baker, Liability Insurance as Tort

Regulation: Six Ways that Liability Insurance Shapes Tort Law in Action, 12 C

ONN

. I

L.J. 1, 11 (2005) (noting that “tort law in action” is often “less focused on the individual

fault of individual defendants than tort law on the books,” and that “greater . . . stakes”

increase the likelihood that law in action will involve “particularized assessments that

formal tort doctrine requires”). See generally Deborah R. Hensler, Resolving Mass Toxic

Torts: Myths and Realities, 1989 U. I

. L. R

. 89 (canvassing the empirical literature on

mass torts).

\\jciprod01\productn\N\NYU\86-4\NYU401.txt unknown Seq: 11 30-SEP-11 7:26

October 2011] SUNLIGHT AND SETTLEMENT MILLS 815

if a defendant is at fault, amassing evidence to prove it often requires

a long and tedious investigation, and some calls are close and hotly

contested, meaning that compensation via traditional tort is, almost by

definition, slow, costly, cumbersome, and unpredictable. In addition,

traditional tort retains as a central tenet the notion that “each indi-

vidual possesses an absolute right to the integrity of his or her per-

sonhood” and, when injured, ought to be made whole (returned to his

or her ex ante position).

This is important for achieving corrective

justice and maintaining adequate deterrence, but doing so requires the

payment of non-economic damages (principally for “pain and suf-

fering”), the award of which thrusts the fact-finder into nebulous, fact-

intensive damage calculations (exacerbating tort’s unpredictability

problem), and the promise of which tempts some claimants into

dishonesty and fraud.

Impatient with traditional tort’s shortcomings, scholars, theorists,

and politicians have, since the early years of the last century, devised

and debated plans to speed payments and inject more predictability,

horizontal equity, and certainty into the delivery of automobile acci-

dent compensation in the United States.

Sometimes explicitly

patterned on workers’ compensation, these proposals have typically

advocated the elimination of fault-based compensation in lieu of auto-

matic, widespread, rapid, and limited relief, often provided by the

first-party (the victim’s own) insurer.

Advantages and disadvantages

of such plans are largely the reverse of those above. Abolishing fault

as a prerequisite to payment reduces delay, trims transaction costs,

removes these cases from the court system (thus alleviating court con-

gestion), and dramatically expands the pool of compensated claim-

ants. Limiting damages to economic loss, meanwhile, achieves

consistency and predictability in damage payouts and, by eliminating

the potential to profit from one’s misfortune, helps to prevent fraud.

But, in so doing, no-fault regimes necessarily and inevitably sacrifice

CHUCK

, supra note 15, at 263; see also T

HOMAS

H. K

OENIG

& M

ICHAEL

L. R

USTAD

EFENSE OF

ORT

1 (2001) (“The most important manifest function of torts is to

restore plaintiffs to the position they were in prior to the injury by awarding monetary

damages.”).

See generally Richard Abel, General Damages Are Incoherent, Incalculable,

Incommensurable, and Inegalitarian (But Otherwise a Great Idea), 55 D

AUL

L. R

. 253

(2006) (offering a broad critique of non-economic damages); Jeffrey O’Connell, A

Proposal To Abolish Defendants’ Payment for Pain and Suffering in Return for Payment of

Claimants’ Attorneys’ Fees, 1981 U. I

. L. R

. 333 (same).

See supra note 5 (listing various no-fault proposals that have been developed and

debated over the past century).

See, e.g., C

OLUMBIA

NIV

. C

OUNCIL FOR

ESEARCH IN THE

. S

., supra note 5,

at 217 (calling for a “plan of compensation . . . without regard to fault, analogous to that of

the workmen’s compensation laws”).

\\jciprod01\productn\N\NYU\86-4\NYU401.txt unknown Seq: 12 30-SEP-11 7:26

816 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

the individualized treatment of claims, deprive victims of

compensation for their pain and suffering, and sacrifice tort’s twin

aims of promoting optimal deterrence and providing corrective justice

or moral redress.

B. Settlement Mills as a Blended Mechanism

Settlement mills can be viewed as providing a third, blended form

of accident compensation, straddling no-fault and traditional tort.

Before discussing the pros and cons of settlement mill practice, how-

ever, it is useful to have a clear picture of what such a practice entails.

Settlement mills, situated on the far end of a continuum of con-

temporary personal injury practices, are distinctive in many important

respects. First, settlement mills advertise more aggressively than other

personal injury lawyers, and, unlike other practitioners, the majority

or vast majority of their cases come from these advertising efforts.

Second, they maintain unusually high claim volumes. While studies

suggest that most personal injury attorneys have somewhere between

sixty and seventy open files at any one time and serve on the order of

110 clients per year, settlement mill attorneys (or non-attorney negoti-

ators) often triple that—juggling 200 to 300 open files on any given

day and serving 300 to 400 clients annually.

Third, settlement mills

Some question the power and validity of deterrence and corrective justice in the auto

context, where compulsory liability insurance already mutes individual liability; civil and

criminal penalties, as well as simple self-preservation, already provide powerful incentives

for safety; and negligent conduct, typically characterized by a momentary lapse of atten-

tion, is notoriously hard to curtail. See, e.g.,S

TATE OF

N.Y. I

. D

’

, A

UTOMOBILE

NSURANCE

. . . F

HOSE

ENEFIT

?: A R

EPORT TO

OVERNOR

ELSON

OCKEFELLER

12–13 (1970) (“Individual, last-moment driver mistakes—undeterred by

fear of death, injury, imprisonment, fine or loss of license—surely cannot be deterred by

fear of civil liability against which one is insured.”). It is unclear whether no-fault legisla-

tion leads to higher accident or fatality rates. Some studies suggest it does. See A

NDERSON

ET AL

., supra note 4, at 80–82 (providing summary of eight empirical studies, half of which

show that no-fault increases fatality rates, and half of which show no effect).

Engstrom, supra note 3, at 1492. In contrast, a recent study found that, even among

those Texas lawyers with the highest volume of relatively low-dollar claims, only 13%

advertised on TV. Stephen Daniels & Joanne Martin, It Was the Best of Times, It Was the

Worst of Times: The Precarious Nature of Plaintiffs’ Practice in Texas, 80 T

. L. R

1781, 1788–89 & n.19 (2002).

See Daniels & Martin, supra note 35, at 1789 tbl.4 (reporting that lower-echelon

attorneys in Texas had a median of forty-five cases at any one time, while higher-echelon

attorneys had significantly fewer); Parikh, supra note 18, at 247 (reporting that Chicago

plaintiffs’ lawyers surveyed in 1995 served an average of 142 clients per year (citing J

OHN

P. H

EINZ ET AL

., U

RBAN

AWYERS

: T

OCIAL

TRUCTURE OF THE

(2005)));

Sara Parikh, Professionalism and Its Discontents: A Study of Social Networks in the

Plaintiff’s Personal Injury Bar 73 (May 10, 2001) (unpublished Ph.D. thesis, University of

Illinois at Chicago) (on file with the New York University Law Review) (reporting that

lower-echelon personal injury practitioners in Chicago served an average of seventy-nine

clients per year).

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 817

do not function as traditional gatekeepers: They do not expend

significant resources vetting cases, and they reportedly accept most

would-be litigants that their ads attract. As a consequence, settlement

mills’ portfolios tend to consist largely of soft-tissue-injury claims

(sprains, strains, contusions, and whiplash) sustained in automobile

accidents—cases that, as we will see, most practitioners eschew.

Fourth, settlement mills tend not to prioritize meaningful lawyer-

client interaction. In his study of Wisconsin contingent fee lawyers, for

example, Herbert Kritzer found that face-to-face meetings were rela-

tively rare, but they did bookend a typical case: Clients met with law-

yers when the retainer was signed at the beginning of the

representation and when the settlement check was delivered at the

end.

In contrast, clients of settlement mills often meet with lawyers

when the settlement check is disbursed—or not at all.

Fifth, as com-

pared to conventional counsel, settlement mills tend to delegate more

extensively to non-attorney personnel.

At a Louisiana firm, in fact,

delegation was taken to such lengths that it was a “regular practice”

for clients to have their cases settled without any attorney involve-

ment whatsoever.

Finally, and most importantly, settlement mills do

not emphasize traditional litigation or old-fashioned lawyering but

rather emphasize settlement. Research is rarely conducted; lawsuits

are rarely filed; and trials are exceptional.

To further illustrate the

settlement mill paradigm, two case studies are offered below.

1. The Texas Law Firm of Joe W. Weiss

We first consider the law firm of Joe W. Weiss, which operated in

San Antonio, Texas from the late 1970s until Weiss’s disbarment in

For a description of settlement mills’ cursory case screening practices, see Engstrom,

supra note 3, at 1498–500 and infra notes 137–39 and accompanying text. Most personal

injury lawyers screen cases fairly rigorously. See K

RITZER

, supra note 19, at 67, 71–76 (pro-

viding acceptance rates by case volume); Herbert M. Kritzer, Holding Back the Floodtide:

The Role of Contingent Fee Lawyers, W

. L

., Mar. 1997, at 10, 13 (finding that lawyers

who fielded 1000 or more calls per year accepted an average of only 10% to 15% of callers

as clients), and infra note 323 and accompanying text (describing cherry-picking by high-

echelon firms). For information on many lawyers’ reluctance to accept small soft-tissue

cases, see infra note 124 and accompanying text.

RITZER

, supra note 19, at 113.

Engstrom, supra note 3, at 1500–01.

Id. at 1494–95.

Sledge Disciplinary Transcript, supra note 12, at 67–68 (testimony of Wendy

LeBleau).

Engstrom, supra note 3, at 1495–97, 1502–03. Settlement mills are also notable for

their entrepreneurial, rather than professional, orientation; for charging tiered (or “gradu-

ated”) contingency fees for their services; for spurring negotiators to settle cases using

mandatory quotas or by offering negotiators awards or fee-based compensation; and for

resolving cases comparatively quickly. See id. at 1492–503.

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818 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

1996.

According to a press report, Weiss was, for a time, “San

Antonio’s most recognizable personal injury lawyer,”

and the firm

he founded was a bustling place with more than a half-dozen attor-

neys, roughly thirty non-attorney personnel, and—true to the settle-

ment mill paradigm—an “amazing” number of clients.

In his ads,

Weiss dubbed himself “The Lawyer More People Call,” and, at some

point, Weiss may well have been the most sought-after lawyer in all of

South Texas.

Fueled by the firm’s dominant television and print

advertising, the firm settled thousands of personal injury cases per

year.

These cases were not large, typically involving soft-tissue inju-

ries sustained in automobile accidents, with values ranging from $5000

to $20,000.

Consistent with the settlement mill paradigm, the firm very rarely

filed lawsuits and, according to numerous sources, at least in the

1990s, did not conduct a single jury trial.

The job of a lawyer was,

Information on the Weiss firm comes from four former Weiss attorneys and one non-

attorney employee, press reports, and documents from a 1996 bar disciplinary proceeding.

Weiss was disbarred at the proceeding’s conclusion for, inter alia, threatening a former

client with criminal prosecution and knowingly making a false statement to a tribunal.

Weiss v. Comm’n for Lawyer Discipline, 981 S.W.2d 8, 12 (Tex. App. 1998).

Bruce Vincent, Taped Threat Leads to PI Lawyer’s Disbarment, T

. L

., Feb. 12,

1996, at 4.

Telephone Interview with F.M. (Apr. 29, 2008); see Transcript of Record at 10,

Comm’n for Lawyer Discipline v. Weiss, No. 94-CI-18282 (Tex. Dist. Ct. Feb. 1, 1996)

[hereinafter Weiss Disciplinary Transcript] (testimony of Joe W. Weiss) (testifying that, in

his twenty-year practice, he had represented “thousands and thousands of accident vic-

tims”); id. at 11, 21 (discussing case volume); id. at 257 (discussing personnel).

Brenda Sapino Jeffreys, Poet, Pilot, Phone Book King, T

. L

., Jan. 13, 1997, at 3.

For information concerning advertising, see, for example, Telephone Interview with

F.M. (Apr. 29, 2008), where, when asked “[w]hat percentage of cases came from adver-

tising,” the interviewee responded, “All of them.” For information concerning case

volume, see Weiss Disciplinary Transcript, supra note 45, at 21 (Feb. 1, 1996), in which Joe

W. Weiss stated, “I handle thousands and thousands of cases for people.” See also Tele-

phone Interview with F.M. (Apr. 29, 2008) (estimating that firm settled 8000 to 10,000

cases per year).

See Telephone Interview with A.M. (May 14, 2008) (stating that, initially, cases

would settle for $10,000 to $20,000 but that, as years went by, case values declined consid-

erably); Telephone Interview with E.C. (Apr. 22, 2008) (“[C]ases at a minimum were soft

tissue and auto—almost all was auto.”); Telephone Interview with F.M. (Apr. 29, 2008)

(recalling that a “tiny” proportion of cases were non-auto and that the average case ranged

in value from $5000 to $10,000).

Lawsuits were exceedingly rare. See, e.g., Telephone Interview with E.C. (Apr. 22,

2008) (“[A]ll the associates there did pre-litigation.”); Telephone Interview with F.M.

(Apr. 29, 2008) (stating that no lawsuits were filed in-house); cf. Telephone Interview with

A.M. (May 14, 2008) (“I personally initiated several [lawsuits] because I talked my boss

into letting me do that.”). Trials were even rarer. See id. (noting that, even when lawsuits

were filed, cases were settled prior to trial); Telephone Interview with E.C. (Apr. 22, 2008)

(noting the absence of trials); Telephone Interview with F.M. (Apr. 29, 2008) (same); see

also Weiss Disciplinary Transcript, supra note 45, at 290 (Jan. 31, 1996) (testimony of Joe

W. Weiss) (Q: “[H]ave you ever even tried a jury case before?” A: “No, sir.”).

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 819

instead, to “[s]ettle cases. Set ‘em up and settle them.”

In fact, rather

than mere settlement, quick settlement was the goal, and it was often

achieved. Though studies suggest that claims of represented auto acci-

dent victims often take more than a year to resolve, sources report

that, at Weiss, cases were often settled within a mere 90 to 180 days.

Reflecting on the quick turnaround, one former attorney remarked:

“[W]ith Joe, they got speed. I don’t think anybody has ever matched

the speed with which he settled cases.”

If a case could not settle at

all or if the insurer refused to offer no more than a “ridiculous”

“unfair”

sum, the case would be referred to outside counsel for liti-

gation. Often, these cases involved disputed liability, extremely

serious injury, or wrongful death.

These outside referrals, however,

were apparently rare. One lawyer explained that, in his recollection,

“5% or less of cases were referred out,”

and, in his 1996 disciplinary

proceeding, Weiss himself explained that the firm was able to broker a

settlement agreement 99% of the time.

A striking—and perhaps defining—characteristic of the Weiss

firm was its entrepreneurial (rather than professional) orientation.

“He was a businessman,” a former attorney recalled, “[h]e would tell

you that right off the bat.”

Weiss’s philosophy, another explained,

was “to treat this like an insurance company, and each person will

Telephone Interview with E.C. (Apr. 22, 2008).

Compare I

. R

ESEARCH

OUNCIL

, A

UTO

NJURY

NSURANCE

LAIMS

: C

OUNTRY-

WIDE

ATTERNS IN

REATMENT

, C

OST

AND

OMPENSATION

67 (2008) (showing that 54%

of represented claimants had to wait over one year for payment, even when eventual pay-

ments were small ($1 to $500), and that only 8% of represented claimants with small claims

received payment within 90 days), with Telephone Interview with F.M. (Apr. 29, 2008)

(estimating that cases would be resolved within 90 to 180 days), and Telephone Interview

with E.C. (Apr. 22, 2008) (estimating that typical soft-tissue-injury cases would settle

within three to four months after an accident). But cf. Telephone Interview with K.R. (May

1, 2008) (“I saw many that were nine months old, many that were more than a year.”).

Telephone Interview with F.M. (Apr. 29, 2008).

Telephone Interview with A.M. (May 14, 2008).

Telephone Interview with E.C. (Apr. 22, 2008).

Telephone Interview with K.R. (May 1, 2008). It also appears that the firm did not

even attempt to settle cases involving medical malpractice or product liability claims in-

house. Instead, it immediately referred those cases to specialists. See Telephone Interview

with A.M. (May 14, 2008).

Telephone Interview with F.M. (Apr. 29, 2008); see also Telephone Interview with

K.R. (May 1, 2008) (recalling that 10% or less of cases were referred out). But cf. Tele-

phone Interview with A.M. (May 14, 2008) (stating that, during his years at firm, hundreds

of cases were referred out for litigation).

Weiss Disciplinary Transcript, supra note 45, at 262 (Jan. 31, 1996) (testimony of Joe

W. Weiss).

Telephone Interview with E.C. (Apr. 22, 2008); see also Weiss Disciplinary Tran-

script, supra note 45, at 19 (Feb. 1, 1996) (testimony of Joe W. Weiss) (“I do my best to

conduct my business as best I can.”); Telephone Interview with F.M. (Apr. 29, 2008) (“He

was an amazing business man.”).

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820 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

have a large volume of claims and settle them and work through the

process.”

He continued:

We joked because in Joe’s office, there was no law library. You

know . . . the law firms I had always worked at, you would have your

law library for research. In Joe’s office, you walk into your office

and it was very spartan because your desk had your pen, your

notepad, and your adding machine. . . . That was it.

Although many would find fault with the firm’s entrepreneurial

focus, it apparently led to an institutional culture that valued client—

or, as Weiss might say, “customer”—satisfaction. As one former

lawyer put it, “[A] lot of law firms forget that they are a business, and

they need to treat clients like customers. . . . And that was Joe’s

strength, for better or worse.”

Unlike some settlement mills, where

lawyers and clients never personally meet, the firm worked hard to

ensure clients met with their attorneys at the beginning of the repre-

sentation, even if that meeting was largely pro forma.

Attorneys

wore beepers so they could be reached by clients (and prospective

clients) even during off-hours.

And, to guard against delay, Weiss

maintained detailed systems to track the pace of case resolution.

Finally, at the conclusion of each representation, the firm would send

each client a detailed satisfaction survey, and lawyers were required to

review client responses and make adjustments when necessary.

After having years to reflect, some of the firm’s former lawyers tem-

pered criticism of certain firm practices with grudging respect:

[N]ot to focus on the negative with Joe because I could spend hours

on that. The positive side of it is, and the justification of it is, with

Joe, his cases were settled so fast and the client got their money so

fast. Even though they may have gotten a little bit less, they got it a

lot faster. . . . But his premise, and he was very blunt about it, is

exactly that. ‘Yeah, my clients might get a little bit less. Yeah, we

might not litigate these cases. But we get them the money quicker,

and there’s a value to that,’ and it’s true.

Telephone Interview with F.M. (Apr. 29, 2008).

Id.

As one former lawyer put it, “I would come by and just shake their hand.” Tele-

phone Interview with E.C. (Apr. 22, 2008); see also Telephone Interview with A.M. (May

14, 2008) (stating that meeting clients was important “for good public relations”).

Telephone Interview with K.R. (May 1, 2008).

Telephone Interview with F.M. (Apr. 29, 2008).

Telephone Interview with A.M. (May 14, 2008).

Telephone Interview with F.M. (Apr. 29, 2008).

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 821

2. The California Law Firm of Jim Rogers

A second exemplar is the law firm of Jim Rogers of Northern

California.

In his ads, Rogers called himself the “People’s Lawyer,”

and, in his prime, he was arguably the most famous (some may say

most notorious) personal injury attorney in the San Francisco Bay

Area.

Rogers owed his fame to his extensive television advertising,

which generated the bulk of the firm’s business, and by the time he

voluntarily surrendered his law license in 2006 with disciplinary

charges pending, he had been a “ubiquitous” figure on late-night TV

for just over two decades.

In its heyday, the Rogers firm, like that of Weiss, was a busy

place, with approximately 1500 open cases at any one time.

These

cases mostly involved soft-tissue injuries sustained in auto accidents

with settlement values ranging from $1000 to $9000, and they were

processed by a staff of approximately three lawyers and five parale-

gals.

Typical of settlement mills, which tend to delegate significant

tasks to non-attorney personnel, these paralegals performed much of

the office’s work, including initial case screening and, in many cases,

the actual negotiation of claims.

The portrait below is drawn from telephone interviews with Jim Rogers (J.R.) and

seven of his former attorneys and non-attorney employees, as well as a review of various

public records, including press reports, disciplinary files, and documents from a 2002 mal-

practice proceeding. I refer to Sherman Rothman (S.R.) as an attorney though he was

never licensed in California. However, before working for Rogers as a paralegal, he had

been a personal injury lawyer in New York for some three decades.

Will Harper, Time’s Up, Bub, E

AST

XPRESS

(Apr. 21, 2004), http://www.east

bayexpress.com/eastbay/times-up-bub/Content?oid=1073562.

Will Harper, Settling for Less,E

AST

XPRESS

(Jan. 8, 2003), http://www.eastbay

express.com/eastbay/settling-for-less/Content?oid=1069091. The majority of clients came

to the firm as a result of advertising. Telephone Interview with J.R. (July 28, 2008) (sug-

gesting that 70% to 80% of his clients sought the firm because of advertising). Deposition

of James M. Rogers at 16–17, Wilson v. Law Offices of James M. Rogers, No. 823761-7

(Cal. App. Dep’t Super. Ct. Aug. 23, 2000) [hereinafter Rogers Deposition] (testifying that

he started advertising on television in 1986). For Jim Rogers’s bar resignation information,

see Attorney Search: James Martin Rogers-#95990, S

. B

., http://members.calbar.ca.

gov/search/member_detail.aspx?x=95990 (last visited Aug. 11, 2011).

Todd Woody, Small Claims, Big Problems, R

ECORDER

, Jan. 21, 1997, at 1, available

at 1997 WLNR 7086099 (quoting Rogers as saying, “I have 1,500 clients at any given

time”); see also Stipulation re Facts, Conclusions of Law and Disposition and Order

Approving at 8, Rogers, No. 94-0-11226 (Cal. Bar Ct. Aug. 1, 1997) (approved for private

reproval) (“He is a busy practitioner who handles a large volume personal injury practice

with thousands of clients.”).

For information on case size and type, see Telephone Interview with J.R. (July 28,

2008), in which Rogers recalled that 60% to 70% of cases involved soft-tissue injuries sus-

tained in auto accidents and that cases were typically settled for $9000 or less. For informa-

tion on staffing, see Telephone Interview with S.R. (Mar. 27, 2008).

Telephone Interview with N.M. (June 3, 2008); Telephone Interview with S.R. (Mar.

27, 2008); see also Willy Morris, A ‘People’s Lawyer’ on the Defense, C

ONTRA

OSTA

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822 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

By most accounts, the Rogers firm was a place where any connec-

tion to the formal law was highly tenuous—a fact vividly illustrated by

the firm’s method of case valuation. Rather than relying on past trial

experience or published jury verdict reports, both of which were in

short supply,

negotiators reportedly calculated “demands” (the sum

demanded of the defendant’s insurer on the client’s behalf) by simply

multiplying the client’s out-of-pocket expenses by a seemingly arbi-

trary coefficient, often five.

Then, when actually settling claims,

Rogers would set “targets” for his non-lawyer negotiators, while

attorney negotiators devised their own systems.

One attorney

explained his approach: “Multiply your specials [medical bills] and

add in your verifiable lost wages. If you got two times your specials

plus your lost wages, you were doing pretty darn good. If you got

three times, you were hitting a home run.”

All of this did not take

long. Claims were often settled within two to twelve months of the

accident and, according to two sources, after less than a day of

attorney or paralegal time.

IMES

, Feb. 3, 1997, at A3, available at 1997 WLNR 2056546 (reporting that “most of the

day-to-day work is handled by paralegals with periodic review by Rogers and the other

attorneys”).

It does not appear that the office even subscribed to relevant jury verdict reports.

See, e.g., Telephone Interview with J.J. (Apr. 24, 2008) (explaining that cases were evalu-

ated based on past experience rather than jury verdict reports). As for trial experience,

sources indicate that, with one exception, firm attorneys had little or no trial experience, as

many were hired fresh out of law school. Telephone Interview with S.R. (Mar. 27, 2008)

(recalling that, with one exception, firm attorneys were inexperienced); see Telephone

Interview with T.R. (Apr. 16, 2008) (“I can say this with confidence: None of the people

that worked there had a lot of significant trial experience.”).

Telephone Interview with J.J. (Apr. 24, 2008) (“There was pretty much a formula

. . . . Demand five times the specials. Expect three times the specials.”); Telephone Inter-

view with N.M. (June 3, 2008) (recalling similar formula); cf. Telephone Interview with J.R.

(July 28, 2008) (stating that formula of five-times specials was sometimes, but not always,

utilized).

Telephone Interview with N.M. (June 3, 2008).

Telephone Interview with L.J. (Apr. 17, 2008). Settlement mills, of course, are not

the only firms where lawyers rely on “going rates” or multiply economic loss by an arbi-

trary coefficient to estimate general damages. However, settlement mills—largely because

of their high volumes, limited attorney-client contact, frequent delegation to non-attorney

personnel, and cursory case development—appear to lean more heavily on formulas than

most other firms. Compare D

OUGLAS

E. R

OSENTHAL

, L

AWYER AND

LIENT

: W

’

SIN

HARGE

36 (1974) (referring to “going values” for tort liability claims), and Daniels &

Martin, supra note 35, at 1796, 1804 (describing “going rates” for claims), with Engstrom,

supra note 3, at 1532–35 (describing settlement mills’ very heavy reliance on going rates).

See Telephone Interview with J.J. (Apr. 24, 2008) (noting that cases took four to five

hours to resolve); Telephone Interview with T.H. (Apr. 15, 2008) (describing that cases

would typically settle after five hours of employee effort, from retention to release). As for

case duration, interview sources were asked, “For the typical soft tissue injury case, how

long between the accident and settlement?” Answers varied. See Telephone Interview with

J.J. (Apr. 24, 2008) (estimating six months); Telephone Interview with N.M. (June 3, 2008)

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 823

The firm’s tenuous link to the formal law is further illustrated by

how little traditional “lawyering” was done and the infrequency or

absence of trials.

As for the former, one lawyer recalled that “no one

did any research,”

while another bemoaned the fact that, while

there, he “wasn’t practicing law.”

As for the latter, though the firm

did help some clients represent themselves in small claims court, the

firm only very rarely went to trial in the traditional sense.

“All I

know is at any cost—any cost—they did not go to trial,”

an attorney

explained, while a paralegal concurred that “[t]hey weren’t interested

in going to court.”

Indeed, in 2000, Rogers testified in a deposition

that despite the flood of cases flowing through the office, no one at

the firm had tried a case in the previous five to seven years and, in a

recent interview with me, acknowledged that the firm did not conduct

any jury trials in the six years that followed.

(estimating “a few” months); Telephone Interview with S.R. (Mar. 27, 2008) (estimating six

or seven months); Telephone Interview with T.R. (Apr. 16, 2008) (estimating two to four

months); cf. Telephone Interview with J.R. (July 28, 2008) (estimating that most cases were

resolved within nine to twelve months of accidents). There was also no consensus as to

what proportion of prospective clients who called the office seeking legal representation

were ultimately accepted as clients. Compare Telephone Interview with J.J. (Apr. 24, 2008)

(stating that “at least 75%” of callers were accepted), with Telephone Interview with J.R.

(July 28, 2008) (suggesting that office accepted only between 10% and 50% of prospective

clients).

Lawsuits, it turns out, were not that infrequently filed. However, after a bench trial, a

trial court concluded that, at least sometimes, the Rogers firm “[c]ommenc[ed] lawsuits to

increase attorneys’ fees to 40% after reaching settlements,” meaning that the filing of suit

did not necessarily reflect an intent to litigate. Wilson v. Law Offices of James M. Rogers,

No. 823761-7 at 4 (Cal. Super. Ct. July 17, 2002), withdrawn, (Oct. 15, 2002); see also Tele-

phone Interview with S.R. (Mar. 27, 2008) (recalling being asked to postpone settlement

until the summons was served).

Telephone Interview with S.R. (Mar. 27, 2008).

Telephone Interview with T.R. (Apr. 16, 2008).

In small claims court in California, a lawyer cannot appear on a client’s behalf and

recovery is capped at $7500. Self-Help Center: Small Claims Basics, J

UDICIAL

OUNCIL OF

., http://www.courtinfo.ca.gov/selfhelp/smallclaims/scbasics.htm#whocansue (last vis-

ited Aug. 11, 2011). Nevertheless, for a time, approximately 20% of Rogers’s clients were

channeled to that venue. Telephone Interview with J.R. (July 28, 2008).

Telephone Interview with S.R. (Mar. 27, 2008); see also Telephone Interview with

L.J. (Apr. 17, 2008) (Q: “Did the Rogers firm conduct any trials during your tenure?” A:

“No, and that was amazing. I don’t know if they ever conducted a trial.”).

Telephone Interview with N.M. (June 3, 2008).

See Rogers Deposition, supra note 69, at 11 (Q: “When is the last time there has

been a trial in your office?” A: “I am not sure exactly. Probably five or six, seven years

ago.”); Telephone Interview with J.R. (July 28, 2008). But see Telephone Interview with

B.G. (Apr. 16, 2008) (recalling that the firm conducted four or five trials); Telephone Inter-

view with J.J. (Apr. 24, 2008) (stating that between five and ten cases were taken to trial

each year). Referrals were also infrequent. See infra notes 276–77 and accompanying text.

This, of course, begs the question of what happened to the firm’s “big” claims. There are

some suggestions that even sizable claims were simply settled. See Wilson v. Law Offices of

James M. Rogers, No. 823761-7 at 8 (Cal. Super. Ct. July 17, 2002), withdrawn, (Oct. 15,

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824 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

OSTS AND

ENEFITS

Settlement mills are relatively distinct providers of legal services

and, not surprisingly, they bring with them certain distinct costs and

benefits. Below, I evaluate some of the advantages and disadvantages

of settlement mill practice, considering mills first in substance and

then in form.

A. Settlement Mills in Substance

No-fault proponents deride the traditional tort system for, inter

alia, (1) maintaining high transaction costs, (2) delaying compensa-

tion, (3) clogging courts, (4) delivering unpredictable lottery-like

awards, (5) denying compensation to many needy claimants, and (6)

providing compensation to those with fraudulent and exaggerated

claims. Indeed, these are six of the problems that no-fault legislation

was specifically designed to combat.

As we see below, though offi-

cially operating in the realm of traditional tort, settlement mills

mitigate all but the last of these concerns.

1. Transaction Costs

The first goal of no-fault is to reduce costs, as no-fault proponents

criticize the tort system for being “inordinately expensive to admin-

ister,”

with transaction costs consuming roughly half of every

dollar.

Settlement mills are notable, then, for delivering compensa-

tion more cheaply. This savings is largely traceable to the fact that

settlement mills file lawsuits far less frequently than most other, even

high-volume, personal injury practitioners.

No lawsuit, of course,

means that defense counsel need not be retained and also that court

2002) (discussing case settled by the Rogers firm where reasonable jury verdict would have

resulted in an additional $300,200 in damages for the plaintiff); Telephone Interview with

S.R. (Mar. 27, 2008) (recalling the settlement of sizable claims).

See supra note 5 (listing various no-fault plans).

P. B

ERNZWEIG

, B

CCIDENT

ESIGN

: T

ASE FOR

OMPREHENSIVE

NJURY

EPARATIONS

85 (1980).

See D

EBORAH

R. H

ENSLER ET AL

., RAND, T

RENDS IN

ORT

ITIGATION

: T

TORY

EHIND THE

TATISTICS

29 tbl.4.1 (1987) (reporting that, in auto cases, defendant

and plaintiff legal fees consumed forty-five cents of every dollar expended); J

AMES

AKALIK

& N

ICHOLAS

M. P

ACE

, RAND, C

OSTS AND

OMPENSATION

AID IN

ORT

ITIGATION

70 (1986) (reporting that, in auto cases, plaintiffs’ net compensation as a per-

centage of total expenditure was 52%); S

TATE OF

N.Y. I

. D

’

, supra note 34, at 34–35

(finding that transaction costs consumed fifty-six cents of every premium dollar). In con-

trast, according to one study, a true no-fault regime would consume only about seven cents

of every dollar. S

TEPHEN

J. C

ARROLL ET AL

., RAND, N

-F

AULT

PPROACHES TO

OMPENSATING

EOPLE

NJURED IN

UTOMOBILE

CCIDENTS

xvi, 19 (1991).

Engstrom, supra note 3, at 1502–03.

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 825

costs, deposition costs, and expert witness fees need not accrue.

RAND researchers estimate that such costs often consume about 3%

of the plaintiff’s ultimate recovery,

and, when auto accident victims

do file lawsuits, defense attorneys’ fees and costs average roughly

$9900.

This means that, by rarely filing suit, settlement mills gen-

erate significant savings.

2. Delay

The second goal of no-fault is to speed compensation, as the tort

system is typically bedeviled by long delays.

Although waits vary by

case type and by jurisdiction, tort cases typically take over two years

to litigate to a judgment or verdict, and studies suggest that delays are

often substantial, even in seemingly straightforward auto cases and

even in the absence of trial.

Settlement mills, then, are next notable for delivering compensa-

tion more quickly—usually within two to eight months.

Part of this

rapid resolution, perhaps a large part, flows naturally from the fact

that settlement mill claimants’ injuries tend to be modest, and modest

claims tend to be more rapidly resolved. Big claims involving big sums

and serious injuries, in contrast, require more thorough and time-

consuming investigations by insurers prior to payment and tend to

involve longer uncertainty as to the scope of impairment, which slows

resolution.

Still, even accounting for claim size, it appears that

AKALIK

& P

ACE

, supra note 87, at 39.

In 1985, RAND researchers estimated that defendants paid an average of $4900 to

defend each auto tort lawsuit. Id. at 51. Adjusted for inflation, that $4900 is roughly $9930.

Inflation was calculated pursuant to CPI I

NFLATION

ALCULATOR

, http://data.bls.gov/cgi-

bin/cpicalc.pl? (last visited Aug. 11, 2011).

See Philip A. Hart, National No-Fault Auto Insurance: The People Need It Now, 21

ATH

. U. L. R

. 259, 297 (1972) (deriding the tort system for its “sickeningly slow proce-

dures for delivering funds”). No-fault plans speed compensation by eliminating fights over

fault and by replacing lump sum with periodic payments, which permit compensation to

commence even before the extent of impairment is established.

Compare T

HOMAS

H. C

OHEN

& S

TEVEN

K. S

MITH

, B

UREAU OF

USTICE

TATISTICS

IVIL

RIAL

ASES AND

ERDICTS IN

ARGE

OUNTIES

: 2001, at 8 (2004) (estimating that

cases take roughly 25.6 months to reach judgment or verdict), with infra note 93 and

accompanying text (noting that, according to most reports, settlement mills typically

resolve claims within two to eight months).

Engstrom, supra note 3, at 1502.

OSS

, supra note 29, at 224–25, 247; see infra note 106 (noting that part of the

increase in compensation speed may also be attributable to the fact that settlement mill

negotiators and insurance claims adjusters interact with one another frequently). See gener-

ally Jason Scott Johnston & Joel Waldfogel, Does Repeat Play Elicit Cooperation?

Evidence from Federal Civil Litigation, 31 J. L

EGAL

TUD

. 39 (2002) (finding that frequent

interaction is correlated with faster claim resolution). Also relevant is the fact that, because

settlement mills rarely file lawsuits, defense counsel is not typically retained. When defense

lawyers, often paid by the hour, are retained, they have a “natural incentive . . . to extend

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826 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

settlement mills resolve claims with relative speed—and this is no

small feat.

Almost half a century ago, one leading observer of the

tort system wrote, “The speeding up of settlements . . . would do more

to relieve the distress of injury victims than any other conceivable

change in tort law administration.”

By delivering relatively prompt

compensation, settlement mills undoubtedly spare clients, many of

whom lack adequate first-party protection and maintain only thin

financial cushions, significant financial and emotional distress.

3. Court Congestion

Third, no-fault proponents point to the fact that “automobile liti-

gation is the major cause of court congestion” and seek to remove

such cases from the formal legal system in order to free courts “from

their bondage to the automobile.”

Settlement mills, by rarely filing

lawsuits, accomplish much the same. And, of course, to the extent that

settlement mills siphon disputes from the court system, society also

saves (at least financially).

The average public expenditure per case

filed is roughly $1000, and the average public expenditure per trial

probably reaches five figures.

cases in order to produce more revenue.” A

BRAHAM

, supra note 8, at 89; cf. R

OSS

, supra

note 29, at 19, 60, 235 (explaining that insurance adjusters are under intense pressure to

close claims quickly).

Compare Engstrom, supra note 3, at 1502 (noting that settlement mills typically

settle claims within two to eight months of accidents), with R

OSS

, supra note 29, at 226

(reporting that, even of those with “[t]otally subjective” injuries, an average of 378 days

elapsed prior to payment).

Alfred F. Conard, The Economic Treatment of Automobile Injuries, 63 M

ICH

. L.

. 279, 315 (1964).

TATE OF

N.Y. I

. D

’

, supra note 34, at 22, 123; accord K

EETON

& O’C

ONNELL

supra note 5, at 13 (asserting that “traffic victims’ attempts to gain compensation” have

had a “crushing” effect on courts).

Two caveats are warranted. The first is that a portion of any savings will be offset to

the extent settlement mills inspire more claimants to seek compensation. The second is that

channeling dispute resolution from the public realm to the private sphere, while generating

financial savings, also entails the loss of various public benefits, although one may debate

the extent to which these benefits attend the small, routine claims settlement mills typically

resolve. See David Luban, Settlements and the Erosion of the Public Realm, 83 G

. L.J.

2619, 2622–28 (1995) (suggesting that civil adjudication is a public good because it pro-

duces precedents and legal rules, helps to develop attorneys’ advocacy skills, and expresses

and elaborates public values).

For the average expenditure per case, see Gillian K. Hadfield, Higher Demand,

Lower Supply? A Comparative Assessment of the Legal Resource Landscape for Ordinary

Americans, 37 F

ORDHAM

. L.J. 129, 149 tbl.4 (2010), which estimates that each case

filed consumes roughly $1049 in public funds. In 1985, Chief Justice Burger stated that the

average jury trial costs taxpayers $8300. Warren E. Burger, Opening Remarks, 62 A.L.I.

ROC

. 32, 36 (1985). Adjusted to today’s dollars, this equals roughly $16,300. Inflation was

calculated pursuant to CPI I

NFLATION

ALCULATOR

, supra note 90. For the average cost

of case disposition, including jury trial, in various jurisdictions, see J.S. K

AKALIK

& R.L.

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 827

4. The Litigation Lottery

Fourth, no-fault proponents deride the tort system as a “litigation

lottery”: a haphazard and unpredictable “game of chance,” where

“[o]ne seriously injured party may recover nothing at all . . . while

another similarly injured receives an award far in excess of his actual

loss.”

100

And though the indictment is often overblown,

101

it is true

that the tort system is known to compensate claimants with similar

injuries quite differently. Sometimes differences are based on illegiti-

mate criteria—the claimant’s race or physical attractiveness has been

known to affect her recovery, for example

102

—and sometimes they

are based on criteria (like fault itself) that is wholly legitimate from a

legal perspective but that might nevertheless smack a casual observer

as arbitrary. For various reasons, this unpredictability is problematic.

It is troubling from a theoretical perspective, as it is contrary to hori-

zontal equity—the elemental notion of justice that like victims should

be treated in a like fashion.

103

It creates legal and practical difficulties

for defendants, as it is difficult to invest in the “right” level of precau-

tion or obtain adequate insurance ex ante without some estimate of

the liability in store ex post.

104

And the practical consequences for the

seriously injured plaintiff who receives nothing after mounting a pro-

tracted court challenge may be nothing short of dire.

Against this backdrop, settlement mills provide relative cer-

tainty—less than no-fault, to be sure, but far more than traditional

tort. Partly traceable to small claim size (which, at least in the short

run, makes it cheaper for the insurer to pay something as opposed to

OSS

, RAND, C

OSTS OF THE

IVIL

USTICE

YSTEM

: C

OURT

XPENDITURES FOR

ARIOUS

YPES OF

IVIL

ASES

69 tbl.4.30 (1983).

100

EFFREY

O’C

ONNELL

& C. B

RIAN

ELLY

, T

LAME

AME

: I

NJURIES

NSURANCE

AND

NJUSTICE

xi (1987).

101

See, e.g., Michael J. Saks, Do We Really Know Anything About the Behavior of the

Tort Litigation System—and Why Not?, 140 U. P

. L. R

. 1147, 1213 (1992) (“The allega-

tion that the tort system is an erratic lottery is exaggerated.”). See generally Philip G.

Peters, Jr., What We Know About Malpractice Settlements, 92 I

OWA

L. R

. 1783 (2007)

(reviewing sizable body of empirical scholarship to show that, in the medical malpractice

context, settlement outcomes are driven by case strength).

102

U.S. D

’

TOF

EALTH

& H

UMAN

ERVS

., O

FFICE OF

ISABILITY

, A

GING AND

ONG

-T

ERM

ARE

OLICY

, A

DDRESSING THE

EALTH

ARE

RISIS

: R

EFORMING

THE

EDICAL

ITIGATION

YSTEM

MPROVE THE

UALITY OF

EALTH

ARE

(2003) (reporting that, on average, attractive patients recover more than others in medical

malpractice lawsuits).

103

Rabin, supra note 8, at 722 (discussing horizontal equity).

104

See E

RIC

ELLAND

& A

LEXANDER

ABARROK

, J

UDGE AND

URY

: A

MERICAN

ORT

AW O N

RIAL

20 (2006) (“Deterrence doesn’t work well if . . . defendants cannot predict

who will be punished.”).

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828 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

contesting liability),

105

and partly traceable to repeat-play dynamics

(since settlement mills’ high case volumes ensure frequent adjuster-

negotiator interaction),

106

even cases with serious liability issues are

often amicably resolved. Insurers will offer something (as opposed to

an outright denial) for nearly every claim.

107

As a non-lawyer negoti-

ator from a Louisiana firm explained, “If it was a real legal dispute,

sometimes, you know, [the insurance adjuster] would mention that

fact or say, ‘Well, look, just to make this thing go away, I’m still willing

to give you $5,000, $6,000.’”

108

A negotiator from the Rogers firm

meanwhile recalled:

I remember getting a file from one of the paralegals, the statute [of

limitations] had run like two days over. I knew the adjuster very,

very well. Had dealt with him on several other cases. I asked him to

do me—it wasn’t my case—to do me a big favor, let’s settle this as

three days earlier before the statute ran, and he did.

109

It is not just that settlement mills are apt to provide something as

opposed to nothing. As the Rogers firm’s reference to multipliers

helps to illustrate, settlement values are also relatively predictable.

Settlement mills tend to settle cases for formulaic “going rates”—i.e.,

values worked out over time between the settlement mill and insur-

ance adjuster, often calculated based on the medical bills the claimant

has accumulated.

110

Guided by going rates, according to one settle-

ment mill negotiator, “you know going in and [the adjusters] know

going in about the value of this case.”

111

“[S]omebody who gets a

whiplash,” another explained, “they’re all the same, almost the same.

I mean, if somebody has a two-month whiplash or a three-month

105

U.S. D

’

TOF

RANSP

., M

OTOR

EHICLE

RASH

OSSES AND

HEIR

OMPENSATION IN THE

NITED

TATES

37 (1971) (“[I]nsurance companies are usually

willing, particularly with small claims . . . to settle a questionable claim, or in insurance

parlance, to ‘buy’ the claim.”).

106

Settlement mill negotiators very frequently negotiate with the same pool of insur-

ance adjusters. Engstrom, supra note 3, at 1529 n.286.

107

Though some cases are dropped prior to negotiation, very few cases that proceed to

negotiation result in no offer from the insurance company. See Engstrom, supra note 3, at

1517 n.207 (collecting sources); Telephone Interview with F.M. (Apr. 29, 2008) (recalling

“[v]ery tiny” number of no-offer cases while at the Weiss firm); Telephone Interview with

T.R. (Apr. 16, 2008) (recalling only one or two no-offer cases while working at the Rogers

firm). But see Telephone Interview with H.L. (Apr. 7, 2008) (disputing the notion that

insurance adjusters will tender offers when liability is questionable, although agreeing that

“very, very few cases” resulted in no offer).

108

Sledge Disciplinary Transcript, supra note 12, at 128 (testimony of Lillian

Higginbotham Lalumandier).

109

Telephone Interview with S.R. (Mar. 27, 2008).

110

Engstrom, supra note 3, at 1532–42 (discussing going rates); see also supra note 76

(same).

111

Sledge Disciplinary Transcript, supra note 12, at 128 (testimony of Lillian

Higginbotham Lalumandier).

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 829

whiplash and they get well, it has a certain value.”

112

The combined

effect of settlement mills’ ability to (1) virtually assure some payment

and also (2) roughly predict the amount of that payment means that,

much like no-fault, settlement mills are able to smooth the peaks and

valleys of recovery, increasing the likelihood that, at least intra-firm,

similar claims will be treated similarly. The litigation lottery concern

that so troubles no-fault proponents, in short, is largely solved.

5. Access to Justice

Fifth, no-fault proponents criticize the tort system for leaving so

many accident victims uncompensated and seek to expand the pool of

compensated claimants.

113

In their own unique way, settlement mills

might fulfill this objective as well.

114

The first way settlement mills might expand the delivery of com-

pensation is by funding advertising campaigns that encourage more

individuals to file claims and retain counsel following an accidental

injury. These ads, meanwhile, might be hitting their mark. Just as per-

sonal injury attorney advertising has exploded and just as settlement

mill representation has become more prevalent, auto accident victims

have become more likely to file third-party claims and to seek the

assistance of counsel.

115

Or, as the Insurance Research Council put it,

112

Id. at 423 (testimony of Lawrence David Sledge).

113

Mark M. Hager, No-Fault Drives Again: A Contemporary Primer, 52 U. M

IAMI

. 793, 807 (1998) (“[A] basic purpose of no-fault is to widen the delivery of compensa-

tion . . . .”); Gary T. Schwartz, Auto No-Fault and First-Party Insurance: Advantages and

Problems, 73 S. C

. L. R

. 611, 622 (2000) (“No-fault rests on the premise that all auto

accident victims should be compensated for their economic losses.”).

114

In so doing, settlement mills also arguably fulfill their responsibilities under Model

Code EC 2-1 to “assist in making legal services fully available” and EC 2-2 to “assist

laypersons to recognize legal problems.” M

ODEL

ODE OF

ROF

’

ESPONSIBILITY

EC 2-1,

2-2 (1980). Granted, whether increased claiming—or increased claiming with the assistance

of counsel—is itself desirable or undesirable is a matter of debate, and though no-fault

proponents would like all accident victims to achieve some compensation, they might view

more victims seeking compensation through tort as cause for consternation, not

celebration.

115

For information on the explosion of personal injury attorney advertising, see Richard

J. Cebula, Historical and Economic Perspectives on Lawyer Advertising and Lawyer Image,

15 G

. S

. U. L. R

. 315, 321 tbl.1 (1998) and Maria Aspan, Getting Law Firms To Like

Commercials, N.Y. T

IMES

, June 19, 2007, at C5. For information on settlement mill preva-

lence, see Engstrom, supra note 3, at 1517–21. Studies show an increase in claiming during

the 1980s. See S

TEPHEN

J. C

ARROLL ET AL

., RAND, T

OSTS OF

XCESS

EDICAL

LAIMS FOR

UTOMOBILE

ERSONAL

NJURIES

2 (1995) (comparing data from 1980 and

1991 and finding “[d]rivers who have accidents are more prone to submit claims”); I

ESEARCH

OUNCIL

, F

RAUD AND

UILDUP IN

UTO

NJURY

LAIMS

: P

USHING THE

IMITS OF THE

UTO

NSURANCE

YSTEM

25 (1996) [hereinafter I

. R

ESEARCH

OUNCIL

RAUD AND

UILDUP

] (noting “steady increase[ ]” in bodily injury liability claim fre-

quency from 1980 to 1993). Likewise, studies show an increase in attorney retention. See

. R

ESEARCH

OUNCIL

, I

NJURIES IN

UTO

CCIDENTS

: A

NALYSIS OF

UTO

\\jciprod01\productn\N\NYU\86-4\NYU401.txt unknown Seq: 26 30-SEP-11 7:26

830 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

after comparing claim data from 1980 (when attorney television

advertising had yet to take off) to 1993 (when it was an almost $126

million industry): “[A] major shift has occurred in the way that acci-

dent victims have learned to interpret their situations and respond to

economic incentives . . . .”

116

This evidence is hardly conclusive, and

other changes in the legal services industry—including the profes-

sion’s explosive growth—have also probably played a part.

117

But

existing data are consistent with the view that attorney advertising, in

some part funded by settlement mills, is increasing the American

public’s propensity to retain lawyers and file claims.

118

And because

claimants who take such steps are substantially more likely to recover

as compared to those who do not, settlement mills are arguably

expanding the pool of compensated claimants.

119

Before one dismisses increased claiming as wasteful or counter-

productive, it must be emphasized that claiming has an often-

overlooked distributive dimension. Some studies suggest that low-

income individuals have been traditionally less likely to seek redress

NSURANCE

LAIMS

7 fig.1-5 (1999) (showing significant increase in attorney retention

between 1977 and 1997); I

. R

ESEARCH

OUNCIL

, P

AYING FOR

UTO

NJURIES

: A C

ON-

SUMER

ANEL

URVEY OF

UTO

CCIDENT

ICTIMS

36 fig.5-1 (2004) [hereinafter I

ESEARCH

OUNCIL

, A

UTO

NJURIES

] (noting dramatic increase in percentage of respon-

dents who report hiring an attorney, from 19% in 1977 to 43% in 2002); cf. ABA

TANDING

OMM

ON THE

ELIVERY OF

EGAL

ERVS

., R

EPORT ON THE

URVEY OF

EGAL

LINICS AND

DVERTISING

IRMS

21 (1990) (concluding, on basis of very

limited data, “that advertising law firms, as a whole, are not causing increased lawyer use in

the general population”).

116

. R

ESEARCH

OUNCIL

, F

RAUD AND

UILDUP

, supra note 115, at 25; see also

Cebula, supra note 115, at 321 tbl.1 (reporting that, by 1993, television attorney advertising

was an almost $126 million industry).

117

See T

HOMAS

D. M

ORGAN

, T

ANISHING

MERICAN

AWYER

80–81 (2010) (high-

lighting the near-quadrupling in the size of legal profession from 1970 to 2009).

118

See J

OHN

D. S

TUCKEMEYER

, W

ASH

. L

EGAL

OUND

., “E

XTRAORDINARY

OTENT

HEAP

USIC

”: T

ASE FOR

EFORMING

AWYER

DVERTISING

2–7 (1993)

(attributing increase in auto accident claiming to increase in attorney advertising); J

OOST

supra note 6, § 10:11 (attributing increase in attorney retention to increase in attorney

advertising).

119

Though it is hard to tell whether the relationship is causal, or merely correlative, it

appears that represented claimants are far more likely to get something as opposed to an

outright denial. See, e.g., Marc A. Franklin et al., Accidents, Money, and the Law: A Study

of the Economics of Personal Injury Litigation, 61 C

OLUM

. L. R

. 1, 13 (1961) (“In those

cases in which the claimant is represented by an attorney the frequency of recovery is 90

per cent, while in those cases in which the claimant acts for himself the rate of recovery is

only 65 per cent.”); Clarence Morris & James C.N. Paul, The Financial Impact of

Automobile Accidents, 110 U. P

. L. R

. 913, 924 (1962) (“[R]etention of a lawyer

greatly increases the prospect . . . of an award . . . .”); Stephen Daniels et al., Why Kill All

the Lawyers? Repeat Players and Strategic Advantage in Medical Malpractice Claims 6–7

(Am. Bar Found., Working Paper No. 9210, 1993) (suggesting that represented medical

malpractice claimants were far more likely to secure payment, as compared to those who

were unrepresented).

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 831

following accidental injury, as compared to their wealthier counter-

parts.

120

This failure to initiate claims, meanwhile, seems attributable

not to a lack of financial need but rather to a lack of information con-

cerning rights and potential remedies and also a lack of knowledge

about and contact with lawyers. These are two obstacles that settle-

ment mills and their advertisements, some of which are specifically

targeted to appeal to “[p]eople who might not otherwise be aware of

their legal options,”

121

should logically help low-income individuals

overcome.

122

Settlement mills might expand access to legal services along a

second dimension as well, by giving the minimally injured—a group

Steven Croley has dubbed “an important set of underrepresented civil

litigants”—access to counsel that they might otherwise lack.

123

Rele-

120

For example, a 1957 study of auto accident claimants in New York found that fol-

lowing a minor car accident, “over one fourth (27 percent) of those with low [socio-

economic status (SES) took] no action at all, but practically no one (2 percent) with high

SES fail[ed] to take action.” R

OGER

RYANT

UNTING

& G

LORIA

S. N

EUWIRTH

, W

UES IN

ORK

ITY

? A S

TUDY OF

UTOMOBILE

CCIDENT

LAIMS

98 (1962);

accord A

LFRED

F. C

ONARD ET AL

., A

UTOMOBILE

CCIDENT

OSTS AND

AYMENTS

TUDIES IN THE

CONOMICS OF

NJURY

EPARATION

257 (1964) (“[S]eriously injured indi-

viduals who did not file a suit tend to have lower incomes and are more likely to be in

nonprofessional occupations.”); 1 U.S. D

’

TOF

RANSP

., E

CONOMIC

ONSEQUENCES OF

UTOMOBILE

CCIDENT

NJURIES

3 (1970) (“The ratio of reparations to loss was 0.38 for

low income families and 0.61 for high income families.”); Helen R. Burstin et al., Do the

Poor Sue More? A Case-Control Study of Malpractice Claims and Socioeconomic Status,

270 JAMA 1697, 1699 (1993) (finding that poor and uninsured patients were significantly

less likely to file malpractice claims, after controlling for injury severity). But cf. ABA,

ONSORTIUM ON

EGAL

ERVS

AND THE

UBLIC

, L

EGAL

EEDS AND

IVIL

USTICE

: A

URVEY OF

MERICANS

20 fig.6 (1994) (finding no meaningful difference in claiming rates

of low- and moderate-income individuals); Frederick C. Dunbar & Faten Sabry, The

Propensity To Sue: Why Do People Seek Legal Actions?, B

. E

CON

., Apr. 2007, at 31

(analyzing RAND data from 1988–1989 and concluding that income “tend[s] not to have a

robust effect on propensity to claim or sue”).

121

Telephone Interview with T.T. (Aug. 14, 2008).

122

See H

UNTING

& N

EUWIRTH

, supra note 120, at 99 (speculating that low-SES individ-

uals often fail to claim because of, inter alia, their “lack of understanding of what their

rights may be” and their “lack of contact with lawyers”).

123

Steven Croley observed: “[T]ort plaintiffs in low-damage cases constitute an impor-

tant set of underrepresented civil litigants: given the costs of litigation, and the attendant

difficulties of finding legal representation for cases involving modest damages, tort plain-

tiffs with strong liability claims but not exorbitant damages have little access to justice.”

Steven Croley, Summary Jury Trials in Charleston County, South Carolina, 41 L

. L.A.

L. R

. 1585, 1587 (2008); see also P

ETER

A. B

ELL

& J

EFFREY

O’C

ONNELL

, A

CCIDENTAL

USTICE

: T

ILEMMAS OF

ORT

10 (1997) (describing difficulty some claimants

face finding counsel if they have “significant but not crushing injuries”); B

ERNZWEIG

supra note 86, at 83 (“[I]njured claimants whose out-of-pocket losses are relatively small

. . . are often denied legal assistance . . . .”); Stephen C. Yeazell, Getting What We Asked

For, Getting What We Paid For, and Not Liking What We Got: The Vanishing Civil Trial, 1

J. E

MPIRICAL

EGAL

TUD

. 943, 966 (2004) (discussing “a huge number of claims [priced]

out of the litigation market”).

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832 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

vant here is a survey of Texas plaintiffs’ lawyers conducted by Stephen

Daniels and Joanne Martin. They found that the majority (59.2%)

would not accept a hypothetical case involving “a simple car wreck,”

clear liability, adequate insurance, and “soft tissue injuries worth

$3000.”

124

Are settlement mills, in regularly accepting such low-dollar

claims, increasing the availability of representation? It is difficult to

say for sure, but the same 1995 Insurance Research Council study

quoted above also found that “Americans are increasingly willing and

able to pursue claims for minor injuries.”

125

And settlement mill law-

yers themselves certainly report fulfilling this role. According to one

settlement mill partner, “[W]e frequently have clients come in who

have been turned down by other attorneys because their case is too

small; they can’t find an attorney easily to take their case.”

126

Like-

wise, a former Rogers firm attorney, echoing a sentiment shared by a

number of his colleagues, explained, “I think the law firm—firms like

Jim’s—do certainly [perform] a service for a certain portion of society

where a number of other firms would not be interested in taking their

cases, either because they may be less than desirable clients and/or

their cases are not big enough.”

127

Additional empirical evidence is needed to (1) determine

whether the above relationships are causal, rather than merely correl-

ative; (2) pinpoint settlement mills’ precise contributions to these

dynamics; and also (3) gauge to what extent increased claiming

involves compensation-seeking for legitimate, rather than fabricated

or exaggerated, injuries.

128

But fragmentary data suggest that, just as

124

Stephen Daniels & Joanne Martin, The Strange Success of Tort Reform, 53 E

MORY

L.J. 1225, 1256 & tbl.8 (2004); accord ABA C

OMM

’

NON

AWYER

RACTICE

, N

ON-

AWYER

CTIVITY IN

-R

ELATED

ITUATIONS

: A R

EPORT WITH

ECOMMENDATIONS

81 (1995) (documenting witnesses’ testimony that “few lawyers will handle automobile or

other property damage claims of a few hundred (or even a few thousand) dollars”).

125

. R

ESEARCH

OUNCIL

, F

RAUD AND

UILDUP

, supra note 115, at 25 (emphasis

added).

126

Transcript of Record at 112, Zang, No. SB-86-0014-D (Special Local Admin. Comm.

of the State Bar of Ariz. Mar. 21, 1984) (testimony of Peter Whitmer before Arizona

Disciplinary Board); see also Telephone Interview with Lillian Lalumandier (Aug. 13,

2007) (stating that a significant proportion of Sledge’s clients could not have found repre-

sentation elsewhere); Telephone Interview with L.T. (Mar. 6, 2008) (“[A] lot of attorneys

won’t handle the cases that we’re willing to handle.”).

127

Telephone Interview with J.J. (Apr. 24, 2008); see also Telephone Interview with

A.M. (May 14, 2008) (stating that, prior to coming to his firm, clients had “tried to deal

with the insurance company themselves and just got nowhere”); Telephone Interview with

L.J. (Apr. 17, 2008) (stating that clients could not have gotten representation if it were not

for Rogers and adding, “let me tell you, these insurance companies were out for

themselves”).

128

See generally S

TUCKEMEYER

, supra note 118, at 2–7 (alleging that many claims that

result from increased attorney advertising are fraudulent).

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 833

no-fault endeavors to expand access to compensation, settlement

mills, in their own unique way, might be doing much the same.

6. Fabricated or Exaggerated Claims

A sixth and, for our purposes, final critique is that the tort system,

by virtue of payment for non-economic loss, is “marred by tempta-

tions to dishonesty that lure into their snares a stunning percentage of

drivers and victims.”

129

By abolishing payment for pain and suffering,

no-fault was explicitly designed to eliminate such temptations.

130

But

here, far from alleviating this problem of traditional tort, settlement

mills very likely exacerbate it, perhaps substantially.

The tort system first rewards plaintiffs who seek extra, unneces-

sary medical treatment because, as the Rogers case study illustrates, a

plaintiff’s economic loss (“special damages”) is often multiplied in

order to calculate her total recovery.

131

As a former Rogers attorney

explained, “If a person goes to a chiropractor and gets some treat-

ment, gets some medical specials, all of a sudden instead of having a

case that’s worth $1500, you have a case that’s worth $3500.”

132

Often

called “medical buildup,” this perverse incentive structure has been

called “one of the central weaknesses of the current tort system”

133

nd is estimated to cost insurers and their policyholders billions of dol-

lars per year.

134

Insurance Research Council statistics hint at the problem’s mag-

nitude: Attorney-represented claimants with sprains and strains as

their most serious injury report economic losses nearly three times

higher, on average, than their non-represented counterparts ($7229

129

EETON

& O’C

ONNELL

, supra note 5, at 3; see also S

TAFF OF

OINT

CON

. C

OMM

supra note 5, at 11 (“Fraud and abuse of the system are endemic, driven in large measure

by the incentives of the tort system.”).

130

Ironically, modified no-fault, especially with monetary thresholds, might exacerbate,

rather than alleviate, the fraud concern. See I

. R

ESEARCH

OUNCIL

, F

RAUD AND

UILDUP

, supra note 115, at 55 (“A monetary threshold does not seem to reduce the

appearance of fraud and buildup and may encourage claim enhancement.”); Auto Choice

Reform Act of 1997: Hearing Before the S. Comm. on Commerce, Science, and

Transportation, 105th Cong. 83 (1997) (statement of Tim Ryles, former Ins. Comm’r, State

of Georgia) (“[N]o-fault is to insurance fraud what octane level is to gasoline; the more no-

fault you have, the greater the fraud.”).

131

See supra notes 73–76 and accompanying text.

132

Telephone Interview with L.J. (Apr. 17, 2008).

133

TAFF OF

OINT

CON

. C

OMM

., 104

ONG

., I

MPROVING THE

MERICAN

EGAL

YSTEM

: T

CONOMIC

ENEFITS OF

ORT

EFORM

17 (Comm. Print 1996).

134

. R

ESEARCH

OUNCIL

, F

RAUD AND

UILDUP

, supra note 115, at 2 fig.1-1, 23

(concluding that approximately 36% of all paid bodily injury claims appear to involve

fraud or buildup and estimating that excess injury payments in 1995 totaled $5.2 to $6.3

billion); see C

ARROLL ET AL

., supra note 115, at 3 (reporting that “35–42 percent of med-

ical costs claimed by auto accident victims appear to be excess”).

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834 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

versus $2436).

135

To be sure, there are some wholly benign explana-

tions for this gap. For instance, represented claimants are more likely

to have the confidence to seek necessary but costly medical treatment,

that they would otherwise forego (physical therapy, for example), in

order to facilitate more rapid or complete recoveries, and they are

also better equipped to identify, document, and seek payment for the

full range of compensable expenses. But pervasive medical buildup is

probably part of the story. And, because settlement mills often main-

tain unusually close relationships with doctors and chiropractors (who

also benefit handsomely when patients seek extra medical care), they

likely exacerbate the medical buildup concern.

136

Aside from medical buildup, the mere possibility of payment for

non-economic damages (and thus, the fact that filing a claim will put

money in one’s pocket) creates an incentive to feign or grossly exag-

gerate injuries—and here too, settlement mills may be particularly

susceptible to falling on the wrong side of the ethical line. Most obvi-

ously, in contrast to more conventional counsel who spend significant

resources vetting clients and cases prior to acceptance, as noted previ-

ously, settlement mills do not tend to engage in rigorous pre-retention

review.

137

At one Florida settlement mill, for example, an attorney

recalled that the “modus operandi was to sign everything up.”

138

And

at a Louisiana firm, statistics suggest that in some years, roughly 95%

of those who called the firm seeking representation following an auto

accident were, at least initially, signed up as clients.

139

Such open-door

policies are unlikely to weed out fraudsters or malingerers, particu-

larly since, as also noted previously, settlement mills commonly

represent claimants with soft-tissue injuries, a class of injuries

135

. R

ESEARCH

OUNCIL

, supra note 51, at 59–60 & fig.4-8.

136

See Telephone Interview with G.V. (Apr. 7, 2008) (“In most cases, you would

develop relationships with chiropractors who were trained and educated to believe that

even soft tissue injuries could result in permanent injury, given the type of accident it

was.”); Telephone Interview with S.R. (Mar. 27, 2008) (stating that “[i]t was a given” that

some clients received treatment they did not need). Indeed, one of Rogers’s ads reportedly

included the following: “Your doctor doesn’t believe you’re really injured. Call the

People’s Lawyer at 444-4441 for a lawyer and a doctor who are on your side, who will wait

until the case settles to get paid, who know that people really do get hurt in car accidents.”

Harper, supra note 69.

137

See supra note 37 and accompanying text (contending that settlement mills’ cursory

screening is distinctive).

138

Telephone Interview with D.R. (Mar. 4, 2008); see also Telephone Interview with

G.V. (Apr. 7, 2008) (Q: “What percentage of callers seeking legal representation were

accepted as clients?” A: “Pretty much everyone.”).

139

Transcript of Record at 138–39, In re Guirard, No. 04-DB-005 (La. Sept. 23, 2004)

(testimony of E. Eric Guirard before Louisiana Attorney Disciplinary Board) [hereinafter

Guirard Disciplinary Transcript] (stating that 2204 calls were received in 2000 and that

2107 of those callers were signed up as clients).

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 835

notoriously difficult to verify and thus easily—and, studies suggest,

often—feigned.

140

More broadly, adherence to ethical obligations is bound to suffer

in view of settlement mills’ persistent focus on profitability, coupled

with the fact that work at these firms is almost entirely unmonitored,

for reasons explained in Part III. As one former Weiss attorney

explained, “Let me tell you, so much goes on in a law firm that settles

cases, and it’s all out of the light of day. If you don’t have a moral

center, and you’re willing to slide and slip around, you can do all sorts

of things because you’re never going to be caught.”

141

Accurately

gauging to what extent settlement mills encourage medical buildup or

represent claimants with wholly non-meritorious claims is not pos-

sible, and, it is vital to stress, the number will also vary considerably

between settlement mills, as some appear far more unscrupulous than

others.

142

But there are indications that settlement mills may, more

often than most, blur ethical boundaries and bend to the temptations

of fraud.

B. Settlement Mills in Form: The Mill Masquerade

As seen above, in substance, settlement mills do many things

well. They offer their clients relative speed and predictability, while

sparing their clients from litigation’s emotional entanglements and

bruising ordeals. Yet speed, predictability, simplicity, and certainty are

fundamentally incompatible with the idiosyncratic, fact-intensive,

case-by-case determinations that undergird traditional tort. So, along

the way, there is an implicit trade. Even in the absence of aggregation,

and even though clients are complaining of damage to their bodies

(which tort law has long conceptualized as particularly personal),

140

A 2001 study concluded that approximately 42% of reported soft-tissue-injury claims

(defined, quite narrowly, as sprains and strains to the neck and back) in dollar-threshold

no-fault states and tort states are for nonexistent or preexistent injuries. Stephen Carroll &

Allan Abrahamse, The Frequency of Excess Auto Personal Injury Claims, 3 A

. L. &

CON

. R

. 228, 228, 248 (2001); see also Herbert I. Weisberg & Richard A. Derrig, Fraud

and Automobile Insurance: A Report on Bodily Injury Liability Claims in Massachusetts, 9

J. I

. R

. 497, 537 (1991) (highlighting the frequency with which claims for only sprains

and strains involve apparent fraud).

141

Telephone Interview with E.C. (Apr. 22, 2008).

142

Compare Telephone Interview with A.M. (May 14, 2008) (“In my entire time there, I

never signed up a client that I thought was not in a bona fide accident or did not have bona

fide injuries.”), with Telephone Interview with T.R. (Apr. 16, 2008) (“A lot of these people

aren’t hurt. . . . [Y]ou should have screened the malingerers from the people who had

legitimate injuries.”).

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836 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

settlement mills resolve individual claims on something resembling a

wholesale basis.

143

The trade, while not uncontroversial, is quite reasonable.

144

And

settlement mills are hardly alone in brokering it. It has long been said

that traditional tort’s commitment to individualized justice is more

mythical than real.

145

In fact, a number of formal mechanisms—from

class actions, to the workers’ compensation regime, to the September

11th Victim Compensation Fund—dispense with it altogether.

146

More than that, if given the choice, many settlement mill claimants

would surely select just this system. “[M]embers of the public,” it has

been said, “want routes that are quick, cheap, and relatively stress-

free.”

147

The problem, though, is that while some, and perhaps most, acci-

dent victims want justice served simply—and some have claims too

small to make the full-dress litigation envisioned by traditional tort

practically feasible, no matter their desire—others have sizable claims

and “go to law” with other, more amorphous or more complicated,

aspirations.

148

And for these individuals, settlement mill representa-

tion may be disaster.

143

See Roger C. Cramton, Individualized Justice, Mass Torts, and “Settlement Class

Actions”: An Introduction, 80 C

ORNELL

L. R

. 811, 815 (1995) (describing auto accidents

as “the paradigm case of . . . traditional tort”); Judith Resnik, Aggregation, Settlement, and

Dismay, 80 C

ORNELL

L. R

. 918, 923 (1995) (“Tort law had conceptualized injuries done

to an individual’s body as specific and personal.”).

144

To be sure, some oppose any corrosion of the individualized ideal, and some opposi-

tion to class resolution of personal injury claims stems from class treatment’s fundamental

incompatibility therewith. See, e.g., Judith Resnik, From “Cases” to “Litigation,” 54 L

ONTEMP

. P

ROBS

. 5, 17 (1991) (“One source of distress about and hostility toward class

actions in general arose from a view of lawsuits—and particularly of tort actions—as being

quintessentially cases involving individuals.”); accord Alexandra D. Lahav, The Law and

Large Numbers: Preserving Adjudication in Complex Litigation, 59 F

. L. R

. 383, 384

(2007) (“One tragic aspect of mass torts is that individual harm becomes routinized.”).

145

See supra note 29 (cataloging number of studies suggesting that, particularly when

stakes are small and volumes are high, case-by-case adjudication often yields to routiniza-

tion and rules of thumb).

146

For brief background information on the wholesale treatment of claims in the New

York workers’ compensation system and the September 11th Victim Compensation Fund,

see M

ARC

A. F

RANKLIN ET AL

., T

ORT

AW AND

LTERNATIVES

834–35, 866–69 (8th ed.

2006). Class actions are also aggregative, by their very design. See, e.g., F

. R. C

. P. 23

(delineating rules for federal class actions).

147

AZEL

ENN ET AL

., P

ATHS TO

USTICE

: W

HAT

EOPLE

O AND

HINK

BOUT

OING TO

254–55 (1999); see also H

UNTING

& N

EUWIRTH

, supra note 120, at 9

(reporting that surveyed auto accident victims preferred reasonable settlement to be

“made simply, more or less mechanically, and without too much argument on the part of

the insurers”); R

OSS

, supra note 29, at 241 (“[M]ost claimants seem to prefer a definite

settlement for a lower amount of money to the gamble of trial for a higher amount of

money.”).

148

For some, having the opportunity to hold a tortfeasor publicly accountable, or simply

to tell one’s story, matches, or even eclipses, any desire to maximize the economic recovery

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 837

The crux of the issue is that while clients affirmatively trade indi-

vidualized justice for routinized relief in some contexts (as in the Sep-

tember 11th Victim Compensation Fund), and while the trade is some

mix of obvious and unavoidable when tort law has been formally sup-

planted (as in the case of workers’ compensation or after certification

of a mandatory class),

149

at settlement mills, it is neither.

150

Clients,

that is, sometimes sign up for settlement mill services without knowing

that a distinct form of legal service is on offer, and worse, sometimes

in the shadow of ads that actively cultivate a contrary impression.

151

This, in turn, means that while settlement mills have traded traditional

tort for a streamlined form of compensation resting on routine and

rules-of-thumb, not all settlement mill clients have agreed to—or are

attained. See Judith Resnik et al., Individuals Within the Aggregate: Relationships, Repre-

sentation, and Fees, 71 N.Y.U. L. R

. 296, 364 (1996) (“Research on litigants, particularly

in the context of tort law, reveals a group of individuals who seek something in addition to

money.”); see, e.g., Deborah R. Hensler, The Real World of Tort Litigation, in E

VERYDAY

RACTICES AND

ROUBLE

ASES

157–62 (Austin Sarat et al. eds., 1998); Abel, supra note

31, at 259–66; John M. Conley & William M. O’Barr, Hearing the Hidden Agenda: The

Ethnographic Investigation of Procedure, 51 L

& C

ONTEMP

. P

ROBS

. 181, 186 (1988). For

more on the proportion of mill clients with large claims, see infra note 155. For more on

litigants’ non-monetary objectives, see infra note 334.

149

Workers’ compensation has long replaced the tort remedy with a no-fault compensa-

tion scheme. F

RANKLIN ET AL

., supra note 146, at 828. Similarly, claimants who received

funds from the September 11th Victim Compensation Fund explicitly “waiv[ed] the right to

file a civil action.” 49 U.S.C. § 40101 note sec. 405(c)(3)(B)(i) (2006). For information on

class actions, see F

. R. C

. P. 23(b)(1)–(2).

150

Settlement mills are not the only providers for whom this is true. There are a number

of important parallels, for example, between mills and non-class collective representation,

where the departure from the traditional attorney-client relationship is also profound and

all too often obscured. In both contexts, lawyers work in high volume, seek to maximize

aggregate recoveries, and have little personal involvement with individual clients. See gen-

erally Erichson, supra note 29, at 524–26.

151

Some settlement mills, to their credit, are quite candid about the contours of the

representation. See infra note 181 (explaining that clients were aware that cases were han-

dled by non-lawyers). Others, unfortunately, are not. See infra note 344 and accompanying

text (describing potentially misleading Weiss ad); see also In re Zang, 741 P.2d 267, 274

(Ariz. 1987) (en banc) (finding that Zang and Whitmer “scrupulously avoided” taking

cases to trial even though firm’s ads portrayed firm as “willing and able” to do so); Tran-

script of Record at 3177, May v. Bloomfield, No. D019136 (Cal. Ct. App. 1993) [herein-

after Spital Transcript] (introducing transcript of Spital law firm ad boasting, “We

encourage a close attorney-client relationship. . . . [W]e treat each client as if he or she

were our only client.”); John Accola, A Twist for ‘Strong Arm’: Suit Reinstated, R

OCKY

OUNTAIN

EWS

, Jan. 10, 2006, at 1B (recounting ads in which firm’s named partner

referred to himself as “Strong Arm” and boasted, “I can get you more money!”); Tele-

phone Interview with J.K. (May 15, 2008) (A: “What I don’t like is when an attorney

advertises heavily on TV like he’s some tough, smart, you-deserve-respect-and-justice-type

attorney, and the fact of the matter is, he doesn’t handle any cases, and he’s never litigated

a case. That bothers me.” Q: “That’s what you felt like [your employer] was doing?” A:

“Yeah, I did.”); accord Telephone Interview with S.R. (Mar. 27, 2008) (suggesting discon-

nect between service offered and received).

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838 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

even aware of—the exchange. In the rueful words of one former set-

tlement mill attorney, “It really was very formulaic. Everybody saw it

that way, except for the client, who actually thought of themselves as

an individual.”

152

Thus, while settlements mills, in substance, get a passing grade,

settlement mills, in form—particularly as they create and exploit a

troubling disconnect between the type of legal service apparently, and

actually, on offer—are less satisfactory. Below, I explore the ramifica-

tions of this disconnect vis- `a-vis the representation of claimants with

serious injuries, the delegation of settlement negotiations to non-

lawyer personnel, and the fees the firms charge.

1. Settling for Less: The Under-Compensation of the Most Seriously

Hurt

The first and most obvious problem occurs when the seriously

injured, those most in need of attentive, individualized representation

and who would have no trouble securing conventional counsel, never-

theless seek settlement mills’ services.

153

A former Weiss attorney

explained:

My perception was then, and it is now, for these high volume firms,

that if you have small injuries that are not very permanent [and]

that are well documented, he settles quick, he settles fast, and gets

you full value. If you have very, very serious injuries that require

long-term treatment, then you get the short end of the stick.

154

To be sure, most settlement mill clients have indeed sustained

only minor injuries and are bound to be quite satisfied. But some

fraction have sustained serious injuries and thus have potentially

152

Telephone Interview with K.N. (Nov. 8, 2007); accord Spital Transcript, supra note

151, at 3329 (testimony of Jerry W. May) (stating that, as a client of the Spital firm, he

expected personalized, individualized attention, as promised in firm’s ads, but, in fact: “[I]t

wasn’t personal at all. And [Spital] didn’t know me. He didn’t know my name.”).

153

Granted, the most seriously injured fare poorly, as compared to the least seriously

injured, even in traditional tort. See Alfred F. Conard, Insurance Rates and Regulations,U.

ICH

. L. Q

UADRANGLE

OTES

, Fall 1970, at 14 (“If there is one thing which the surveys

have shown conclusively, it is that the tort system overpays the small claimants who need it

least, and underpays the large claimants who need it most.”). Indeed, this over- and under-

compensation is another flaw of traditional tort that no-fault proponents often point to, yet

no-fault proposals typically fail to address. See U.S. D

’

TOF

RANSP

., C

OMPENSATING

UTO

CCIDENT

ICTIMS

: A F

OLLOW

-U

EPORT ON

-F

AULT

UTO

NSURANCE

XPERIENCES

5 (1985) (noting that no-fault plans, like traditional tort, “fall short of the

needs of catastrophically injured victims”).

154

Telephone Interview with K.R. (May 1, 2008); accord Telephone Interview with L.J.

(Apr. 17, 2008) (“If you needed a good lawyer, [the Rogers firm] was not the place to

be.”).

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 839

sizable claims.

155

And these luckless souls, it is fair to say, are not well

served.

Many of the attributes that distinguish settlement mills from con-

ventional counsel also serve to artificially depress claim value. First,

settlement mills settle cases quickly, and, although speed has undeni-

able benefits, fast settlements tend to depress the value of claims. Or,

as Alfred Conard concluded after his comprehensive study of auto

claim compensation, “the man who has a severe injury is likely to

settle for it quickly only if he settles for a relatively small amount.”

156

Second and relatedly, settlement mills commonly impose incentives or

quotas on negotiators, rewarding or requiring the settling of a given

number or dollar value of claims within a specified time period.

157

Under this system, negotiators are compensated or evaluated based

on their aggregate recoveries, or simply based on their ability to close

claims, creating a temptation, as one settlement mill negotiator put it,

to “[g]et the first offer from the insurance company and move on.”

158

Third, settlement mills rarely file lawsuits and a number of studies

show that the act of not filing is correlated with (although not necessa-

rily causally related to) reduced recoveries.

159

Fourth, insurance

155

See Sledge Disciplinary Transcript, supra note 12, at 121 (testimony of Lillian

Higginbotham Lalumandier) (recalling that as a non-lawyer she settled “several” cases for

more than $100,000); Telephone Interview with C.R. (Apr. 1, 2008) (recalling million dollar

settlement); Telephone Interview with S.R. (Mar. 27, 2008) (estimating that 10% of cases

at the Rogers firm involved either fractures or permanent injury). Testimony involving the

San Diego firm of Sam Spital, which flourished in the late 1980s and early 1990s, is also

instructive (although perhaps not generalizable since that firm, unlike some others, specifi-

cally sought out large and complicated cases). Spital Transcript, supra note 151, at 3214–15

(testimony of Samuel E. Spital). In sworn testimony, Spital estimated that 5% of his

office’s caseload involved cases “over the $30,000 level.” Id. at 4707.

156

ONARD ET AL

., supra note 120, at 222; see also H

AZEL

ENN

, H

ARD

ARGAINING

UT OF

OURT

ETTLEMENT IN

ERSONAL

NJURY

CTIONS

106 (1987) (“[I]f a plaintiff

holds out against an insurance company and rejects initial offers, he will receive more

money at the end of the day.”); R

OSENTHAL

, supra note 76, at 36 (“[T]he longer the client

holds out, the larger the settlement he will be able to bargain out of the insurer.”); John R.

Foutty, The Evaluation and Settlement of Personal Injury Claims, 492 I

. L.J. 5, 7 (1964)

(“[T]he value of a personal injury claim often increases in proportion to the time elapsed

since the date of the injury.”).

157

Engstrom, supra note 3, at 1501 (describing quotas).

158

Telephone Interview with J.K. (May 15, 2008); see also Telephone Interview with

D.W. (May 8, 2008) (describing “convenience store attitude” at firm, where “[the]

[q]uicker you can move something, [the] better off you are”); Telephone Interview with

R.J. (Apr. 8, 2008) (“I was expected to meet quotas and settle cases, and there was very

little interest in litigating the cases that needed to be litigated and settling the cases that

needed to be settled.”).

159

See C

ONARD ET AL

., supra note 120, at 157 fig.4-5 (showing that average settlement

amounts increased after suit was filed); id. at 270 (“The serious injury subjects who sued

fared better than the serious injury subjects who did not.”); Franklin et al., supra note 119,

at 17 & n.86 (“The average suit recovered $1,464; the average claim recovered $675.”);

Maurice Rosenberg & Michael I. Sovern, Delay and the Dynamics of Personal Injury

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840 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

adjusters appear to vary their offers based on the perceived risk of

litigation.

160

Because settlement mills have a reputation for avoiding

trial, they have less credibility in their dealings with insurers and are,

it seems, less likely to obtain top dollar.

161

Fifth and finally, settlement

mills often employ inexperienced attorneys or non-attorney personnel

to evaluate claims and negotiate settlements.

162

For the run-of-the-

mill soft-tissue case, these individuals, often skilled at negotiating (if

not the traditional practice of law), may do just fine—an issue I will

return to below. But it takes someone with patience, sophistication,

talent, and time to see complexity embedded in the routine.

163

Identi-

fying that obscure deep pocket or crafting a novel but winning argu-

ment might mean the difference between a meager settlement and a

substantial recovery, and that is something settlement mills, given

both the personnel they hire and the constraints they impose, are

quite poorly equipped to do.

And indeed, it is noteworthy that various settlement mill negotia-

tors report that some case values were compromised. One attorney

stated, “I am personally aware of cases I think [were] settled for

$10,000, $15,000, $20,000 less [because insurance adjusters knew the

attorney handling the case] wasn’t going to actually try the case and

Litigation, 59 C

OLUM

. L. R

. 1115, 1128–29 (1959) (showing that suits settled for higher

average value than mere claims, although rejecting notion that “simply putting a case into

suit could raise its value enough to account for the enormous differences reflected”); cf. 1

U.S. D

’

TOF

RANSP

., A

UTOMOBILE

ERSONAL

NJURY

LAIMS

64 tbl.V-21 (1970)

(showing same ratio of economic loss to final settlement, regardless of whether suit was

filed).

160

See Brandon Ortiz, Former Casualty Manager Testifies Against Allstate, L

EXINGTON

ERALD

-L

EADER

, Oct. 5, 2007, at A1 (summarizing the testimony of a former Allstate

casualty manager, who noted that “Allstate kept a log of plaintiff attorneys, noting which

ones were aggressive and which ones caved in”).

161

As one former settlement mill lawyer put it, “If the figure was no good, [insurers]

were not worried he would go to trial because he wouldn’t.” Telephone Interview with S.R.

(Mar. 27, 2008); see also Telephone Interview with D.W. (May 8, 2008) (“If you’re not a

trial lawyer, you got—that’s your only weapon. If you don’t show up in that court room,

you’ve got no bargaining power. If you don’t have a gun, you can’t participate in a gun

fight.”); Telephone Interview with G.V. (Apr. 7, 2008) (Q: “You think reputation matters

in terms of the offers you’re given?” A: “I know it matters.”); Telephone Interview with

S.S. (May 30, 2007) (stating that insurance adjusters “knew it was a joke” and, when she

would protest that offers were too low, would respond by asking, “What are you going to

do about it?”).

162

See, e.g., Telephone Interview with S.R. (Mar. 27, 2008) (stating that, at the Rogers

firm, “[t]he lawyers . . . had no clue what they were doing”).

163

Compare Vince v. Wilson, 561 A.2d 103, 104 (Vt. 1989) (permitting a negligent

entrustment action against a negligent driver’s great aunt who had supplied funds for her

grandnephew to purchase the vehicle, which had struck the plaintiff), with Telephone

Interview with A.M. (May 14, 2008) (suggesting that attorneys would spend the least

amount of time—merely two or three hours—settling cases when a claimant had sustained

serious injuries because those could be easily settled for policy limits).

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 841

tee it up.”

164

Another confessed that he and his colleagues sometimes

yielded to the financial incentives associated with settling cases

quickly, rather than at full value.

165

A third described at his firm a

“stack ‘em deep and settle ‘em cheap” mentality.

166

A fourth charac-

terized the size of his firm’s settlements as “terrible,”

167

while a fifth

put it this way:

I think the expectation of the firm is these are just widgets. Get

them in. Get them out. Let’s make some money and move on. You

could miss some really good cases or miss some things that would

lead to your client getting their due result by not taking the time.

168

2. Unauthorized Practice of Law

Second, some settlement mills (including the Rogers firm) have

non-attorneys negotiate settlements of third-party personal injury

claims in apparent violation of Model Rule of Professional Conduct

5.5.

169

For routine cases, this delegation, unto itself, may not fairly

warrant condemnation.

170

But like much else about the settlement

mill paradigm, its under-the-table status is cause for grave concern.

164

Telephone Interview with C.R. (Apr. 1, 2008).

165

Telephone Interview with G.V. (Apr. 7, 2008).

166

Telephone Interview with J.K. (May 15, 2008) (“[T]here seemed to be kind of a

mentality of churning and burning, you know, almost like stack ‘em deep and settle ‘em

cheap.”).

167

Telephone Interview with S.R. (Mar. 26, 2008); see also Telephone Interview with

S.R. (Mar. 27, 2008) (“They settle at ludicrous, absolutely ludicrous, cost.”).

168

Telephone Interview with R.J. (Apr. 8, 2008); accord Spital Transcript, supra note

151, at 3061–62 (testimony of Shawn M. Sornson) (testifying that, while working as an

attorney for Sam Spital, he does not believe that he was able to obtain every dollar to

which each client was entitled); see also Will Harper, 800-XLAWYER: Embattled People’s

Lawyer Quits Profession, E

AST

XPRESS

(Sept. 27, 2006), http://www.eastbayexpress.

com/eastbay/800-xlawyer/Content?oid=1081909 (describing the Wilson case, where

“Rogers pressured Wilson to accept an $85,000 settlement for what a judge later figured

was a million-dollar case . . . .”).

169

ODEL

ULES OF

ROF

’

ONDUCT

R. 5.5 (2007) (outlawing unauthorized practice

of law). For examples of firms where the settlement of claims was (at least sometimes)

delegated to non-lawyers, see Engstrom, supra note 3, at 1505, 1506 n.115, 1512 and supra

note 72 and accompanying text.

170

See Herbert M. Kritzer, Seven Dogged Myths Concerning Contingency Fees, 80

ASH

. U. L.Q. 739, 778–79 (2002) (advocating that non-lawyers settle routine claims for

reduced contingency fees). A rich literature has developed that broadly questions the

wisdom of unauthorized practice provisions. See generally H

ERBERT

M. K

RITZER

, L

EGAL

DVOCACY

: L

AWYERS AND

ONLAWYERS AT

ORK

(1998); Richard L. Abel, How the

Plaintiffs’ Bar Bars Plaintiffs, 51 N.Y.L. S

. L. R

. 345, 349, 375–76 (2006); Barlow F.

Christensen, The Unauthorized Practice of Law: Do Good Fences Make Good Neighbors—

or Even Good Sense?, 1980 A

. B. F

OUND

. R

. J. 159; Thomas D. Morgan, The Evolving

Concept of Professional Responsibility, 90 H

ARV

. L. R

. 702, 707–12 (1977); Deborah L.

Rhode, Policing the Professional Monopoly: A Constitutional and Empirical Analysis of

Unauthorized Practice Prohibitions, 34 S

TAN

. L. R

. 1, 75–80 (1981).

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842 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

Courts routinely hold that non-lawyers may not negotiate the set-

tlements of third-party personal injury claims on behalf of claimants;

when they do, it constitutes the unauthorized practice of law.

171

Because “[t]he prohibition against the practice of law by a layman is

grounded in the need of the public for integrity and competence,”

courts must implicitly find, then, that lawyers necessarily settle third-

party personal injury claims more competently or with more integrity

than do non-lawyer personnel.

172

But this conclusion is somewhat

dubious. When claims are routine and the negotiation hinges, as it

often does, not on legal merit but on the slippery question of

“quantum” (i.e., the proper compensation for the claimant’s injury),

173

it is not self-evident that formal legal training is necessary or even

helpful.

174

Meanwhile, courts’ line drawing is awfully fine. While injury vic-

tims cannot retain lay negotiators, insurance companies can and com-

monly do.

175

Indeed, these non-lawyer insurance adjusters are the

individuals with whom settlement mill negotiators typically bargain,

and some settlement mill negotiators have experience in insurance

company ranks—which all tends to undermine any blanket assertion

171

See, e.g., Idaho State Bar v. Villegas, 879 P.2d 1124, 1126 (Idaho 1994)

(“[N]egotiating legal positions and issues also clearly involve[s] the practice of law.”); Utah

State Bar v. Summerhayes & Hayden, Pub. Adjusters, 905 P.2d 867, 869–70 (Utah 1995)

(concluding that “third-party adjusting” by non-lawyers constitutes the unauthorized prac-

tice of law).

172

ODEL

ODE OF

ROF

’

ESPONSIBILITY

EC 3-1 (1980); see Rhode, supra note 170,

at 74–96 (considering EC 3-1 and questioning whether the ban on lay representation fur-

thers state’s articulated interests).

173

Sledge Disciplinary Transcript, supra note 12, at 123–24 (testimony of Lillian Higgin-

botham Lalumandier) (testifying that, when settling routine claims, she did not argue law

but instead argued “quantum,” which was “what the case is worth”); accord Telephone

Interview with L.T. (Mar. 6, 2008) (recalling that negotiations focused on “[v]alue issues”);

see also H

ERBERT

M. K

RITZER

, T

USTICE

ROKER

: L

AWYERS AND

RDINARY

ITIGATION

143 (1990) (“[I]n many disputes there is little or no difference of opinion over

whether something is owed to the plaintiff; instead, the question to be resolved is how

much should be paid.”). But see J

EFFREY

O’C

ONNELL

, T

NJURY

NDUSTRY AND THE

EMEDY OF

-F

AULT

NSURANCE

12–13 (1971) (reporting that, prior to the widespread

adoption of comparative negligence, fault was the “principal” issue in auto negotiations);

Telephone Interview with H.G. (Apr. 29, 2008) (stating that “most cases” were contested).

174

Indeed, studies show that even experienced practitioners assign markedly different

values to particular injuries. See, e.g., G

ERALD

R. W

ILLIAMS

, L

EGAL

EGOTIATION AND

ETTLEMENT

5–7 (1983).

175

See, e.g., Liberty Mut. Ins. Co. v. Jones, 130 S.W.2d 945, 961–62 (Mo. 1939) (distin-

guishing between adjusters who represent claimants and adjusters employed by insurers

and finding that only the former practice law unlawfully); L

R. R

USS

, C

OUCH ON

NSURANCE

§ 48:65 (3d ed. 2010) (“An adjuster who represents himself or herself to the

public as able to . . . settle claims generally, is engaged in practice of law . . . while an

adjuster in the regular employ of an insurance or casualty company is obviously in a dif-

ferent category.”).

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 843

of incompetence.

176

(It is fair to assume that, if non-lawyers were nec-

essarily bad negotiators, insurance companies would have, by now,

wised up.)

Nor is the non-lawyer settlement of claims, even on behalf of

individuals, particularly exceptional. Most states permit licensed

“public adjusters” to represent clients in property damage negotia-

tions with their own (“first-party” as opposed to “third-party”)

insurers.

177

Non-lawyer “claims assessors” lawfully settle personal

injury claims for clients in the United Kingdom, with some apparent

success.

178

And, up until the 1930s (when Depression-era unautho-

rized practice crackdowns put the brakes on such activity), non-

lawyers routinely settled injury claims,

179

as did lay negotiators at auto

clubs for their dues-paying members.

180

But even if the current ban is misguided, mills’ delegation, in the

face of the formal proscription, is still problematic, raising three prin-

cipal concerns. First, as long as the lay settlement of third-party claims

is formally proscribed, the non-lawyer substitution is likely to take

place without the client’s informed consent and, worse, sometimes in

the shadow of ads or documents falsely suggesting that an actual

lawyer-client relationship is in the offing.

181

Second, this lack of trans-

parency is apt to lead to over-charging. Some settlement mills, as I will

next discuss, appear to charge a premium for services performed by a

licensed attorney while depriving clients the full benefit of the bar-

176

See, e.g., Telephone Interview with S.S. (May 30, 2007) (explaining that all of her

negotiations were with lay adjusters, rather than with defense counsel).

177

E.g., S.C. C

ODE

§§ 38-48-40, -70, -100 (1976) (regulating public adjusters).

178

See B

LACKWELL

OMMITTEE

, T

NVESTIGATION OF

-L

EGALLY

UALIFIED

LAIMS

SSESSORS AND

MPLOYMENT

DVISERS

CT FOR

EWARD

30–31, 48

(2000) (noting lack of “any measurable public concern about, or widespread problem with”

claims assessors’ activities).

179

Corinne Lathrop Gilb, Self-Regulating Professions and the Public Welfare: A Case

Study of the California Bar 233 (May, 1956) (unpublished Ph.D. thesis, Radcliffe College)

(on file with the New York University Law Review).

180

E.g., Am. Auto. Ass’n v. Merrick, 117 F.2d 23, 23–25 (D.C. Cir. 1940) (discussing

claims settlement activities of 29,000-member District of Columbia Motor Club). For a

discussion of Depression-era unauthorized practice crackdowns, see R

ICHARD

L. A

BEL

MERICAN

AWYERS

7 (1989).

181

See, e.g., Telephone Interview with A.E. (Aug. 16, 2007) (stating that clients were left

under the false impression that their settlements had been negotiated by office’s named

partner). But see Sledge Disciplinary Transcript, supra note 12, at 125 (testimony of Lillian

Higginbotham Lalumandier) (confirming that, when she settled cases for Lawrence Sledge,

everybody knew she was not a lawyer); Supplemental Submission Re: Lawrence D. Sledge

from Schiff Law Corporation to Donna L. Roberts, Bd. Adm’r, La. Att’y Disciplinary Bd.,

at LDS-0003 (Apr. 16, 2001) (on file with the New York University Law Review) [herein-

after Sledge Submission] (letter to clients) (“If you are selected as a client, your file will be

transferred to the paralegal handling your case for settlement.”).

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844 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

gain.

182

Finally, precisely because the non-lawyer settlement of third-

party claims is unlawful, it is unregulated. One former settlement mill

attorney explained:

I want you to understand, too, when you are a non-lawyer working

in pre-lit and you can settle claims, there is no code of ethics.

There’s no code of professional responsibility. What are you going

to do, take their drivers’ license away? Seriously. . . . What are you

going to do? Not let them go to lunch? Ethical concerns they don’t

have. They don’t have any concerns.

183

In comparison, there are typically licensing requirements and reg-

ulatory safeguards when non-lawyers press claims before tribunals

that explicitly permit lay advocacy. The U.S. Patent and Trademark

Office (PTO), for example, allows lay representation, finding “no sig-

nificant difference between lawyers and nonlawyers either with

respect to their ability to handle the work or with respect to their eth-

ical conduct.”

184

But, in order to represent clients, patent agents must

fulfill certain college coursework requirements, pass a one-day exami-

nation, and, once practicing, are subject to the PTO’s detailed rules of

conduct.

185

Likewise, the Social Security Administration permits lay

advocacy and a review, even of litigated social security appeals, found

only a limited gap between the success rates of lawyer and non-lawyer

personnel.

186

But, as at the PTO, non-attorney social security repre-

sentatives are at least loosely regulated.

187

182

For a discussion of the “licensure premium,” see generally M

ORRIS

M. K

LEINER

ICENSING

CCUPATIONS

: E

NSURING

UALITY OR

ESTRICTING

OMPETITION

? 59, 60

tbl.3.3 (2006), which estimates that licensure premium, for all professions, is on order of

4% to 35%. As alluded to above, over the years, a number of lay public adjusters have

sprung up to represent clients in third-party injury disputes, even though such representa-

tion is widely held to violate unauthorized practice provisions. Consistent with the exis-

tence of a licensure premium, limited anecdotal evidence suggests that these adjusters

sometimes charge contingency fees substantially below the standard 33%. See, e.g., Dau-

phin Cnty. Bar Ass’n v. Mazzacaro, 351 A.2d 229, 230 (Pa. 1976) (describing a public

adjuster who would settle uncontested third-party injury claims for a 10% to 20% contin-

gency fee); La. Claims Adjustment Bureau, Inc. v. State Farm Ins. Co., 877 So. 2d 294, 296

(La. Ct. App. 2004) (describing firm that settled auto accident claims for a 25% contin-

gency fee); James Podgers, Crumbling Fortress, 79 A.B.A. J. 50, 55 (1993) (suggesting that

select public adjusters in Phoenix would handle personal injury claims for fees “as low as”

18%).

183

Telephone Interview with D.W. (May 8, 2008).

184

Sperry v. Florida, 373 U.S. 379, 402 (1963).

185

See, e.g., Donald J. Quigg, Nonlawyer Practice Before the Patent and Trademark

Office, 37 A

DMIN

. L. R

. 409, 409–10 (1985) (broadly describing regulation of patent

attorneys and agents at the PTO).

186

RITZER

, supra note 170, at 116.

187

See 20 C.F.R. §§ 404.1740, 416.1540 (2010) (establishing rules of conduct); 20 C.F.R.

§§ 404.1705(b), 416.1505(b) (providing qualifications for representatives).

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 845

In short, the lawyer requirement may be overkill; skilled,

independent, licensed paraprofessionals may be able to settle individ-

uals’ routine injury claims just as effectively as attorney personnel.

But the murky status quo, in which the formal prohibition leads settle-

ment mills to engage in an under-the-table delegation, gives clients the

worst of both worlds.

3. The Matter of Fees

A third problem, alluded to above, concerns the issue of fees. Set-

tlement mills, that is, appear to charge standard legal fees (or slightly

more) for less than standard legal services, again suggesting that mills

may be exploiting client ignorance concerning the particular service

provided.

Studies suggest that most personal injury contingency fees hover

around 33% of a client’s recovery. Studies also suggest that fees

exceeding one-third are relatively rare. In Herbert Kritzer’s study of

Wisconsin contingency fee practitioners, for example, he found that,

of lawyers who charged a fixed (i.e., non-tiered) contingency fee, a full

93% charged a fee of one-third, whereas only 1% charged more than

that amount.

188

Data from Alaska similarly show that, during a

roughly three-year period, 71% of cases involved fees of one-third;

only 12% were higher.

189

So, too, a 1988–1989 RAND study found

that, of practitioners charging a fixed contingency fee, only 10%

charged a fee greater than one-third.

190

Of course, not all personal

injury lawyers use fixed contingency fees. Some employ tiered fees,

which escalate at predetermined intervals. Returning to the Wisconsin

study, Kritzer found that only a minority of lawyers (31%) used tiered

fees, but of those who did, the “most common pattern” was to charge

25% of the gross recovery “if the case did not involve substantial trial

preparation (or, in some cases, did not get to trial), and one-third if it

got beyond this point, perhaps rising to 40 percent or more if the case

resulted in an appeal.”

191

188

RITZER

, supra note 19, at 39.

189

Id. at 42–43.

190

Id. at 43 (citing D

EBORAH

R. H

ENSLER ET AL

., RAND, S

URVEY OF

OMPENSATION

FOR

CCIDENTAL

NJURIES IN THE

NITED

TATES

, 1988–1989 [Computer File and Docu-

mentation] 230 (2001)); accord I

. R

ESEARCH

OUNCIL

, A

UTO

NJURIES

, supra note 115,

at 75 tbl.A-21 (reporting that, of surveyed auto accident claimants, only 9% in 1998 and

12% in 2002 recalled paying contingency fees exceeding 34%).

191

RITZER

, supra note 19, at 39–40; see also Stephen K. Dietz et al., The Medical

Malpractice Legal System, in A

PPENDIX

: T

EPORT OF THE

ECRETARY

’

OMMISSION

EDICAL

ALPRACTICE

114–15 & tbls.III-43, III-44 (1973) (reporting that, in medical

malpractice cases, the contingency fee is typically around 33%, rising to 40% in the event

of trial).

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846 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

In comparison, every one of the twelve settlement mills I have so

far studied charges a tiered contingency fee. And among those firms,

as compared to Kritzer’s data, most start with a higher percentage (at

least 33%—and perhaps as high as 40%—compared to Kritzer’s 25%)

and also trigger the escalator sooner in the litigation process.

192

While

Kritzer found that firms generally triggered the escalator only after

“substantial trial preparation,” all settlement mills in my (admittedly

very small and unscientifically drawn) sample trigger the escalator

when suit is merely filed.

193

To be sure, to the extent that settlement mills do charge higher

contingency fees, there is one ready and reasonable explanation:

Because most settlement mill claims are small, they arguably justify a

larger percentage.

194

A $5000 case and a $50,000 case, in other words,

192

One important detail is that both Kritzer’s data and my data come from retainer

agreements. K

RITZER

, supra note 19, at 39. Reliance on retainer agreements runs the risk

of overstating the fee actually charged, given that some lawyers will reduce their fee in

order to induce settlement. Id. at 41 (“It is not at all uncommon for lawyers to collect fees

that are less than what the retainer agreement entitles them to.”). It is plausible (although

speculative) that settlement mill lawyers, intent on forging settlements, reduce fees at

uncommonly high rates, which would account for some of the apparent discrepancy. See

Telephone Interview with A.M. (May 14, 2008) (stating that, at the Weiss firm, “Even

though [the fee] was 40%, you’d see an average of 20-25-30% in fees. That was not

uncommon.”).

193

At Weiss, for example, though there was some disagreement as to the actual per-

centage utilized, the majority of sources recalled that the contingency fee was 40% if the

case could be resolved prior to the initiation of litigation and 45% if litigation commenced.

Telephone Interview with A.M. (May 14, 2008); Telephone Interview with F.M. (Apr. 29,

2008); Telephone Interview with E.C. (Apr. 22, 2008). But see Telephone Interview with

K.R. (May 1, 2008) (recalling fee of one-third); Transcript of Deposition of Joe W. Weiss at

53, Comm. for Lawyer Discipline v. Weiss, No. 94-CI-18282 (Tex. Dist. Ct. Sept. 5, 1995)

(stating that a particular client was charged fee of 35%). Rogers, meanwhile, typically

charged a tiered contingency fee: 33% in the absence of suit and 40% if a lawsuit was

initiated. See Wilson v. Law Offices of James M. Rogers, No. 823761-7 at 7 (Cal. Super. Ct.

July 17, 2002), withdrawn, (Oct. 15, 2002); Telephone Interview with J.R. (July 28, 2008).

Other firms display similar patterns. The Sledge firm of Louisiana, for example, charged a

fee of 33% in the absence of suit, 40% if a suit was filed, and 50% in the event of an

appeal. Sledge Submission, supra note 181, at LDS-0152 (firm’s contract for legal services).

At the Dupayne firm of Georgia, clients were charged 33% in the absence of suit and 40%

if suit was initiated. Telephone Interview with J.G. (Aug. 27, 2007); Telephone Interview

with A.E. (Aug. 16, 2007). At the Guirard firm of Louisiana, clients were charged 36% in

the absence of suit and 40% if suit was filed. Guirard Disciplinary Transcript, supra note

139, at Ex. ODC 3 (firm’s contract for legal services). At the Azar firm of Colorado, clients

were charged 35% and up to 40% “if it [became] necessary to file suit or demand arbitra-

tion.” Plaintiff’s Motion for Partial Summary Judgment as to Liability for Breach of Fidu-

ciary Duty at Ex. A, Pappas v. Frank Azar & Assocs., No. 06-cv-01024-MSK-BNB (D.

Colo. Mar. 30, 2007) (firm’s fee agreement). At the Spital firm of California, the “normal”

agreement was one-third, rising to 40% if the case went into litigation. Spital Transcript,

supra note 151, at 4746 (testimony of Samuel E. Spital).

194

On the other hand, just how much smaller is debatable. In 1979–1980, the Civil

Litigation Research Project concluded that the median case in state court involved roughly

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 847

might require a comparable amount of effort while offering to the

contingency fee practitioner radically different rewards. If the contin-

gency fee practitioner thus chooses to raise his fee when damages are

low, so be it. Bolstering this argument, if the very small cases that

settlement mills accept have traditionally been rejected by conven-

tional counsel (a question considered above), they presumably have

been turned down because they are not profitable.

195

If high fees (and

economies of scale) are necessary to make small claims profitable,

that would militate in settlement mills’ favor.

Other factors, though, militate in favor of a lower percentage. As

compared to conventional counsel, settlement mills do not wrestle

with particularly novel or difficult issues, devote extraordinary time or

attention to their cases, display extraordinary skill or expertise, or

shoulder significant risk.

196

As for novelty and difficulty, Jim Rogers

acknowledged that his firm specialized in “basic,” “very straightfor-

ward” cases with “no argument about liability.”

197

Another settlement

mill partner, likewise, described many of his firm’s claims as “so very

cut and dry.”

198

Not surprisingly, in view of their simplicity, settlement mills

appear to expend little time and effort on the cases they resolve.

While Kritzer’s research reveals that even the highest-volume contin-

gency fee lawyers average twenty-five hours per case,

199

many

settlement mill claims are reportedly settled in a fraction of that

$4500. H

ERBERT

M. K

RITZER

, L

’

AKE A

EAL

: U

NDERSTANDING THE

EGOTIATION

ROCESS IN

RDINARY

ITIGATION

14, 20 (1991). In inflation-adjusted dollars, that equals

roughly $13,000, which is not dramatically more than settlement mills’ typical recovery.

Inflation was calculated pursuant to CPI I

NFLATION

ALCULATOR

, supra note 90.

195

See supra Part II.A.5 (discussing accident victims’ access to redress).

196

Model Rule 1.5(a) lists eight factors to be considered in determining the reasonable-

ness of a fee. These include, inter alia, “the time and labor required, the novelty and diffi-

culty of the questions involved, and the skill requisite to perform the legal service

properly.” M

ODEL

ULES OF

ROF

’

ONDUCT

R. 1.5(a) (2007). The rule does not discuss

risk, but the factors are “not exclusive,” id. at cmt. 1, and others have identified risk as an

important factor bearing on the appropriateness of a given contingency fee, see ABA

Comm. on Ethics and Prof’l Responsibility, Formal Op. 94-389 (1994) (stating that, when

deciding whether contingency fees are appropriate, “likelihood of success” is among the

factors that “should be considered”).

197

Telephone Interview with J.R. (July 28, 2008).

198

Sledge Disciplinary Transcript, supra note 12, at 427 (testimony of Lawrence David

Sledge).

199

Herbert M. Kritzer, Investing in Cases: Can You Profit from Contingency Fee Work?,

70 W

. L

AWYER

10, 44 (1997); accord K

RITZER

, supra note 194, at 31 (reporting that the

median case in the Civil Litigation Research Project sample, resolved for about $13,000 in

today’s dollars, consumed 30.4 hours of attorney time); R

OBERT

J. M

OUN ET AL

RAND, A

LTERNATIVE

DJUDICATION

: A

VALUATION OF THE

ERSEY

UTOMOBILE

RBITRATION

ROGRAM

41 tbl.3.8 (1988) (providing estimate of twenty

“billable” attorney hours and ten non-attorney staff hours per automobile case).

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848 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

time.

200

One Louisiana firm, for example, distributed an office policy

manual which advised that “most [automobile] cases should take no

more than 4–6 hours of staff work to turn over.”

201

A few sources

from a Florida firm indicated that typical cases required less than a

day of work.

202

And various sources, from firms in Texas and Cali-

fornia, likewise recalled that the typical case could be wrapped up in

less than six hours.

203

Nor do settlement mill practitioners display extraordinary talent.

As we have seen, it is not unusual for settlement mills to delegate

much of their work to non-attorney personnel, and the lawyers at such

firms often downplay the legal skill required, describing their work as

follows:

“I might as well have been working on an assembly line.”

204

“[T]he whole system is set up to do as little work as possible.”

205

“I felt like a claims adjuster with a law license.”

206

“It’s barely the practice of law. . . . You are a glorified adjuster until

you file suit, and when you file suit, minimal work gets done.”

207

“Lawyers over there on the pre-litigation side are just brokers,

that’s all you are. A good monkey could do the work.”

208

Finally, settlement mill lawyers face remarkably little risk. Con-

tingency fee lawyers typically face numerous unknowns when they

agree to represent a client: Will the case result in a favorable settle-

ment or judgment? Even if it does, will that settlement or judgment be

collectible? How much will it cost in both effort and expense to obtain

that recovery? How much time will pass before the recovery is

200

To be sure, some settlement mill lawyers report substantially higher inputs. See, e.g.,

Telephone Interview with A.M. (May 14, 2008) (“[On] [t]he average file, I would spend

anywhere between ten hours to fifty hours, even without litigation.”).

201

Sledge Submission, supra note 181, at LDS-0042 (staff memo).

202

Telephone Interview with R.J. (Apr. 8, 2008) (stating that he spent “a couple, few

hours” per settlement); Telephone Interview with K.E. (Apr. 3, 2008) (stating that an usual

case required “[n]ot more than eight hours”); Telephone Interview with D.R. (Mar. 4,

2008) (recalling that he spent two to three hours, from time of demand to time of release);

cf. Telephone Interview with H.L. (Apr. 7, 2008) (estimating ten to twenty hours for typical

soft-tissue case); Telephone Interview with C.R. (Apr. 1, 2008) (recalling that he spent

eight to ten hours on typical soft-tissue case).

203

See Telephone Interview with C.P. (May 20, 2008) (noting that, at his Texas firm,

“two hours would cover everything”); Telephone Interview with J.K. (May 15, 2008) (“I’d

probably say per case maybe four hours, max.”). For relevant information about the

Rogers firm, see supra note 77 and accompanying text, which provides estimates of four to

five hours.

204

Telephone Interview with R.J. (Apr. 8, 2008).

205

Telephone Interview with C.P. (May 20, 2008).

206

Telephone Interview with K.R. (May 1, 2008).

207

Telephone Interview with K.N. (Nov. 8, 2007).

208

Telephone Interview with D.W. (May 8, 2008).

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 849

obtained?

209

These are precisely the uncertainties that are said, quite

reasonably, to justify an elevated fee when a recovery is attained.

210

Yet, at settlement mills, as we have seen, such risks are much reduced

or altogether absent.

211

Judging the reasonableness of contingency fees is admittedly

fraught, particularly since high fees can sometimes reduce principal-

agent conflicts and, paradoxically, work to clients’ advantage.

212

But

the possibility of rent-seeking is real when the anomalies described

above are coupled with the following three considerations: First, some

public adjusters, who forthrightly provide a streamlined service,

charge substantially lower contingency fees for seemingly similar

work;

213

second, well-documented information asymmetries plague

the contingency fee marketplace;

214

and, third, data reveal that plain-

tiffs’ lawyers in auto cases earn higher average effective hourly rates

than do other contingency fee practitioners, even though auto cases

tend to require less expertise and entail reduced risk.

215

III

EED FOR

EFORM

Part III considers the need for reform. Subpart A briefly reviews

settlement mills’ myriad advantages and disadvantages, particularly in

209

ABA Comm. on Ethics and Prof’l Responsibility, Formal Op. 94-389 (1994) (reciting

various risks). These risks are not just theoretical; research suggests that plaintiffs’ lawyers

receive no payment for a non-trivial percentage of contingency fee cases. See K

RITZER

supra note 173, at 138 (reporting that 19% of contingency fee lawyers studied by Civil

Litigation Research Project received no payment).

210

Kritzer, supra note 170, at 748–49.

211

See supra note 107 (discussing rarity of no-offer cases).

212

See generally Michael McKee et al., Contingent Fees, Moral Hazard, and Attorney

Rents: A Laboratory Experiment, 36 J. L

EGAL

TUD

. 253 (2007) (showing in laboratory

setting that lawyer effort increases as contingent fees rise).

213

See Deidra M. Lemons, Free-Lance Adjusters’ Fees Muddy Water, H

OUSTON

HRON

., July 5, 2001, at 5C (reporting that public adjusters charge fees of 7% to 10%); see

also supra note 182 (regarding fees charged by a smattering of third-party public

adjusters).

214

See, e.g., Lester Brickman, The Market for Contingent Fee-Financed Tort Litigation:

Is It Price Competitive?, 25 C

ARDOZO

L. R

. 65, 93–97 (2003) (outlining various informa-

tion asymmetries in contingency fee tort litigation). As we will see infra at Part III.C, facts

about attorney quality are particularly elusive.

215

Kritzer, supra note 170, at 788 tbl.9b (showing that auto practitioners in Wisconsin

earned a mean effective hourly rate of $417, while “[o]ther personal injury” practitioners

earned $281); id. at 791 tbl.10a (displaying survey data collected by RAND showing that,

in a sample of federal proceedings terminated in 1991, auto practitioners earned a mean

effective hourly rate of $1031, while “[o]ther tort” practitioners earned $484); id. at 793

tbl.10b (displaying survey data collected by RAND showing that, in a sample of federal

proceedings filed in 1992–1993, auto practitioners earned a mean effective hourly rate of

$288, while “[o]ther tort” practitioners earned $230).

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850 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

light of the distinct demographics of the clientele served. Subpart B

then analyzes the existing lawyer regulatory architecture and con-

siders why settlement mills are destined to fall through certain

persistent gaps. Subpart C then shows that, given these gaps, the task

of ensuring adequate attorney quality is largely relegated to the indi-

vidual client—a fact that has profound implications for the Bar’s duty

to make objective information about lawyer quality more readily

available.

A. Disparate Justice, D´ej`a vu

As we have seen, settlement mills have many advantages. They

may well expand the availability of basic legal services and they spare

their clients from litigation’s expense, uncertainty, time, and trouble.

On the other hand, though, some clients with fabricated or exagger-

ated claims are over-compensated, perhaps significantly. And our

notion of individualized justice is compromised. Settlement mills do

not typically engage in a fine-grained assessment of fault; they invest

little in each case’s factual and legal development; and they sometimes

delegate “legal work” to non-lawyer personnel. There is, of course, a

strong argument that these shortcuts do not matter, or do not matter

much, for small claims. Indeed, lots of lawyers cut corners, and it is

arguably precisely such routinization that permits the representation

of those with only modest injuries.

216

But some clients with serious

injuries are almost certainly ill-served, and there is an undeniable

problem when clients are not informed (or worse, misinformed) of the

peculiar nature of the service provided.

The problems plaguing settlement mills are particularly stark

when we recognize that, in the United States, we have grown accus-

tomed to two tiers of justice. The “haves” benefit, and have long bene-

fited, from personalized legal services provided by highly educated,

meticulously trained, and lavishly compensated practitioners intent on

discovering and exploiting every tactical advantage.

217

The “have-

nots,” meanwhile, when represented at all, are, and have long been,

represented by under-paid and over-worked practitioners whose

adversary impulses are muted by some mix of high caseloads, insuffi-

cient support, and inadequate training.

218

Thus, the work of the law

216

See supra note 29 (noting that traditional tort’s formal commitment to individualized

justice tends to yield in various contexts).

217

See generally E

RWIN

O. S

MIGEL

, T

ALL

TREET

AWYER

: P

ROFESSIONAL

RGANIZATION

? (1964) (providing a sociological account of Wall Street law firms of

the 1960s).

218

Approximately 80% of low-income residents’ legal needs are wholly unmet. L

EGAL

ERVS

. C

ORP

., D

OCUMENTING THE

USTICE

AP IN

MERICA

A-1 (2009), available at

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 851

firm lawyer for the affluent is, as Eve Spangler reported, “the work of

a fine custom tailor: highly individualized and with exquisite fit.”

219

Meanwhile, the work of a lawyer for the poor is, as Jerome Carlin

found, frequently “mass process[ed],” “routinized,” and all too often

ill-fitting.

220

The one area where this class-based justice is thought not to

obtain is the particular world of personal injury. Tort law entitles one

to relief from injury irrespective of one’s wealth or status.

221

And con-

tingency fee financing, overwhelmingly the choice of personal injury

litigants, should make that relief practically available.

222

Armed with

the contingent fee, the rich and poor alike should be able to retain

counsel with equal talent and time, making the phrase “equal justice

under law” eminently attainable, rather than merely aspirational, at

least in this narrow corner of practice.

223

Yet, settlement mills overwhelmingly represent individuals who

are poor, uneducated, and/or who belong to historically disadvantaged

http://www.lsc.gov/pdfs/documenting_the_justice_gap_in_america_2009.pdf. The services

provided to the remaining 20% can be less than adequate. See generally M

ARJORIE

IRTH

OOR

EOPLE

’

AWYERS

(1976) (analyzing legal assistance programs in New Jersey that

provide the poor with sub-standard legal services resulting from chronic underfunding).

For specific descriptions of the quality of services provided, see id. at 76–77. See also

Jerome E. Carlin et al., Civil Justice and the Poor: Issues for Sociological Research, 1 L

& S

’

. 9, 55–59 (1966) (characterizing legal services for low-income people as “of a

quite limited character”).

219

PANGLER

, L

AWYERS FOR

IRE

: S

ALARIED

ROFESSIONALS AT

ORK

50 (1986)

(characterizing views of senior partners).

220

Jerome E. Carlin & Jan Howard, Legal Representation and Class Justice, 12 UCLA

L. R

. 381, 385 (1965) (describing services as “mass process[ed]”); Carlin et al., supra

note 218, at 57 (describing Legal Aid services as “routinized”).

221

Of course, since lost wages are compensable, the rich plaintiff is usually entitled to

more relief in absolute terms. Cf. M

ARTHA

HAMALLAS

& J

ENNIFER

B. W

RIGGINS

, T

EASURE OF

NJURY

: R

ACE

, G

ENDER

AND

ORT

158–70 (2010) (observing that

plaintiffs’ gender and race might also impact economic recovery).

222

Approximately 96% of individual personal injury plaintiffs pay their lawyers on a

contingency fee basis. Samuel R. Gross & Kent D. Syverud, Don’t Try: Civil Jury Verdicts

in a System Geared to Settlement, 44 UCLA L. R

. 1, 15–16 (1996).

223

See B

ELL

& O’C

ONNELL

, supra note 123, at 123 (“[P]laintiffs’ lawyers . . . function in

the tort system to provide injured persons with something that aggrieved citizens dealing

with other areas of law often lack: access to the courts and equality of representation.”

(emphasis added)); R

OSS

, supra note 29, at 75 (“[T]he contingent fee . . . makes the little

man’s claim as interesting to the lawyer as the big man’s claim.”); James W. Bollinger,

Contingent Fees—The New Suggestion of Judicial Supervision,69C

ENT

. L.J. 355, 356

(1909) (“The contingent fee actually makes the courthouse the one temple of justice for all,

equally accessible to both the rich and the poor.”); Lee S. Kreindler, The Contingent Fee:

Whose Interests Are Actually Being Served?, 14 F

ORUM

406, 406 (1979) (“The contingent

fee makes it possible for anyone in our society to get the best lawyer.”); see also infra notes

228–29 and accompanying text (referring to the contingency fee as “a great leveler” and

“equalize[r]”).

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852 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

ethnic and racial minority groups.

224

Given persistent social hierar-

chies, these clients are also personally acquainted with few lawyers

and know little about the civil justice system generally. “[T]here are

no lawyers in [my clients’] personal social circles,”

225

one settlement

mill lawyer explained, while another recalled, “People didn’t know

what a real law firm was.”

226

A third responded, when asked to

describe his typical client, “Working class. . . . People who don’t have

any particular understanding of the legal system, except what they’ve

heard from television.”

227

If the contingency fee is “a great leveler”

228

famously able to

“equalize[ ] otherwise unequal litigants,”

229

what explains this? Part of

the answer might be that when low-income individuals pursue tort

claims, they are, some studies suggest, more likely to seek the assis-

tance of counsel, presumably because of a sense, perhaps well-

founded, that they lack the literacy, sophistication, or savvy to handle

the problem effectively without legal assistance.

230

If the poor dispro-

portionately want lawyers even for very small claims, and if settlement

mills occupy the market niche willing to accept those very small

claims, that will predictably affect settlement mills’ clientele. Part of

the answer might also stem from the fact that settlement mills settle—

and settle quickly—and the poor, who are less likely to have sturdy

224

See, e.g., Telephone Interview with J.J. (Apr. 24, 2008) (stating that, at the Rogers

firm, a typical client was “[g]enerally a person of color” and “either lower income or lower-

middle class”); see also Engstrom, supra note 3, at 1524 (describing typical settlement mill

clients).

225

Mark Ballard, The Ad-Made Man and the Old-Line Firm: Changes in Law Practice

Are Played Out in Baton Rouge, N

’

L.J., Sept. 30, 2002, at A1, A12 (quoting E. Eric

Guirard).

226

Telephone Interview with S.S. (May 30, 2007).

227

Telephone Interview with T.T. (Aug. 14, 2008).

228

Samuel R. Gross, We Could Pass a Law . . . What Might Happen If Contingent Legal

Fees Were Banned, 47 D

AUL

L. R

. 321, 341 (1998) (“Whatever else might be said

about the contingent fee, it is a great leveler.”).

229

Philip H. Corboy, Contingency Fees: The Individual’s Key to the Courthouse Door, 2

ITIG

. 27, 34 (1976).

230

See H

UNTING

& N

EUWIRTH

, supra note 120, at 99 (“Of those who decide to take

action, persons with the lowest SES are most likely to employ a lawyer . . . .”); B

ARBARA

A. C

URRAN

, T

EGAL

EEDS OF THE

UBLIC

: T

INAL

EPORT OF A

ATIONAL

URVEY

152, 156–57 (1977) (“Problem-havers who consulted lawyers on tort matters had

substantially lower mean income ($8,000) than those who did not ($11,000).”). But cf. 1

U.S. D

’

TOF

RANSP

., supra note 120, at tbl.46S (comparing attorney retention rates by

highest grade completed and reporting that seriously injured auto accident claimants with

college and graduate degrees were far more likely to retain counsel, as compared to claim-

ants with less formal education); Bruce Campbell & Susette M. Talarico, Access to Legal

Services: Examining Common Assumptions, 66 J

UDICATURE

313 (1983) (reporting on a

Georgia survey which found that low-SES individuals were substantially less likely to hire

lawyers or identify problems as requiring legal assistance).

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 853

safety nets, may disproportionately prefer payments certain and

without delay.

231

But part of the answer, too, and perhaps a larger part, stems from

the fact that the poor are far more likely than their wealthier counter-

parts to choose a lawyer on the basis of attorney advertising.

232

And

why is that? Three explanations seem likely. First, as compared to

wealthier individuals, the poor are less likely to have social and

familial ties with lawyers and are less likely to have used legal services

in the past, meaning they are less likely to know more personal ways

to find lawyers and also less likely to know the reputations of various

practitioners.

233

Next, some advertisers affirmatively craft their ads to

appeal to low-income or historically disadvantaged groups.

234

Jim

Rogers, for example, explicitly geared his commercials “to appeal to

folks who may not be upward-income individuals.”

235

Finally, there

might be a simple misconception at work. One 1992 New Mexico

survey (specifically focused on direct mail advertisers) found that, as

compared to their wealthier and more highly educated counterparts,

the poor and least educated were far more likely to think that

attorney advertisers are superior to non-advertisers, believing adver-

tisers to be comparatively more skillful, of better quality, and inclined

to give a better deal.

236

231

Carlin et al., supra note 218, at 77 (“Lawyers who deal with poor persons in . . .

personal injury cases . . . tell us that poor clients often exert strong pressure to ‘settle out’

so that they can pay their bills and have ‘something extra’ to live on.”); accord Telephone

Interview with J.J. (Apr. 24, 2008) (“A number of our clients were uninsured.”). Returning

to the notion that settlement mills maintain particularly close relationships with doctors

and chiropractors, settlement mills might also be attractive to uninsured accident victims

because they can offer medical care on credit. See supra note 136 (discussing Rogers ad,

which promised medical as well as legal services).

232

ABA C

OMM

’

NON

DVERTISING

, L

AWYER

DVERTISING AT THE

ROSSROADS

ROFESSIONAL

OLICY

ONSIDERATIONS

97 & tbl.XII (1995) [hereinafter L

AWYER

DVERTISING

] (showing that lower-income households are substantially more likely to

choose lawyers on basis of advertising, as compared to moderate-income households);

Scott Sandlin, Poster Boy or Scapegoat?, A

LBUQUERQUE

J., Oct. 12, 1997, at A1 (reporting

statements by Will Hornsby of the ABA’s Commission on Advertising: “‘If you look at

who responds to advertising, they are people who don’t otherwise know how to find a

lawyer,’ . . . and generally are ‘newly-relocated,’ low-income, undereducated, and

minorities.”).

233

See Lawyer Advertising, supra note 232, at 97 (observing that low-income individ-

uals “are the least likely to know of other resources for finding a lawyer”).

234

Id. (“Those who advertise personal legal services, especially personal injury or other

contingency-fee services, target low and moderate-income populations.”).

235

Rogers Deposition, supra note 69, at 18–19.

236

See Petition for Writ of Certiorari at apps. 51, 52, Revo v. Disciplinary Bd. of the

Sup. Ct. for the State of N.M., 521 U.S. 1121 (1997) (No. 96-1780) (appending a December

1992 survey of Albuquerque adults’ responses to direct mail advertisement). The least edu-

cated were also, crucially, twice as likely as their most educated counterparts (77% versus

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854 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

Whatever the explanation, though, settlement mill clients are

overwhelmingly persons of limited means. And this fact has normative

bite. True, settlement mills have much to recommend them, and, as

previously discussed, might be improving the lot of certain individuals

who, in settlement mills’ absence, might have trouble securing any

type of legal representation or even shy away from claiming alto-

gether. But, at the same time, these client characteristics suggest a dis-

couraging d ´ej `a vu: a replication of the all-too-familiar justice gap

where high-income personal injury claimants are more apt to retain

“conventional counsel” of exquisite fit, while low-income claimants

are more apt to retain firms where legal services are mechanized and

mass produced. Unlike the traditional justice gap where counsel

quality hinges on a client’s unequal ability to pay, however, this justice

gap—especially as it exists for the small proportion of settlement mill

clients with large claims—is less explicable and consequently more

invidious since it rests merely on one’s ability to choose. As one

former settlement mill lawyer from Texas bluntly explained:

Anyone with a law degree in this town or familiarity with how the

courts work would say, “You can’t go there.” But it’s the people

sitting at home watching Jerry Springer who see his ads that are on

five times a day between the hours of one and four in the after-

noon . . . who go to him. And get trapped in the snare.

237

B. The Trouble with the Current Regulatory Architecture

The status quo is, I suggest, quite flawed. But as explained below,

the current regulatory architecture—consisting of disciplinary, lia-

bility, institutional, and informal controls—is unlikely to curb settle-

ment mills’ worst abuses, suggesting that a new, tailored mechanism is

needed to achieve meaningful reform.

238

1. Disciplinary Controls

Disciplinary controls, typically in the form of bar disciplinary pro-

ceedings, are the first and most well-known lawyer regulatory tool.

For a host of reasons, however, these proceedings are ill-suited to

address the settlement mill shortcomings previously identified as most

38%) to believe that advertising lawyers are legally required to be “experienced in the

trial” of cases in the substantive area in which they advertise. Id. at app. 52.

237

Telephone Interview with C.P. (May 20, 2008).

238

The description of the current regulatory architecture is drawn from the classic work,

David B. Wilkins, Who Should Regulate Lawyers?, 105 H

ARV

. L. R

. 799 (1992).

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 855

problematic.

239

The first reason for this is the simplest: Settlement

mills do not necessarily run afoul of clear rules of professional respon-

sibility. No rule requires attorneys to file lawsuits and try cases. Nor

must attorneys inform clients about their propensity to do so. Like-

wise, under the rules, it is arguably fine to incentivize negotiators with

quotas and contests, mechanize case processing, and, given proper

training and supervision, delegate important tasks, such as client

screening, to non-attorney personnel. Furthermore, though I suggest

above that settlement mill fees might be outsized in relation to the

effort exerted, and one could certainly advance a global critique that

settlement mill representation falls below a minimal threshold of com-

petence, rules governing both fees and competence are vague enough

that disciplinary counsel would have great difficulty proving outright

violations. And, not surprisingly, commentators indicate that discipli-

nary actions for excessive fees and incompetent representation are

exceptional.

240

Furthermore, even when settlement mill conduct does violate a

clear rule of professional ethics, existing disciplinary mechanisms are

unlikely to either detect or punish the transgression. As for detection,

disciplinary bodies are reactive; they rely on grievances filed typically

by fellow attorneys, judges, and (most often) former clients—three

constituencies that, for a host of reasons, are poorly positioned to

detect or blow the whistle on settlement mill abuse.

241

For starters,

since settlement mills rarely file lawsuits, they do not typically interact

with defense counsel or with judges. They interact, instead, with insur-

ance claims adjusters, who, unlike lawyers and judges, are not subject

239

This is not to suggest, of course, that settlement mill lawyers are never disciplined. A

number of the firms discussed in this research were. Indeed, I have located a number of

settlement mills by reviewing public disciplinary records.

240

See M

ODEL

ULES OF

ROF

’

ONDUCT

R. 1.5 (2007) (regarding fees); id. R. 1.1

(regarding competence); see also ABA C

OMM

’

NON

VALUATION OF

ISCIPLINARY

NFORCEMENT

, L

AWYER

EGULATION FOR A

ENTURY

11 (1992) (“The disciplinary

system was not designed to address complaints about the quality of lawyers’ services or fee

disputes.”). Indeed, disciplinary action for excessive fees and incompetent performance is

unusual. R

ICHARD

L. A

BEL

, L

AWYERS IN THE

OCK

: L

EARNING FROM

TTORNEY

ISCIPLINARY

ROCEEDINGS

211 (2008) (“Disciplinary committees rarely punish lawyers

for excessive fees.”); G

EOFFREY

C. H

AZARD

, J

ET AL

., T

AW AND

THICS OF

AW -

YERING

850 (4th ed. 2005) (observing that courts and ethics opinions “often state that it is

inappropriate to impose discipline for conduct that amounts ‘only’ to negligent malprac-

tice”); Lester Brickman, Contingency Fee Abuses, Ethical Mandates, and the Disciplinary

System: The Case Against Case-by-Case Enforcement, 53 W

ASH

. & L

L. R

. 1339, 1345

(1996) (noting that contingency fee lawyers are “virtually never disciplined for charging

unreasonable fees”).

241

Most grievances are filed by clients, rather than by judges or fellow practitioners. See

BEL

, supra note 240, at 502–03; see also id. at 499 (pointing out that lawyer disciplinary

systems are “almost entirely reactive”).

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856 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

to rules of professional responsibility and are therefore not duty-

bound to report perceived unethical conduct.

242

Settlement mill cli-

ents, meanwhile, because of their particular unsophistication, are

unlikely to identify even egregious ethical lapses when they occur and,

even if they do identify misconduct, are relatively unlikely to know

how to lodge a formal complaint.

243

More, even if a client can identify

wrongdoing and knows to whom to direct her grievance, doing so

takes resolve, as disciplinary proceedings can trigger retaliatory

action, drag on for years, and seldom benefit the complaining client.

244

Finally, in the unlikely event that a complaint is filed, statistics are not

on the client’s side. Few grievances result in formal charges.

245

And, in

the unlikely event that formal charges culminate in a formal finding of

wrongdoing, serious penalties are exceptional.

246

2. Liability Controls

Liability controls, typically in the form of malpractice actions,

impose a second formal constraint on attorney misfeasance. But they,

too, are unlikely to curb settlement mill abuse. Most obviously, this is

because clients, and particularly settlement mill clients, have trouble

identifying even egregious attorney misbehavior. Then, in the unlikely

event that a client does detect wrongdoing, daunting obstacles stand

between an aggrieved client and a recovery significant enough to

prompt a law firm to change its ways.

247

242

See, e.g., Telephone Interview with S.S. (May 30, 2007) (explaining that all of her

negotiations were with adjusters). Model Rule 8.3(a) imposes an obligation to alert author-

ities when a lawyer knows that another lawyer has committed a rule violation “that raises a

substantial question as to that lawyer’s honesty, trustworthiness or fitness . . . .” M

ODEL

ULES OF

ROF

’

ONDUCT

R. 8.3(a) (2007). To be fair, though, compliance with Rule 8.3

is spotty; few lawyers tattle on fellow lawyers, even when misconduct is observed. See

ICHARD

L. A

BEL

, L

AWYERS ON

RIAL

: U

NDERSTANDING

THICAL

ISCONDUCT

466–68

(2011) (discussing lawyers’ and judges’ reluctance to report lawyer misconduct).

243

For a discussion of the difficulty clients have identifying lawyer misbehavior, see

BEL

, supra note 180, at 144. According to one (admittedly dated) study, only a minority

of clients even know of the existence of professional disciplinary procedures. Eric H. Steele

& Raymond T. Nimmer, Lawyers, Clients, and Professional Regulation, 1976 A

. B.

OUND

. R

. J. 917, 962–63.

244

EBORAH

L. R

HODE

, I

N THE

NTERESTS OF

USTICE

: R

EFORMING THE

EGAL

ROFESSION

158–62 (2000).

245

ABA C

ENTER FOR

ROF

’

ESPONSIBILITY

, 2008 S

URVEY ON

AWYER

ISCIPLINE

YSTEMS

chart I (2008) (showing that out of 120,406 complaints received by disciplinary

agencies nationally, only 5048 lawyers—a meager 4.2%—were formally charged).

246

In 1983, for example, Abel reports that the Association of the Bar of the City of New

York received 8766 complaints, prosecuted 491 attorneys (5.6%), suspended 86 (1%), and

disbarred 65 (0.7%). A

BEL

, supra note 240, at 503.

247

Notwithstanding these obstacles, some malpractice actions are nevertheless filed. For

example, in a 2000 deposition, Jim Rogers noted that, over the years, he had been sued for

malpractice “probably five to ten times.” Rogers Deposition, supra note 69, at 47.

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 857

The first obstacles are practical. Most notably, in order to make

the malpractice action worthwhile, the underlying action must involve

damages significant enough to make the lawsuit profitable for a mal-

practice lawyer who, like the lawyer whose conduct is at issue, will

likely be paid via contingency fee. This means that clients are only apt

to file malpractice actions when a lawyer’s misconduct results in large,

provable, and collectible damages.

248

If the underlying case is small—

as most settlement mill claims are—it will not be worth a malpractice

lawyer’s time. Similarly, a lack of malpractice insurance will often

defeat damage collection and, in turn, deter case initiation. Only

Oregon requires its attorneys to carry malpractice insurance; in other

states, some 25% to 80% of lawyers are uninsured.

249

Legal hurdles are no less daunting. To prevail on a malpractice

action, plaintiffs must show breach, causation, and damages.

250

As for

breach, malpractice plaintiffs must show that the original attorney’s

performance fell below the prevailing practice in the community—

which can be difficult to prove if reliable information regarding the

practices of other relevant lawyers is not available.

251

Next, plaintiffs

must link their attorney’s negligence to the diminished value of their

particular claim, which can be tricky, and must also link the damages

sustained to the attorney’s breach. Together, this means that plaintiffs

must prove a case within a case, showing that the underlying claim had

legal merit which the attorney’s error erased or diminished. These

various legal hurdles mean that, even when claims are initiated, they

very rarely succeed. According to one recent study, 78% of opened

legal malpractice claims resulted in no payment.

252

248

EBORAH

L. R

HODE

& D

AVID

UBAN

, L

EGAL

THICS

1011–12 (5th ed. 2009);

Geoffrey C. Hazard, Ethics, N

’

L.J., July 6, 1992, at 15 (“The [legal] malpractice

remedy . . . has practical utility only if the claim is open-and-shut or involves a large sum of

money (upwards of $250,000 in many localities).”); see also Wilkins, supra note 238, at 831

(“[C]lients with small or difficult to prove claims are unlikely to gain access to the malprac-

tice system.”).

249

BEL

, supra note 242, at 468 (“A 1988 survey of more than 12,000 California lawyers

suggested that only 17 percent were insured.”); Thomas G. Bousquet, It’s Time for

Mandatory Malpractice Insurance, T

. L

., Dec. 6, 1993, at 17 (“Approximately 60 per-

cent of the attorneys in private practice in the state have no professional liability insur-

ance.”); Jeffrey D. Watters, What They Don’t Know Can Hurt Them: Why Clients Should

Know if Their Attorney Does Not Carry Malpractice Insurance, 62 B

AYLOR

L. R

. 245,

258 n.96 (2010) (“Oregon is the only state that currently requires malpractice insurance

coverage . . . .”).

250

See R

ESTATEMENT

HIRD

) G

OVERNING

AWYERS

§ 48, cmt. c (2000).

251

See R

HODE

, supra note 244, at 165 (“[N]o reliable evidence is available on how law-

yers generally handle many legal tasks.”).

252

Kara MacKillop & Neil Vidmar, Legal Malpractice: A Preliminary Inquiry 14 (Oct.

25, 2006) (unpublished manuscript) (on file with the New York University Law Review)

(presented at the First Annual Conference on Empirical Legal Studies).

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858 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

3. Institutional Controls

Institutional controls—control by judges and regulators—are the

third mechanism commonly thought to restrain attorney conduct.

253

But settlement mills are, once again, unusually impervious to these

mechanisms. Most obviously, because settlement mills only rarely ini-

tiate lawsuits, they seldom practice before judges or administrators

who mete out institutional sanctions. Then, even when troubling con-

duct is identified, institutional controls that exist point in the wrong

direction. Predominant institutional controls include judges’ ability to

hold lawyers in contempt, impose sanctions pursuant to Federal Rule

of Civil Procedure 11 and state court counterparts, penalize discovery

abuse, and publicly admonish obstreperous conduct. Yet, these con-

trols were erected to curb overly zealous lawyering, punishing, for

instance, the bombastic argument, the withholding of documents, or

the filing of frivolous motions or claims. Few, if any, institutional con-

straints exist to curb overly passive lawyering when one fails to vigor-

ously represent one’s client vigorously.

4. Informal Controls: The Reputational Imperative

Finally, peer disapproval is also unlikely to temper settlement

mill abuse. For most lawyers, informal controls are influential.

254

Peer

disapproval—or conversely, the “reputational imperative”—is typi-

cally so potent because most lawyers’ financial survival depends on

signing new clients; to sign new clients, most lawyers rely heavily on

referrals from fellow practitioners; and a good reputation is usually a

precondition to referral receipt.

255

The reputational imperative, when

it works, thus reduces self-dealing in individual cases and also (via

referral networks) channels work to competent providers. But mass

advertising diminishes the reputational imperative. When firms get

their clients primarily from paid advertising (as settlement mills do),

253

For a discussion of various institutional controls, see R

ICHARD

ITRIN

& C

AROL

ANGFORD

, T

ORAL

OMPASS OF THE

MERICAN

AWYER

: T

RUTH

, J

USTICE

, P

OWER

AND

REED

66–68 (1999), A

BEL

, supra note 180, at 152–54, and Wilkins, supra note 238, at

835–38.

254

Charles Wolfram, for example, has written that “informal sanctions” are “[t]he most

widely effective form of regulation of lawyers.” C

HARLES

W. W

OLFRAM

, M

ODERN

EGAL

THICS

22 (1986).

255

The “reputational imperative” refers to the need to maintain a good reputation

among past clients and fellow practitioners in order to obtain referrals and thus generate

future business. For more on the reputational imperative and the importance of referral

networks, see supra notes 18–19 and accompanying text.

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 859

they can choose to bypass reputation-based business—stripping

informal controls of much of their power.

256

C. The “Pin-the-Tail-on-the-Donkey”

257

Problem

of Attorney Choice

If the legal profession set and consistently maintained high stan-

dards such that all lawyers could be counted on to be both expert and

ethical, prospective clients would not need to be particularly con-

cerned with problems of attorney choice. Virtually any lawyer in good

standing could be relied upon to provide competent—and

comparable—counsel.

258

Yet most lawyers would (and, when sur-

veyed, do) agree that this utopian vision does not reflect the status

quo.

259

As settlement mills help to illustrate, there are real differences

in attorney quality, and the choice a client makes has broad repercus-

sions for the type of representation she will receive and even, studies

suggest, the size of the recovery she will ultimately obtain.

260

Choosing a lawyer wisely is thus extremely important. It is also—

especially for clients without lawyers in their social and familial net-

256

For information on settlement mills’ distinctive reliance on advertising, see

Engstrom, supra note 3, at 1492–93.

257

ELL

& O’C

ONNELL

, supra note 123, at 7 (describing picking a personal injury

lawyer as a “pin-the-tail-on-the-donkey process”).

258

OSENTHAL

, supra note 76, at 117.

259

In a mail survey of 500 Sacramento lawyers, 97% of respondents agreed or strongly

agreed that there was great variability among legal service providers. Howard G. Schutz et

al., Lawyers’ Perceptions of Consumers’ Attitudes: Satisfaction, Quality, and Selection

Criteria, 12 J. L

EGAL

ROF

. 87, 95 (1987); see also R

OSENTHAL

, supra note 76, at 60–61

(concluding, based on a study of fifty-nine personal injury victims, that “ineffective profes-

sional service” is “quite common”).

260

See, e.g., F

RANK

A. S

LOAN ET AL

., S

UING FOR

EDICAL

ALPRACTICE

201, 216

(1993) (finding that medical malpractice specialists negotiated settlements that were nearly

twice as large as the sums obtained by non-specialists in similar cases); J

AMES

S. K

AKALIK

ET AL

., RAND, V

ARIATION IN

SBESTOS

ITIGATION

OMPENSATION AND

XPENSES

(1984) (finding that a lawyer’s asbestos-related experience helped determine whether or

not his clients would recover); R

OSS

, supra note 29, at 167, 193 tbl.5.4 (comparing recov-

eries obtained by solo practitioners and specialists and finding substantial disparities,

although no attempt is made to control for claim size or quality); Daniels et al., supra note

119, at 19–21, 27–38 (showing that certain Wisconsin medical malpractice practitioners

obtained payments more often and in far higher amount as compared to others, even

roughly accounting for injury severity); Catherine T. Harris et al., Who Are Those Guys?

An Empirical Examination of Medical Malpractice Plaintiffs’ Attorneys, 58 SMU L. R

225, 248 (2005) (analyzing North Carolina medical malpractice data and concluding that

“[a]ttorney attributes are at least as important as case attributes”); accord David S.

Abrams & Albert H. Yoon, The Luck of the Draw: Using Random Case Assignment To

Investigate Attorney Ability, 74 U. C

. L. R

. 1145, 1149–50, 1166–72 (2007) (reviewing

data from the Clark County Office of the Public Defender in Nevada and finding that,

even when cases and lawyers were randomly assigned, certain public defenders consistently

obtained better results, and observing that “the attorney to whom a defendant is randomly

assigned has a substantial impact on the likelihood and duration of his sentence”).

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860 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

works—extremely difficult. In the market for personal legal services,

there is a startling lack of objective, verifiable information available

concerning an attorney’s malpractice and disciplinary history and

record of failure or success.

1. Market Forces: Existing Insufficiencies and Inefficiencies

Credible information about lawyer performance is difficult (more

often, impossible) to find, no matter one’s resources or resolve.

261

There is nowhere to look, for instance, to determine the extent to

which a given lawyer usually litigates or settles, or, if he settles,

whether he tends to resolve cases quickly or slowly or whether he

obtains unusually generous or stingy sums. There is no centralized

databank recording attorney malpractice complaints, judgments, and

settlements.

262

And even matters of discipline tend to be shrouded in

secrecy. Most states do not publicize attorney grievances in the

absence of a finding of probable cause; not all states publish informa-

tion about who has been sanctioned; and even formerly disbarred law-

yers (practicing after readmission or in a new state) are typically

under no obligation to reveal the blot on their record when wooing

new clients.

263

Information deficits are then significantly exacerbated

when one considers the practical position of personal injury victims—

especially poor, comparatively uneducated victims—often searching

for a lawyer for the first time in their lives, and often shortly after an

accident when wounds are still raw.

264

261

The lack of credible information available about lawyer performance and the con-

comitant difficulty individual clients have intelligently selecting counsel is widely

recognized and well documented. See, e.g., D

EREK

, T

OST OF

ALENT

140 (1993)

(“Most potential clients know very few lawyers and have no way of judging their abili-

ties.”); R

OSENTHAL

, supra note 76, at 132 (“Client use of legal services is less a matter of

informed choice than of taking the first lawyer who comes along.”); Witt, supra note 29, at

283 (“There is virtually no way for a potential claimant to choose sensibly among lawyers

competing for a claim.”); see also supra note 27 and accompanying text (highlighting the

paucity of data).

262

HODE

, supra note 244, at 161.

263

If a lawyer is admitted in multiple jurisdictions, a disbarment in one does not neces-

sarily affect his practice in another. Even within the same jurisdiction, disbarred lawyers

can often apply for reinstatement within a few years; a significant proportion (perhaps

half) of those do win readmission; and, of lawyers who win readmission, “[f]ew . . . tell their

clients they were disbarred, because usually the law doesn’t require it.” Ann Davis, Bar

Readmissions Cloaked in Secrecy, N

’

L.J., Aug. 12, 1996, at A1; see also A

BEL

, supra

note 180, at 148, 291 & tbl.33 (analyzing data for state disciplinary sanctions from

1974–1986); R

HODE

, supra note 244, at 161.

264

The average American uses a lawyer only twice and most accident victims who retain

counsel do so promptly. C

URRAN

, supra note 230, at 190 (finding that an average

American uses a lawyer only twice in her lifetime); D

EBORAH

R. H

ENSLER ET AL

., RAND,

OMPENSATION FOR

CCIDENTAL

NJURIES IN THE

NITED

TATES

, 112, 131, 133 tbl.5.8

(1991) (noting that most clients who contacted lawyers “did so promptly”); see I

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 861

This is not to suggest that no resources are available to guide cli-

ents in their selection but rather that current resources are lacking.

Existing lawyer ranking and rating systems, for example, are better

than nothing—but not by much. One problem is that traditional

regimes, such as Martindale-Hubbell, Best Lawyers in America, and

Super Lawyers, are often geared toward corporate clients, which is

precisely the segment of the market where information deficits are

smallest.

265

Other relatively recent web-based entrants, such as Avvo.

com and LawyerRatingz.com, cast the net more broadly with an eye

to helping all sorts of individuals find qualified counsel.

266

Still, these

websites tend to rely heavily on voluntarily submitted client reviews,

and clients often lack the capacity to judge the quality of legal services

received, dramatically reducing reliability.

267

Worse, the reviews might

not even come from actual clients. As LawyerRatingz candidly dis-

claims, “[I]t is not possible for us to verify which raters have knowl-

edge of which lawyers, so always take the ratings with a grain of salt.

Remember, we have no way of knowing who is doing the rating—

customers, people in the lawyer industry, regular people, dogs, cats,

etc.”

268

Traditional not-for-profit referral services (often sponsored by

bar associations) are no better. These services typically field calls from

individuals with legal problems and advise individuals as to whether

ESEARCH

OUNCIL

, A

UTO

NJURIES

, supra note 115, at 37 (reporting that 52% of auto

accident claimants who retained counsel did so within one week of their accident).

265

For a discussion of why information deficits are smaller for corporate clients, see

infra note 348 and accompanying text. For information on these resources, see Jennifer M.

Young, Simply the “Best?” A Comparison of Lawyer Rating Systems, H

. B.J., June 2008,

at 6. See also Adam Liptak, On Second Thought, Let’s Just Rate All the Lawyers, N.Y.

IMES

, July 2, 2007, at A9 (“Legal publications these days are full of lists of supposedly

stellar lawyers, which are a nice way to generate advertising and good feelings but perform

no particular service.”).

266

For more information on Avvo.com, see About Us, A

VVO

, http://www.avvo.com/

about_avvo/overview (last visited Aug. 11, 2011) and Liptak, supra note 265. For more

information on LawyerRatingz, see L

AWYER

ATINGZ

, http://www.lawyerratingz.com/ (last

visited Aug. 11, 2011). For a discussion of these and other relatively new web-based

resources, see Stephanie Francis Ward, Grade Anxiety: Firms Fret About Clients Rating

Their Work, A.B.A. J., Feb. 2010, at 49–53.

267

Ronald J. Gilson, The Devolution of the Legal Profession: A Demand Side

Perspective, 49 M

. L. R

. 869, 892 (1990) (noting that clients “have difficulty deter-

mining the quality of the services even after they are rendered”); Michael J. Saks & Alice R.

Benedict, Evaluation and Quality Assurance of Legal Services, 1 L

& H

. B

EHAV

. 373,

378 (1977) (“[C]lients frequently praise services that are shoddy by most other measures

. . . .”); accord A

BEL

, supra note 240, at 526 (observing that websites that merely aggregate

client reactions “risk[ ] letting superficial judgments of style eclipse substantive measures

of lawyer performance”).

268

Help/Frequently Asked Questions, L

AWYER

ATINGZ

, http://www.lawyerratingz.com/

faq.jsp (last visited Aug. 11, 2011).

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862 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

or not their problem requires legal assistance. If legal assistance is

needed, the service will match the caller to an attorney with appro-

priate subject-matter expertise. The matching, however, is very coarse.

At the time of the prospective client’s call, the service will typically

match the caller’s request for, say, a divorce lawyer to the next divorce

lawyer in the rotation, without regard to the lawyer’s competence, the

caller’s preferences, or the characteristics or complexity of the partic-

ular case. Nor do referral services offer much in the way of quality

assurance. Though a few referral networks require the lawyer-

applicant to demonstrate some subject matter expertise, screening is

more often perfunctory. So long as a lawyer pays an annual fee and

meets very minimal requirements, he will be added to the queue.

269

2. Practitioner Referral Networks: An Illustration of a Broken

Market

The existence and prevalence of personal injury practitioner

referral networks (not to be confused with referral services, discussed

above), vividly illustrate the toll information deficits take. Practitioner

referrals describe the system by which certain cases (often those that

are particularly large or complex) are transferred from lower-echelon

practitioners to higher-echelon practitioners in return for a portion of

the ultimate fee (typically around 30% to 50%).

270

Via referral net-

works, according to one influential scholar, “potential plaintiffs mini-

mize search costs.”

271

Clients, it is said, know next to nothing about

attorney quality, but fellow practitioners, peering over one another’s

shoulders, may know a great deal.

272

Rather than attempting to assess

attorney quality themselves, then, clients can hire a lawyer more-or-

269

For information on traditional referral services, see generally A

BEL

, supra note 180,

at 135, Steven K. Berenson, Is It Time for Lawyer Profiles?, 70 F

ORDHAM

L. R

. 645,

654–55 (2001), and Laura Mansnerus, Bar Groups Are Happy To Find You a Lawyer, N.Y.

IMES

, Feb. 27, 1993, at A34. Some for-profit online referral services, which facilitate more

sophisticated sorting, are also cropping up. For information on this new generation of

referral services, see Geeta Kharkar, Googling for Help: Lawyer Referral Services and the

Internet, 20 G

. J. L

EGAL

THICS

769, 774–75 (2007).

270

Stephen Daniels & Joanne Martin, The Texas Two-Step: Evidence on the Link

Between Damage Caps and Access to the Civil Justice System, 55 D

AUL

L. R

. 635, 639

n.22 (2005) (showing a mean referral fee of 29.9% in Texas); Stephen J. Spurr, Referral

Practices Among Lawyers: A Theoretical and Empirical Analysis, 13 L

& S

. I

NQUIRY

87, 101 & tbl.4 (1988) (showing that a 50% fee to a referring lawyer is the most common

arrangement in New York).

271

Charles Silver, Does Civil Justice Cost Too Much?, 80 T

. L. R

. 2073, 2088

(2002); see also Sara Parikh & Bryant Garth, Philip Corboy and the Construction of the

Plaintiffs’ Personal Injury Bar, 30 L

& S

. I

NQUIRY

269, 281 (2005) (“The referral

system ensures that the higher-value cases will, as a general rule, work their way up

through the hierarchy of the plaintiffs’ bar . . . .”).

272

Parikh, supra note 18, at 252.

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 863

less at random and then let the referral market “do their shopping for

them.”

273

But anecdotal evidence from settlement mill practitioners, as well

as others, casts doubt on just how reliably these networks operate.

274

Although some settlement mill practitioners do report referring the

biggest and most complicated claims to outside trial counsel (and par-

ticularly when those claims involve the high risk, highly specialized

areas of medical malpractice or product liability),

275

others appear

reluctant to forego any portion of a sizable fee. At the Rogers firm,

for example, despite the high case volume and an evident reluctance

to try cases in-house, by most accounts, referrals were exceptional.

One former attorney recalled, “Not one single time that I was there

did he refer a single case out to anybody for trial,”

276

while another

concurred, “Danger is, he didn’t farm out the cases that [did] need to

go to trial.”

277

At a Florida firm, the story was similar. There, when

asked how often cases were referred, a lawyer replied, “I would say

rarely if ever. That’s an opportunity for a fee to go out the door.

You’re trying to get fees to come in, not to go out.”

278

Another

agreed, attributing his firm’s reluctance to refer big claims to outside

trial counsel to the fact that “it would be giving at least 25% of the

fee, if not half.”

279

The following colloquy from a sworn statement of a

273

Silver, supra note 271, at 2088.

274

See Daniels & Martin, supra note 18, at 395–96 (noting that, in response to the

changing legal market in Texas, “[s]ome local lawyers have begun keeping their substantial

cases, rather than referring them, in the hope of hitting it big”); accord P

HILIP

ERMANN

, B

ETTER

ETTLEMENTS

: T

HROUGH

EVERAGE

100–01 (1965) (observing that

“some general practitioners” will not routinely “refer a case to a specialist until they have

personally exhausted all settlement possibilities”).

275

See, e.g., Telephone Interview with K.R. (May 1, 2008) (“If it was a case that he

thought had a high value, he would send it out.”).

276

Telephone Interview with S.R. (Mar. 27, 2008).

277

Telephone Interview with L.J. (Apr. 17, 2008); see Harper, supra note 69 (“[W]hat

distinguishes the Law Offices of James M. Rogers is that it almost never goes to trial—or

even refers out big cases to firms that have trial experience.”); Rogers Deposition, supra

note 69, at 87 (testifying that he recalled cases “where we had discussed matters with

outside counsel” but would “need to think” to remember whether the firm had “actually

retain[ed]” outside counsel); cf. Telephone Interview with J.R. (July 28, 2008) (Q: “How

often were cases referred to other [law] firms?” A: “It would happen sometimes. It

wouldn’t happen a lot. I can’t give you an exact number. It certainly was not uncommon,

but it happened occasionally. It wasn’t a huge number. . . . A lot of the cases that were

referred out got referred out at the earlier stages before they ever got to people.”); Tele-

phone Interview with N.M. (June 3, 2008) (stating that, in rare instances, the firm would

refer cases to “probably a litigator”).

278

Telephone Interview with R.J. (Apr. 8, 2008).

279

Telephone Interview with G.V. (Apr. 7, 2008).

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864 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

lawyer who worked at a Georgia settlement mill is also instructive:

Q: But I take it that, as to the split, the big money cases, he shuttles

off to other lawyers on a referral basis. True? He refers those cases

out?

A: Actually, he kept the big money cases as long as he could settle

them . . . .

Q: Did he say anything to you that suggested that he’d rather settle

the cases so he can take a hundred percent of the fee as opposed to

having to split it with another lawyer?

A: Of course.

Q: Did he say that to you?

A: Yes. Many times.

Q: Tell me what he said.

A: He would say “Well, now, if we settle these cases, we get the

money, but we’re going to have to split it with somebody else if we

take it to suit.”

280

Next, even if a referral would be profitable from the firm’s per-

spective, and the settlement mill’s managing partner actually recog-

nizes that his firm’s settlement will be so compromised that he is

better off relinquishing high-value claims,

281

settlement quotas or

financial incentives can still spark an intra-firm principal-agent

problem, motivating line-level negotiators to keep files in-house. Such

incentives, according to one former lawyer, led some negotiators at his

Florida firm to “settle a case for less than the value or be inclined to

rather than refer it somewhere else.”

282

The Weiss firm presents a case

in point: There, attorneys were not paid traditional salaries; compen-

sation was instead wholly dependent on the fees that lawyers person-

ally generated.

283

Referring a case outside the firm thus entailed

280

Sworn Statement of S.S. 29–31 (Aug. 19, 1998). In that proceeding, S.S. did confirm

that cases, regardless of their size, would be referred out if a settlement agreement could

not be reached. Id. at 29. In a subsequent interview, S.S. estimated that such referrals

would happen approximately 1% of the time. Telephone Interview with S.S. (May 30,

2007). (This sworn statement was executed by S.S., on advice of counsel, while employed

by a Georgia settlement mill. S.S. has consented to the statement’s use and quotation

herein. Telephone Interview with S.S. (July 16, 2007).)

281

Given the existence and pervasiveness of self-serving biases, such recognition might

be rarer than one might suppose. See R

ICHARD

H. T

HALER

& C

ASS

R. S

UNSTEIN

, N

UDGE

MPROVING

ECISIONS

BOUT

EALTH

, W

EALTH

AND

APPINESS

31–33 (2008) (dis-

cussing pervasive overconfidence or “unrealistic optimism” while making managerial

decisions); Linda Babcock & George Loewenstein, Explaining Bargaining Impasse: The

Role of Self-Serving Biases, 11 J. E

CON

. P

ERSP

. 109, 110–11, 121 (1997) (noting people’s

tendency to rate themselves as above average when it comes to wide a variety of skills and

attributes, including driving, ethics, managerial prowess, productivity, and health—and

highlighting that professionals are not “immune to the self-serving bias”).

282

Telephone Interview with D.D. (May 20, 2008).

283

Telephone Interview with F.M. (Apr. 29, 2008); cf. Telephone Interview with A.M.

(May 14, 2008) (stating that the fact that he forewent a fee when cases were referred out

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 865

sacrificing one’s fee. Further encouraging settlements, one Weiss

attorney recalled “pressure” to generate $100,000 in fees per

month.

284

Any case relinquished did not count.

Even if the above is anomalous and the big, complex cases are

routinely and reliably referred up the chain to the most able practi-

tioners, that solution is certainly second best. As noted, referring prac-

titioners are paid 30% to 50% of the eventual fee for often nothing

more than a phone call.

285

If clients could effectively identify the best

practitioners right off the bat, high-echelon attorneys would not have

to split fees with referring practitioners. The savings would be enor-

mous, and it is at least plausible that some of it would be passed on to

clients.

286

A P

ROPOSAL FOR

EFORM

Part IV considers how to supplement the existing regulatory

architecture to mitigate many of the problems so far identified, with

respect to both settlement mills and personal injury legal services

more generally.

287

did not affect his behavior because “there was always a new case that just walked through

the door”). But see Telephone Interview with K.R. (May 1, 2008) (failing to recall fee-

based compensation regime).

284

Telephone Interview with F.M. (Apr. 29, 2008) (“We were each to produce at least

$100,000 a month in attorneys’ fees. . . . It was made very clear to you by the other attor-

neys who worked there, and you better darn well make it. You certainly felt the pres-

sure.”); cf. Telephone Interview with A.M. (May 14, 2008) (stating that Weiss would say

that negotiators “‘ought to be able to settle out $100,000 a month, in total money brought

in,’ but people were above and below that constantly”).

285

Parikh, supra note 18, at 253 (quoting an elite Chicago lawyer as stating, “It just

strikes me that there is something inherently wacky in the marketplace that folks will

receive, in this day and age, what will amount to a lot of money for doing nothing.”).

286

On the other hand, currently, when a client finds a high-echelon lawyer without an

intermediary, it does not appear that the high-echelon lawyer reduces his fee to reflect the

saved commission. See Brickman, supra note 214, at 74 (contending that lawyers, when

hired by clients directly, “refuse to share . . . saved commission costs”).

287

This reform proposal is certainly not the first to address some of the problems identi-

fied herein. See, e.g., Kritzer, supra note 170, at 778–79 (calling for elimination of the ban

on lay settlement of claims); Erichson, supra note 29, at 562–63 (proposing that lawyers

offering certain non-traditional legal services be obliged to inform clients of the services’

pros and cons); Witt, supra note 29, at 289 (calling for the elimination of the ban on for-

profit broker intermediaries so lay brokers could help prospective clients find suitable

counsel). In adding this proposal to the literature, I do not rule out other alternatives,

although an analysis of past proposals’ advantages and disadvantages is outside of this

Article’s scope. Nor is this the first transparency reform regime proposed. Lester

Brickman, for instance, has suggested that a closing statement be filed at each case’s con-

clusion and that the closing statement include the hours worked, recovery attained,

expenses incurred, and attorney fee charged. In his conception, these forms should be

available to the public but not necessarily searchable. Lester Brickman, Contingent Fees

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866 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

Since January 1, 1957, a rule of the New York State Supreme

Court’s Appellate Division, First Department, has required lawyers

retained on a contingent fee basis to pursue claims involving personal

injury or wrongful death to file confidential “closing statements” with

the New York Office of Court Administration at each claim’s conclu-

sion.

288

In its current incarnation, each closing statement shows,

among other things, whether the case was closed with or without suit;

whether the case was settled, abandoned, or resolved by court judg-

ment; the gross amount of recovery (even if zero); an “[i]temized

statement of payments made for hospital, medical care or treat-

ments . . . which have been charged against the client’s share of the

recovery”; and the net amounts paid to client and attorney or, if there

was more than one attorney, the amount paid to each.

289

A. Mandatory, Public Closing Statements

Building on the above model, I propose a transparency reform

measure with four components. First, lawyers paid via contingent fees

to represent clients asserting personal injury or wrongful death claims

should be required to file a closing statement with the state bar or

other competent authority at the conclusion of each representation

Without Contingencies: Hamlet Without the Prince of Denmark?, 37 UCLA L. R

. 29,

113–25 (1989). Others have advocated somewhat similar proposals, although usually in

passing. See, e.g.,A

BEL

, supra note 242, at 472–75 (suggesting that better information be

given to clients “before they retain lawyers”); R

ICHARD

OORHEAD

& P

ETER

URST

IVIL

USTICE

OUNCIL

, C

ONTINGENCY

EES

: A S

TUDY OF

HEIR

PERATION IN THE

NITED

TATES OF

MERICA

19–20 (Robert Musgrove ed., 2008) (stating that, if contin-

gency fees were to be adopted in England and Wales, “consideration might be given to

strengthening the need to protect reputation by, for example, requiring claimant lawyers to

publish success rates and levels of average damages for different types of case”); David

Barnhizer, Profession Deleted: Using Market and Liability Forces To Regulate the Very

Ordinary Business of Law Practice for Profit, 17 G

. J. L

EGAL

THICS

203, 213 (2004)

(calling for lawyers to disclose their “track record[s]”); H. Brian Holland, Book Review, 78

ARV

. L. R

. 1299, 1303 (1965) (reviewing F.B. M

INNON

, C

ONTINGENT

EES FOR

EGAL

ERVICES

: A S

TUDY OF

ROFESSIONAL

CONOMICS AND

ESPONSIBILITIES

(1964))

(stating, in passing, that “[m]ore widespread adoption of rules such as those in effect in

New York, requiring the filing of detailed closing statements by counsel, would make valu-

able research material available to the student of legal fees”).

288

The requirement additionally applies in “connection with any claim in condemnation

or change of grade proceedings.” N.Y. C

OMP

. C

ODES

R. & R

EGS

. tit. 22, § 603.7(a)–(b)

(2010). Closing statements came into being alongside a rule presumptively capping contin-

gency fees. Their “primary purpose,” as originally conceived, was “protection of the public

through monitoring of the fees charged by practitioners at the Bar.” Rabinowitz v.

Cousins, 219 A.D.2d 487, 488 (N.Y. App. Div. 1994). New York’s Second Department has

followed suit by also requiring closing statements. N.Y. C

OMP

. C

ODES

R. & R

EGS

. tit. 22,

§ 691.20(b) (2010). A somewhat similar requirement is also in force in Alaska. See A

LASKA

TAT

. § 09.68.130 (2010).

289

N.Y. C

OMP

. C

ODES

R. & R

EGS

. tit. 22, § 603.7(b) (2010).

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 867

(except where a class action is certified).

290

These closing statements

should, at least initially, specify:

(1) The name and address of the client;

(2) The name and address of plaintiff’s counsel and employing

law firm(s);

(3) The name and address of defendant(s) and defense counsel;

(4) The name and address of the insurance carrier, person, or

entity paying the judgment or claim;

(5) Whether the claim involves (a) an automobile accident, (b)

a product liability claim, (c) medical malpractice, or (d)

other;

(6) Whether suit was initiated;

(7) If suit was initiated, whether the suit was terminated by vol-

untary dismissal or abandonment, involuntary dismissal,

pretrial judgment, settlement, or judgment;

(8) The time elapsed between the accident and the final judg-

ment or settlement;

(9) The amount of plaintiff’s claimed economic loss (calculated

by adding together medical bills, lost wages, and other past

and estimated future pecuniary expenditures);

(10) Gross recovery attained (even if zero);

(11) Whether the recovery included a non-monetary term, and, if

so, a brief description of that term; and

(12) Amount paid to the client and to the client’s attorney (and if

more than one attorney, the amount paid to each).

291

Second, reporting should be mandatory. Lawyers who fail to

supply accurate information should be disciplined and subject to stiff

penalties.

292

In order to promote accuracy, clients, defendants, and (if

applicable) defense counsel and insurers should also be sent a copy of

the closing statement for review, and all recipients should be obligated

290

The proposal exempts class counsel because assembling the material for all class

members would likely prove difficult, and sections (e) and (g) of Federal Rule of Civil

Procedure 23 already provide some analogous protections. F

. R. C

. P. 23(e) (estab-

lishing procedures to be followed upon the settlement, voluntary dismissal, or compromise

of class actions); F

. R. C

. P. 23(g) (establishing procedures for appointing class

counsel). Thought may also be given to exempting counsel engaged in multi-district litiga-

tion, which is conducted pursuant to 28 U.S.C. § 1407 (2006).

291

As in New York’s First Department, a joint closing statement should be filed if mul-

tiple attorneys are retained. N.Y. C

OMP

. C

ODES

R. & R

EGS

. tit. 22, § 603.7(b)(3) (2010).

292

Lawyers in New York’s First Department who fail to submit closing statements are

subject to discipline. See, e.g., In re Garcia, 874 N.Y.S.2d 513, 516–17 (N.Y. App. Div.

2009) (suspending respondent from practice of law for, inter alia, failing to file closing

statements). It is unclear, however, how consistently the requirement is enforced. See

OSENTHAL

, supra note 76, at 187 (raising questions concerning attorney compliance with

closing statement requirements).

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868 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

to bring any material errors or omissions to the attention of relevant

authorities. Defense lawyers and insurers should be sanctioned for

any willful failure to comply with this requirement.

293

Third, statistics derived from closing statements should be com-

piled and published on the Internet. Certain steps should be taken,

however, to preserve the confidentiality of potentially sensitive mate-

rial. These steps should include: concealing the identity of the plain-

tiff, defendant, and insurer; concealing the dates of the accident and

settlement; and revealing details of any non-monetary settlement term

only at the plaintiff’s option. In addition, while closing statements

should be filed within a short time (perhaps thirty days) of the claim’s

conclusion, data drawn from the statements should only be “pub-

lished” on a semi-annual basis in order to make it more difficult to

associate a particular closing statement with a particular client or con-

troversy. If concerned about confidentiality, states could also vest

judges with discretion to exempt (by court order) specific claims from

the disclosure requirement upon a showing of good cause.

Fourth and finally, the data should be searchable based on cate-

gory (e.g., “gross recovery,” “time elapsed,” etc.), lawyer, or law firm.

In other words, a prospective client searching by category should be

able to identify the top ten personal injury law firms in her state, as

judged by the ratio of “economic loss” to “gross recovery.” Alterna-

tively, a prospective client who has narrowed down her search and is

interested in retaining a particular law firm to represent her in, for

example, an auto accident claim should be able to see a detailed firm

profile, including the percentage of the firm’s caseload that involves

auto accidents, how often the firm succeeds in obtaining some

recovery for its auto accident clients, and the average gross and net

recoveries obtained. The prospective client, additionally and impor-

tantly, should also be able to see how the above measurements com-

pare to other providers. Ideally, in order to round out the above

portrait, lawyer and firm profiles should also include information con-

cerning lawyers’ malpractice and disciplinary histories, although

including such material is controversial, and the database would also

function in its absence.

294

B. Facilitating Client Use

An initial question, as we ponder the resource’s ramifications, is

whether personal injury clients would actually consult it. Provided the

293

Civil liability for defendants and clients might also be considered.

294

See generally DeGraw & Burton, supra note 24, at 362 (calling for such disclosures

and recognizing that such disclosures are controversial).

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 869

information is presented simply enough, there is reason to believe that

many would.

295

Clients currently spend a non-trivial amount of time

researching lawyers prior to retention, and the website would conceiv-

ably reduce search costs, permitting clients to engage in one-stop

shopping, rather than casting about for information from a variety of

different sources.

296

Indeed, lawyer information clearinghouse Avvo.

com reports an impressive two million website visits per month, indi-

cating a demand, or even hunger, for information of this type.

297

Another encouraging sign is that some patients have embraced loosely

analogous medical practitioner profiles.

298

After the first three years

of the Massachusetts medical practitioner program, for example, its

online profile system “operate[d] at over 3,000,000 hits per year.”

299

An further question, of course, is not just whether quality data

would be consulted; it is whether quality data would influence con-

sumer choice. And here, too, though the evidence is concededly

mixed, there are some encouraging signs.

300

A recent study of fertility

clinics found that after provider report cards were made mandatory,

more patients preferred fertility clinics with higher birth rates.

301

295

In the healthcare field, data show that some patients currently rely on physician and

hospital report cards. Madison, supra note 25, at 222–23 (“Patients are using report cards

to make health care decisions, but in limited numbers.”). Lawyers, intent on maximizing

referral fees, would also presumably consult the profiles prior to referring cases to fellow

practitioners.

296

According to one survey, clients of all types spend an average of nineteen hours

researching lawyers prior to retention, although whether this accurately reflects the time

personal injury clients spend is unknown. Y

ANKELOVICH

, L

AWYERS IN

MERICA

: H

HOOSE

HEM

, U

HEM

AND

OMETIMES

OSE

HEM

6 (2000).

297

Avvo Advertising, A

VVO

, http://media.avvo.com/avvo/cms/avvo_advertising_info_

sheet.pdf (last visited Aug. 11, 2011).

298

For general information on Massachusetts’s physician profiles, for instance, see On-

Line Physician Profile Site, M

ASS

. B

EGISTRATION IN

., http://profiles.massmed

board.org/MA-Physician-Profile-FAQ.asp (last visited Aug. 11, 2011).

299

What Consumers Should Know About Their Doctors: Hearing Before the Subcomm.

on Oversight and Investigations of the H. Comm. on Commerce, 106th Cong. 46 Attach-

ment 1 (2000) (statement of Nancy Achin Sullivan, Exec. Dir., Mass. Bd. of Registration in

Med.).

300

See generally Madison, supra note 25, at 223–25 (analyzing a number of studies,

some of which suggest that health quality data have no effect on patient choice and others

of which indicate some effect); Constance H. Fung et al., Systematic Review: The Evidence

That Publishing Patient Care Performance Data Improves Quality of Care, 148 A

NNALS

NTERNAL

. 111 (2008) (same). Though these studies are somewhat discouraging, one

might speculate that prospective clients would be more swayed by quality data than pro-

spective patients because, when picking lawyers, prospective clients are less likely to face

constraints imposed by insurers, less likely to face geographic restrictions (since face-to-

face meetings are less critical), less likely to have ongoing provider relationships (as

patients have with primary care physicians, for example), less likely to act on the basis of

provider recommendations or referrals, and less likely to require immediate assistance.

301

M. Kate Bundorf et al., Do Markets Respond to Quality Information? The Case of

Fertility Clinics, 28 J. H

EALTH

CON

. 718, 723–26 (2009); accord Michael Sauder & Ryon

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870 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

Another study from the early 1990s found that hospitals and physi-

cians that performed better on the New York cardiac surgery report

card gained market share.

302

And finally, a 2007 study of school choice

in North Carolina found, quite strikingly, that even impecunious par-

ents responded to simple and concise information on school test

scores, coupled with students’ odds of admission, “by choosing schools

with significantly higher test scores than their current guaranteed

option.”

303

One may conclude, then, that if presented simply enough,

quality information would influence consumer choice.

An important difference, though, is that, in the North Carolina

school study, the information was specifically compiled for and

presented to parents.

304

Here, at least initially, information would be

passively provided online, and some citizens—and particularly low-

income citizens—would lack either access to the Internet or the tech-

nological savvy needed to conduct searches.

305

State Bars would thus

need to facilitate the website’s utilization. Most obviously, Bars could

publicize the website’s existence, either with their own media blitz or

by requiring attorneys to add a sentence about the website to their

advertisements.

306

State Bars could also employ administrators to staff

Lancaster, Do Rankings Matter? The Effects of U.S. News & World Report Rankings on

the Admissions Process of Law Schools, 40 L

& S

’

. 105, 122–24, 127–32 (2006)

(examining graduate school rankings from 1993 to 2003 and concluding that rankings

affected both number and quality of applications received).

302

Dana B. Mukamel & Alvin I. Mushlin, Quality of Care Information Makes a

Difference: An Analysis of Market Share and Price Changes After Publication of the New

York State Cardiac Surgery Mortality Reports, 36 M

. C

ARE

945, 949–50 (1998).

303

Justine S. Hastings et al., Preferences, Information, and Parental Choice Behavior in

Public School Choice 17 (Nat’l Bureau of Econ. Research, Working Paper No. 12,995,

2007). Interestingly, low-income families were particularly affected: Receiving concise sta-

tistics had “the same impact on revealed preference for test scores that a $64,700 increase

in household income would have.” Id. at 22–23. The study’s authors speculated that the

information had such an impact on low-income families because, prior to its transmittal,

“low-income parents could have less information from peer groups on which schools are

good schools.” Id. at 19–20.

304

See id. at 12–13.

305

To be sure, the majority of American households (over 70%) have computers with

Internet access. Home Internet Access: Continuing To Grow, But Big Differences Among

Demographics, N

IELSEN

IRE

(Mar. 6, 2009), http://blog.nielsen.com/nielsenwire/online_

mobile/home-internet-access-continuing-to-grow-but-big-differences-among-

demographics/.

306

States could require, for example, that all billboard, TV, and radio advertisements

for personal injury or wrongful death attorneys include the following: “For more informa-

tion about [law firm] and how it compares to other law firms, see [website address] or call

[phone number].” While not uncontroversial, this disclosure should pass constitutional

muster. See Zauderer v. Office of Disciplinary Counsel of the Sup. Ct. of Ohio, 471 U.S.

626, 651 (1985) (emphasizing that “disclosure requirements trench much more narrowly on

an advertiser’s interests than do flat prohibitions on speech”).

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 871

a toll-free telephone line to assist personal injury victims in their

searches.

Critically, however, Bars would likely not be alone in their dis-

semination efforts. Just as in the medical context, non-profit and for-

profit intermediaries would likely help to publicize the resource and,

more importantly, compile and translate the data for easy consumer

comprehension.

307

It is fair to assume, for instance, that new or

existing lawyer rating websites (such as Avvo.com) would readily

incorporate closing statement information (such as gross recoveries,

net recoveries, and loss-to-recovery ratios) into lawyer profiles. The

popular press would almost certainly draw upon this information to

develop their own rankings and ratings regimes.

308

Non-profits

devoted to access to justice might supply streamlined and personalized

information to low-income claimants. And, finally, lawyers themselves

would likely seize the opportunity to make truthful, readily verifiable

comparisons with other lawyers or law firms in their

advertisements.

309

C. Predictable Effects

Requiring that closing statements be filed, and filed publicly,

would have a number of salutary effects. For starters, the public filing

of closing statements would, for the first time, give clients access to

information about past performance that would allow them to predict,

with some basis, the quality and type of service that a particular

lawyer or law firm is likely to provide. And when it comes to past

performance, clients would be able to sort attorneys along a number

of different dimensions. A client desperate for a quick cash payout,

even if that payout comes at a discount, would be able to search for

lawyers who quickly and reliably resolve claims. A client seeking a

hardened litigator would be able to find a lawyer with a record of

going to, and prevailing in, court. And a reform-minded client who

307

See Frequently Asked Questions, H

EALTH

RADES

, http://www.healthgrades.com/

business/information/faqs.aspx (last visited Aug. 11, 2011) (“We compile outcomes data

from dozens of independent public and private sources and translate it into easily under-

standable, objective report card ratings on providers.”); About Us, H

EALTH

RADES

, http://

www.healthgrades.com/business/information/ (last visited Aug. 11, 2011) (touting “more

than eight million unique visitors . . . each month”).

308

Magazines already publish such lists, albeit without the benefit of objective, verifi-

able information. See, e.g., Kim Eisler, 30 of Washington DC’s Best Lawyers,

ASHINGTONIAN

(Nov. 1, 2003), http://www.washingtonian.com/articles/lawlobbying/2364.

html.

309

Law-abiding lawyers cannot currently make such comparisons because it is impos-

sible to substantiate them, and unsubstantiated comparative claims are apt to be mis-

leading. M

ODEL

ULES OF

ROF

’

ONDUCT

R. 7.1 cmt. 3 (2007).

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872 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

primarily wants a defendant to change its ways, lest the same

misfortune befall another, would be able to find a lawyer that fre-

quently includes in her settlements substantial non-monetary terms.

This reform, meanwhile, is prone to increase client satisfaction,

both because client aims are more likely to align with lawyer compe-

tencies and also because some research suggests that consumers who

take a more active role selecting professional service providers experi-

ence a higher degree of satisfaction with the services received.

310

Moreover, a 1989 RAND study found that litigants who view their

attorneys favorably are somewhat more likely to view both civil jus-

tice procedures and outcomes favorably, which means that helping

forge better lawyer-client relationships could have rippling effects.

311

Closing statements would be a boon for researchers and policy

makers as well. Although most cases are settled, startlingly little is

known about settlements, particularly (as is often the case) when no

lawsuit is ever filed.

312

So, too, though we benefit from a significant

and sophisticated theoretical literature exploring contingency fee

financing, our grasp of basic empirical questions remains rudimentary:

We still know almost nothing, for example, about the relationship

between the percentage charged and outcome achieved.

313

Similarly,

though the occasional sensational judgment captures headlines—and,

often, the public’s wrath—too rarely do we have the data to support

or refute assertions that the judgment de jure is representative or

anomalous or, for that matter, ever collected in whole or in part.

314

The website, then, would offer an unprecedented glimpse into the

near-secret world of civil settlement, while also providing new and

310

See H

OWARD

G. S

CHUTZ

& D

EBRA

S. J

UDGE

, A

. A

’

N FOR

DVANCES IN

EALTH

ARE

., C

ONSUMER

ATISFACTION WITH

HYSICIANS

49–51 (1986).

311

E. A

LLAN

IND ET AL

., RAND, T

ERCEPTION OF

USTICE

: T

ORT

ITIGANTS

’

IEWS OF

RIAL

, C

OURT

-A

NNEXED

RBITRATION

AND

UDICIAL

ETTLEMENT

ONFER-

ENCES

61–62 (1989).

312

See Saks, supra note 101, at 1288 (“[O]ur society has been unable to produce

research that is even minimally adequate to answer our most basic questions about the

behavior of the civil justice system.”); see generally William L.F. Felstiner et al., The

Emergence and Transformation of Disputes: Naming, Blaming, Claiming . . . , 15 L

’

. 631, 645 (1981) (observing that the vast majority of cases are settled).

313

Hadfield, supra note 99, at 129 (“[H]ard numbers on what legal services cost and

what fraction of that cost is for real value are few and far between.”). Notably, this igno-

rance has not stopped over a dozen legislatures (and the federal government) from capping

contingency fees in certain cases, a policy which may or may not make sense. See Charles

Silver & David A. Hyman, Access to Justice in a World Without Lawyers: Evidence from

Texas Bodily Injury Claims, 37 F

ORDHAM

. L.J. 357, 358 (2010) (discussing various

legislative efforts to cap contingency fees).

314

See Deborah Jones Merritt & Kathryn Ann Barry, Is the Tort System in Crisis? New

Empirical Evidence, 60 O

HIO

. L.J. 315, 317 (1999) (bemoaning the lack of reliable data

about tort verdicts).

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 873

comprehensive data about cases resolved within the court system,

both of which might then provide a template for the development and

evaluation of more thoughtful policy reforms.

Next, the publication of closing statement data would deter law-

yers from engaging in misleading and deceptive advertising. Deceptive

advertising is, of course, forbidden.

315

Yet, determining whether an ad

is or is not deceptive is difficult since an ad’s veracity often hinges on

hard-to-discover information, and even disciplinary counsel often

“lacks the necessary information and resources” to sort fact from

fabrication.

316

In one recent study, for instance, the New York State

Bar Association found that, though “a very small minority of adver-

tisements could be categorized as false or deceptive on their face,”

upon further investigation, almost a third of the ads reviewed (34 of

119) contained inaccuracies.

317

By publicizing information about how

firms actually operate, disciplinary counsel (and the public) would be

better equipped to identify false statements and ultimately ensure that

law firm ads more often and more closely reflect the service

provided.

318

In addition, administrative costs, for both plaintiffs’ firms and the

administering body, would be quite modest. As for plaintiffs’ firms,

compliance would be straightforward, especially since Model Rule

1.5(c) already requires counsel to prepare a written statement for cli-

ents “[u]pon conclusion of a contingent fee matter” containing some

of the information required.

319

At the state level, meanwhile, a rela-

tively sophisticated website with search features would need to be

developed; some administrative personnel would need to be

employed; and, ideally, a committee should be appointed to periodi-

cally assess and adjust disclosure requirements. But all of these costs

should be manageable.

320

315

See M

ODEL

ULES OF

ROF

’

ONDUCT

R. 7.1 (2007) (“A lawyer shall not make a

false or misleading communication about the lawyer or the lawyer’s services.”); see, e.g.,

Crowe v. Tull, 126 P.3d 196 (Colo. 2006) (en banc) (holding that attorneys who advertise

falsely may be held liable for violations of the Colorado Consumer Protection Act).

316

N.Y. S

TATE

’

, R

EPORT AND

ECOMMENDATIONS OF

ASK

ORCE ON

AWYER

DVERTISING

47 (2005) (finding that disciplinary counsel often “lacks the neces-

sary information and resources to identify misleading advertising”).

317

Id.; see generally Fred C. Zacharias, What Lawyers Do When Nobody’s Watching:

Legal Advertising as a Case Study of the Impact of Underenforced Professional Rules, 87

OWA

L. R

. 971 (2002) (discussing significant under-enforcement of advertising

regulations).

318

For example, the Weiss ad described infra at Part IV.C.2 would be less likely to air or

air for long, if a quick glance at closing statement data contradicted the firm’s claims.

319

ODEL

ULES OF

ROF

’

ONDUCT

R. 1.5(c) (2007).

320

Cf. Patient Protection Act of 2000: Hearing on H.R. 5122 Before the H. Comm. on

Commerce, 106th Cong. 87–88 (2000) (statement of Nancy Achin Sullivan, Exec. Dir.,

Mass. Bd. of Registration in Med.), available at http://www.gpo.gov/fdsys/pkg/CHRG-106h

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874 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

Finally, in a world with public, searchable closing statements, law-

yers and law firms can be expected to adjust their conduct to improve

how they measure up against their peers, creating what is sometimes

called the “sunshine effect.”

321

Most changes in behavior, although

admittedly not all, would be positive. I consider five of the predictable

changes below.

1. How Would Lawyers and Law Firms Change Their Conduct?

Since outputs are influenced by inputs, implementation of the

closing statement proposal would logically impact case screening, with

consequences for both the strength and size of claims lawyers would

accept. First, by mandating the disclosure of abandoned claims, paltry

settlements, dismissals, and outright losses, closing statements are

likely to discourage firms from accepting as clients those with doubtful

or unmeritorious claims.

322

Notably, the screening practices of high-

echelon personal injury firms would be relatively unaffected, as those

firms already invest heavily in pre-retention review and “cherry pick”

cases with the highest likelihood of success.

323

Lower-echelon firms

that do not currently invest much in screening would, however, have a

new and powerful reason to give dubious or long-shot claims a harder

look. And that is likely to be generally beneficial. Mandatory case

screening (at least prior to filing) has long been embraced by the

hrg67118/pdf/CHRG-106hhrg67118.pdf (reporting that the Massachusetts physician profile

system was implemented in only eight months, by a small staff, and at a cost of only

$300,000).

321

See Ha T. Tu & Johanna R. Lauer, Center for Studying Health System Change,

Designing Effective Health Care Quality Transparency Initiatives, I

SSUE

RIEF

, July 2009,

at 5; see also Hearing on Making Health Care Work for American Families: Hearing Before

the Subcomm. on Health of the H. Comm. on Energy and Commerce, 111th Cong. (2009)

[hereinafter Ginsburg Statement], available at http://www.hschange.org/CONTENT/1051/

1051.pdf (statement of Paul B. Ginsburg, President, Center for Studying Health System

Change) (“Experience with publication of provider quality data [shows] that providers are

very responsive in the sense that they take steps to improve whatever dimensions of quality

they are being measured on.”); Fung et al., supra note 300, at 118–20 (conducting a broad

literature review and concluding that publicly releasing performance data stimulates hospi-

tals to improve quality).

322

Doubtful and unmeritorious claims are most apt to be lost at trial or pretrial or, even

if settled, are apt to be settled for substantially reduced sums. See R

OSS

, supra note 29, at

183–84 (showing, in auto cases, that coders’ conclusion of “apparent liability” was strongly

related to “payment outcome”); Peters, supra note 101, at 1813–20 (concluding that

dubious medical malpractice claims were more likely to be denied and, if paid at all, were

likely to be discounted).

323

Witt, supra note 29, at 280 (discussing facts and implications of high-echelon lawyers’

selectivity); see R

OSENTHAL

, supra note 76, at 99 (“Lawyers at the top of their profession

. . . can afford to turn down all cases in which the liability is not near-perfect and in which

the anticipated recovery at trial is less than five figures.”); Daniels & Martin, supra note 35,

at 1789 tbl.4 (reporting that high-echelon lawyers sign a median of 10% of callers to

contract).

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 875

judiciary through the adoption of Federal Rule of Civil Procedure 11

and state court counterparts, and plaintiffs’ lawyers’ initial screening

or “gatekeeping” role has been dubbed “the first line of defense

against frivolous litigation.”

324

Buttressing that line of defense would

logically lead to fewer non-meritorious claims and nuisance-value set-

tlements, generating some societal savings.

325

Second, the proposal would influence claim size (although it is

unclear in which direction). As it stands, the contingency fee provides

a powerful incentive to attract and accept large claims, and studies

confirm that high-echelon counsel typically reject clients whose inju-

ries are insubstantial.

326

It is possible, given transparency, that some

firms would redouble these efforts, since big claims would boost a

firm’s “gross recovery” score. But also possible, and perhaps more

likely, is the opposite: For two reasons, more firms might be more

willing to accept the claims of those with less-than-crushing injuries,

mitigating the legal need problem Steven Croley and others have

identified.

327

First, it is well established that small claims are consist-

ently and significantly overpaid, while big claims are consistently and

significantly underpaid vis- `a-vis economic loss.

328

As a consequence,

small claims tend to have high loss-to-recovery ratios. Second, as also

noted in Part II, small claims are generally resolved relatively quickly

and would thus reflect well on the “time elapsed” metric.

329

Firms

324

Charles Silver, Unloading the Lodestar: Toward a New Fee Award Procedure, 70

. L. R

. 865, 889 (1992). Granted, enhanced screening could also have unintended

consequences, such as deterring long-shot but socially valuable litigation. Nevertheless, the

fact that screening has a salutary purpose distinguishes the personal injury context from

other arenas where screening is far more problematic (for example, when employed by

doctors to weed out the sickest patients). See, e.g., David Dranove et al., Is More

Information Better? The Effects of “Report Cards” on Health Care Providers, 111 J. P

CON

. 555, 567–68 (2003) (finding that, in New York and Pennsylvania, cardiac surgery

report cards led providers to strategically select patients, which had negative conse-

quences); Rachel M. Werner & David A. Asch, The Unintended Consequences of Publicly

Reporting Quality Information, 293 JAMA 1239, 1241 (2005) (noting that, despite offering

certain benefits, quality reporting has caused “physicians to select patients based on risk

profile”); see also infra note 350 and accompanying text (discussing the problem of

employing closing statements in the criminal context, since such an application would

eventually lead to screening of criminal defendants for innocence).

325

See supra notes 134, 140 (highlighting high cost of non-meritorious claims).

326

See, e.g., Stephen Daniels & Joanne Martin, Plaintiffs’ Lawyers, Specialization, and

Medical Malpractice, 59 V

AND

. L. R

. 1051, 1064–65 (2006) (reporting that, among inter-

viewed medical malpractice specialists, “few are willing to take anything much below

$100,000, and some will take nothing below $1 million”).

327

See supra note 123 (discussing the fact that some moderately hurt accident victims

have difficulty securing counsel).

328

See supra note 153 (discussing the relative overpayment of small claims).

329

See supra note 94 and accompanying text (noting that small claims tend to be

resolved relatively quickly).

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876 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

concerned about faring well on these criteria, then, might start low-

ering the financial bar on acceptance.

Third, in addition to accepting smaller claims, the reporting of

ratios and net recoveries might also spur firms to reduce contingency

fees and minimize clients’ claimed economic loss (thus deterring med-

ical buildup). Such incentives would work in two ways. First, net

recoveries can be calculated by subtracting an attorney’s fee and a

client’s claimed economic loss from a client’s gross recovery.

330

So cal-

culated, high fees and hefty medical bills take a big bite out of net

recoveries, meaning net recoveries are apt to be low when fees are

high and medical bills are inflated. Publicizing net recoveries, then,

could exert a powerful positive influence. The reporting of ratios

would have a similar effect. Namely, assuming (1) that insurance com-

panies can identify at least some medical buildup when it occurs (as it

appears they can) and (2) if, when insurers do suspect medical

buildup, they discount general damages (as it appears they do), then

firms with high buildup would have low loss-to-recovery ratios.

331

doubt, some lawyers would still charge too much, and some clients

would continue to build claims.

332

But especially to the extent that

intermediaries (such as Avvo.com, the popular press, or nonprofit

groups) draw attention away from gross recoveries and to net recov-

eries and ratios, closing statements could inject price competition into

the contingency fee marketplace while also curbing firms’ inflationary

impulses.

Fourth, the proposed website explicitly recognizes (and thus gives

“credit” for) non-monetary forms of relief, such as an agreement to

remove a dangerous product from the market in a products liability

case or, in a dog bite case, an agreement to relocate the animal to a

rural locale.

330

This, of course, is a rough and imperfect calculation because clients will actually net

more if (1) some of the claimed economic loss is covered by a claimant’s sick leave or first-

party health or disability insurer (and there is no subrogation) and/or (2) the claimant’s

medical bills are reduced after the insurer’s reimbursement. See Engstrom, supra note 3, at

1541–42 (discussing these possibilities).

331

An Insurance Research Council study suggests there is, and has long been, rampant

medical buildup, and even fraud, in New York City. Not surprisingly, then, injured third-

party claimants in New York City recover lower ratios than claimants in other parts of the

state. In 2002, for example, New York City metro area claimants’ economic loss-to-

recovery ratio was 1:32, while upstate claimants’ ratio was significantly higher at 2:33. I

ESEARCH

OUNCIL

, F

RAUD AND

UILDUP IN

ORK

UTO

NJURY

NSURANCE

LAIMS

37–38, 55–62 (2006); see also R

OSS

, supra note 29, at 109 (quoting an insurance

adjuster who suggested that he is less likely to settle for “three times the specials” if there

has been medical buildup).

332

Built claims will, after all, still generate higher fees and, often, higher client

recoveries.

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 877

Currently, the contingency fee lawyer, with an eye on fee max-

imization, has only a very weak incentive to press for such non-mone-

tary objectives. And, not surprisingly, evidence suggests that non-

monetary settlement terms in personal injury cases are rare

333

—and

probably too rare, from a social perspective. Unlike pure financial

recoveries, non-monetary settlement terms are frequently public-

regarding—the removal of a dangerous product might well avoid the

next calamity—and sometimes it is precisely such institutional, public-

spirited change that the plaintiff most wanted ex ante and would find

most satisfying ex post.

334

Further, because parties may place different

values on non-monetary terms, their inclusion can helpfully “expand

the pie,” shifting the negotiation from a zero-sum to a positive-sum

framework.

335

Drawing attention to such terms, then, is apt to lead to

their more frequent consideration and inclusion. And this, in turn,

might facilitate both the forging of settlements and clients’ satisfaction

with the bargain struck.

336

Fifth and finally, the closing statement regime, which would

impose a new burden on lawyers only when they charge contingency

fees, would probably cause some practitioners to shy away from this

form of financing. This too might be beneficial. The contingent fee is a

dynamic and powerful device, vital to the vindication of certain impor-

tant individual rights. It is, however, not for everyone. Some personal

injury clients (namely, those who are particularly well-heeled and risk-

preferring), would often be better off eschewing contingency fees in

favor of out-of-pocket payment. Yet despite repeated ethical exhorta-

tions directing lawyers to discuss alternative billing arrangements with

333

See K

RITZER

, supra note 194, at 23, 30, 45–47, 101–02.

334

See, e.g., Tamara Relis, “It’s Not About the Money!”: A Theory on Misconceptions of

Plaintiffs’ Litigation Aims, 68 U. P

ITT

. L. R

. 701, 731 (2007) (presenting results from a

survey of accident victims which found that “the vast majority of plaintiffs wanted . . . more

than simply financial compensation[ ] for their harm”); id. at 720–21 (noting that the

formal justice system’s failure to address litigants’ non-monetary objectives “has been

found to be a major reason for litigants’ dissatisfaction”); id. at 724 (reporting on studies in

the United States and abroad which found that, in filing claims, litigants were at least

partly influenced by non-monetary objectives); J

ACK

B. W

EINSTEIN

, I

NDIVIDUAL

USTICE

ASS

ORT

ITIGATION

61 (1995) (noting, anecdotally, that in the Agent Orange and

Long Island Lighting Company cases, some plaintiffs placed great importance on non-

monetary objectives). But see K

RITZER

, supra note 194, at 23 (“My data provide no indica-

tion that a large fraction of the cases that compose ordinary civil litigation involve goals

other than money.”).

335

See Carrie Menkel-Meadow, Toward Another View of Legal Negotiation: The Struc-

ture of Problem Solving, 31 UCLA L. R

. 754, 829–33 (1984) (highlighting that consider-

ation of non-monetary objectives can convert the legal process “into more than a zero-sum

game”).

336

See Ginsburg Statement, supra note 321 (observing that, in his experience, providers

“take steps to improve whatever dimensions of quality they are being measured on”).

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878 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

clients,

337

commentators report that few contingency fee clients are

given alternative payment options, and “lawyers will not normally

take a personal injury case on other than a contingency fee no matter

how wealthy the client.”

338

By subjecting practitioners to an additional

reporting requirement when contingency fees are charged, the website

may recalibrate the fee calculus and stimulate a candid conversation

about the advantages and disadvantages of various fee arrangements,

again, to generally positive effect.

339

2. How Would Settlement Mills Fare?

In a world of increased transparency, settlement mills would have

two choices: They could either fundamentally alter their practice or

they could retain their unique attributes and compete on speed, ease,

predictability, and price. As to the former, closing statements would

highlight how often particular firms initiate lawsuits and try cases. As

a consequence, some settlement mills would likely take steps to do

those things more often, thus blurring the boundary with conventional

counsel. Additionally, since firms would be judged not merely on

whether they initiate suit or try cases, but instead on whether they

prevail in those pursuits, real trial practices would have to be built.

Clients would be more carefully screened; volumes would be reduced;

research tools would be acquired; and talented lawyers would be

337

See ABA Comm. on Ethics and Prof’l Responsibility, Informal Op. 86-1521 (1986)

(“A lawyer normally has an obligation to offer a prospective client an alternative fee

arrangement before accepting a matter on a contingent fee basis.”); ABA Comm. on

Ethics and Prof’l Responsibility, Formal Op. 94-389 (1994) (“It is ethical to charge contin-

gent fees as long as the fee is appropriate and reasonable and the client has been fully

informed of the availability of alternative billing arrangements.”); M

ODEL

ULES OF

ROF

’

ONDUCT

R. 1.5 cmt. 3 (2001) (“When there is doubt whether a contingent fee is

consistent with the client’s best interest, the lawyer should offer the client alternative bases

for the fee and explain their implications.”). This comment to Rule 1.5 was deleted in 2002.

ABA C

ENTER FOR

ROF

’

ESPONSIBILITY

, T

2002 C

HANGES TO THE

ABA M

ODEL

ULES OF

ROFESSIONAL

ONDUCT

16 (5th ed. 2003).

338

O’C

ONNELL

, supra note 173, at 48. Regarding the infrequency of communication, see

AZARD

, J

ET AL

., supra note 240, at 788 and R

HODE

& L

UBAN

, supra note 248, at 839.

But cf. Kritzer, supra note 170, at 760 (noting, from interviews, that some lawyers offer

clients a choice between an hourly fee and a contingency fee and are willing to negotiate

fee arrangements). Regarding lawyers’ reluctance to offer alternative fee arrangements,

see B

, supra note 261, at 139–40 and O’C

ONNELL

, supra note 173, at 48–49.

339

This is not to suggest that all—or even most—risk-preferring, wealthy clients would

prefer flat or hourly fees. Many presumably would not. See generally Eyal Zamir & Ilana

Ritov, Revisiting the Debate over Attorneys’ Contingent Fees: A Behavioral Analysis, 39 J.

EGAL

TUD

. 245 (2010) (suggesting that loss aversion plays a major role in clients’ prefer-

ence for contingency fee arrangements). Nor is it to suggest that the shift to alternative fee

arrangements, to the extent it occurs, would be universally positive; lower-income clients,

for example, might have a harder time securing representation. See H

ELLAND

ABARROK

, supra note 104, at 105–06 (highlighting various problems with a shift to alter-

native fee arrangements).

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 879

recruited and retained. This can be seen as a positive—it does, for

example, move mills closer to the traditional tort approach. On the

other hand, though, these changes would erode some of the many

benefits that settlement mills confer; we might start to see, for

example, greater court congestion, longer delay, more unpredictability

in outcome, and increased systemic costs.

Other settlement mills, meanwhile, would likely take the opposite

tack.

340

Rather than attempting to blur the boundary with conven-

tional counsel, they would presumably embrace the different service

they provide, trumpeting the relative speed and ease with which they

settle claims while (at least hopefully) lowering their fees so as to posi-

tion themselves as the clear bargain alternative.

341

What probably would not happen is a perpetuation of the status

quo where there is, all too often, a glaring gap between services prom-

ised and provided.

342

One example helps to illustrate the point. As

noted previously, there is strong reason to suspect that, at the Weiss

firm of Texas, those with “very, very serious injuries” were not well

served partly because “[e]verybody knew [Weiss] was more interested

in settling than really getting the full value of the case.”

343

At the same

time, though, another former Weiss attorney described the firm’s

advertising accordingly:

His ad, the one that was so effective, was “these are stacks of

money.” And there would be a little stack with ten or twenty dollar

bills. And it would say, “If you go to any law firm, this is what you

can get for your case.” And then it would show a gigantic stack of

340

This will be possible as long as insurance companies’ willingness to settle claims does

not hinge on settlement mills’ willingness to cheaply settle the claims of seriously injured

claimants. To the extent it does, the entire settlement mill system might collapse as the

closing statement regime channels high-value claims to high-echelon counsel. See generally

Engstrom, supra note 3, at 1542–45 (speculating that insurance companies may be willing

to negotiate with settlement mills, even though mills do not hold the “proverbial stick” of

trial, because, inter alia, settlement mills offer deep discounts on claims of grievously

injured accident victims).

341

Others have also noted that increased transparency might lead to a reduction in con-

tingency fees. See, e.g., Herbert M. Kritzer, The Wages of Risk: The Returns of Contingency

Fee Legal Practice, 47 D

AUL

L. R

. 267, 308 (1998) (“[S]imply making consumers

aware that there are alternatives in pricing will put some market pressures on the providers

of the service.”). Recall that public adjusters appear to charge substantially less than settle-

ment mills. See supra note 182 and note 213 and accompanying text. On the other hand,

providers may resist. See Silver, supra note 271, at 2091–92 (suggesting that providers

might be unwilling to offer lower contingency fees, fearing that clients will not hire such

attorneys given the perception that lower fees signal lower quality).

342

See supra note 151 and accompanying text (highlighting this gap).

343

Telephone Interview with K.R. (May 1, 2008).

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880 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

bills and say, “This is what you get if you go to Joe Weiss’s firm.” It

would light up the phone lines like crazy.

344

This disconnect is at the heart of the settlement mill dilemma.

And it is a problem that closing statement data—by empowering cli-

ents to make more educated attorney selections, emboldening lawyer-

competitors to make comparative, substantiated claims about their

own services, and arming bar counsel with data to identify and deter

false and misleading advertising—would most reliably address.

D. Some Pitfalls

Despite my enthusiasm for closing statements, I acknowledge

that there are a number of potential pitfalls. Below, I consider three:

the arguably unfair singling out of personal injury practitioners; the

fact that the proposal would, at least sometimes, erode the confidenti-

ality of otherwise secret settlements; and the reality that some poten-

tial clients might focus myopically on gross recovery attained, to the

exclusion of other, potentially more helpful, indicators. Other

problems and complications would surely emerge upon implementa-

tion.

345

Implementers therefore should periodically review and tweak

the regime to improve its efficacy.

1. Singling Out Contingency Fee Practitioners

First, the proposal requires disclosures from only certain contin-

gency fee practitioners even though it is well established that all types

of lawyers engage in ethical misconduct and all types of fee arrange-

ments (whether hourly, flat, or contingent) pose problems.

346

I do

contend, however, echoing a sentiment espoused by Deborah Rhode,

Roger Cramton, David Wilkins, and others, that different segments of

the Bar face different ethical challenges and thus need regulatory

344

Telephone Interview with F.M. (Apr. 29, 2008). I have not been able to view the ad

or confirm its contents.

345

Additional concerns include, but are not limited to, the following: the possibility that

closing statements will erect a new barrier to entry for new practitioners; the potential for

significant annual and semi-annual volatility; the difficulty in deciding how to apportion

“credit” in cases involving multiple lawyers, and especially between a referring and recip-

ient practitioner; and the possibility that reporting dropped cases will deter lawyers from

dropping cases, even when the discovery process reveals an absence of liability.

346

The hourly fee provides an incentive to “churn” cases, spending more time than nec-

essary. Fixed-fee lawyers have an incentive to under-invest in case development. The con-

tingency fee, similarly, tempts lawyers to secure the maximum fee with the minimum

expenditure of time and effort—and thus to expend less effort than may be necessary to

achieve the optimal result from the client’s perspective. For further discussion of various

conflicts, see R

HODE

, supra note 244, at 168–83 and Engstrom, supra note 3, at 1525 &

n.256.

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 881

mechanisms tailored to the particular challenges they face.

347

This

mechanism, in other words, is tailored to address significant problems

identified in contemporary personal injury contingency fee practice.

Whether it could or should be expanded and tailored to other practice

areas is a question that merits further study.

Closing statements are apt to work best when (1) the representa-

tion has fairly clear aims (thus producing fairly identifiable wins and

losses); (2) the principal concern is that lawyers will under-identify

(rather than over-identify) with clients, spending too little time on the

representation; (3) client information deficits are significant; and (4)

additional client screening is apt to be, on balance, socially beneficial.

In the personal injury context, all criteria are at least arguably met. In

most other contexts, in contrast, at least some of these conditions are

notably absent. It seems, for example, that the proposal would be glar-

ingly ill-suited to lawyers in the corporate hemisphere, where informa-

tion deficits are far smaller (since in-house counsel tend to be

extremely sophisticated), and the principal risk is not inadequate iden-

tification between lawyer and client but rather over-identification—

that the lawyer, too financially reliant on a client’s continued business,

will too quickly acquiesce to the client’s even unreasonable

demands.

348

Expansion to areas such as family law or trusts and

estates, where what constitutes a win or a loss is eminently debatable,

would be messy and likely unsatisfactory.

349

Finally, the criminal

defense context features wins and losses, frequent under-identification

between lawyer and client (especially when volumes are high and

347

See R

HODE

, supra note 244, at 20; see generally Roger C. Cramton, Delivery of Legal

Services to Ordinary Americans, 44 C

ASE

W. R

. L. R

. 531 (1994); Wilkins, supra note

238. Targeted rules are nothing new. Model Rule 1.5 already requires that contingency fees

be in writing, whereas other fees “shall be communicated to the client, preferably in

writing,” and also requires contingency fee practitioners to provide clients with closing

statements upon the conclusion of representation. Compare M

ODEL

ULES OF

ROF

’

ONDUCT

R. 1.5(c) (regarding contingency fees), with id. R. 1.5(b) (regarding fees gener-

ally). Cf. J

EROLD

S. A

UERBACH

, U

NEQUAL

USTICE

: L

AWYERS AND

OCIAL

HANGE IN

ODERN

MERICA

43–52 (1976) (criticizing the Bar for unjustly singling out contingency

fee practitioners).

348

For a discussion of the risks of over-identification between lawyer and corporate

client, see R

HODE

, supra note 244, at 9, Marc Galanter & William Henderson, The Elastic

Tournament: A Second Transformation of the Big Law Firm, 60 S

TAN

. L. R

. 1867, 1913

(2008), Robert W. Gordon, The Ethical Worlds of Large-Firm Litigators: Preliminary

Observations, 67 F

ORDHAM

L. R

. 709 (1998), and Robert L. Nelson, Ideology, Practice,

and Professional Autonomy: Social Values and Client Relationships in the Large Law Firm,

37 S

TAN

. L. R

. 503 (1985). For a discussion of in-house lawyers’ ability to select and

evaluate the performance of outside counsel, see Abel, supra note 170, at 355 and Gilson,

supra note 267, at 902–03.

349

Douglas E. Rosenthal, Evaluating the Competence of Lawyers, 11 L

& S

’

. 257, 264 (1976) (pointing out that, aside from personal injury and criminal practice,

“relatively few types of legal practice . . . produce clear-cut wins or losses”).

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882 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

lawyers are paid on a flat-rate basis), and the problem of unsophisti-

cated clients. But expansion there might nevertheless be problematic,

as revealing conviction and acquittal rates would inexorably lead to

the screening of prospective clients for innocence, which—given

defendants’ involuntary participation in the proceeding and the con-

stitutionally protected right to counsel—seems a far cry from giving

personal injury lawyers an added incentive to, in one scholar’s words,

“hold back the floodtide of unmeritorious cases upon the courts.”

350

2. Eroded Confidentiality of Settlements

Next, publicly filed closing statements would, at least occasion-

ally, expose the financial terms of otherwise secret settlements.

351

be sure, the extent of the exposure is limited, as the proposal takes

steps to preserve confidentiality where feasible: The identity of the

parties, defense counsel, and the insurer would be concealed; closing

statements would be publicly loaded only every six months rather

than on a rolling basis; and the plaintiff would have the option not to

reveal any non-monetary term.

352

Still, motivated observers would

sometimes be able to match a closing statement with a particular

newsworthy claim that, prior to settlement, had been winding its way

through the judicial system.

The broad issue of the desirability of secret settlements is sharply

contested, partly because the question implicates a debate that is even

deeper and more profound: whether the core function of the civil jus-

tice system is to resolve discrete disputes or to advance broader,

public-regarding aims.

353

Part of the disagreement also stems from the

fact that two basic empirical questions at the heart of the debate—(1)

whether secrecy, or its abrogation, affects overall litigation or

350

Kritzer, supra note 37, at 10; see Pamela S. Karlan, Contingent Fees and Criminal

Cases, 93 C

OLUM

. L. R

. 595, 629–31 (1993) (discussing the problem of screening for

client innocence).

351

On the plus side, disclosures might helpfully shuffle support for and opposition to the

closing statement proposal, since the Plaintiffs’ Bar has long worked to curtail secret settle-

ments, and the Defense Bar has long opposed such efforts.

352

States could additionally give judges the ability to exempt specific claims by court

order from the disclosure requirement upon a showing of good cause.

353

Compare Owen M. Fiss, Forward: The Forms of Justice, 93 H

ARV

. L. R

. 1, 29

(1979) (“[C]ourts exist to give meaning to our public values, not to resolve disputes.”), with

Richard L. Marcus, The Discovery Confidentiality Controversy, 1991 U. I

. L. R

. 457,

470 (“The primary purpose for which courts were created . . . is to decide cases according

to the substantive law.”).

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 883

settlement rates

354

and (2) the frequency with which secret settlements

serve to conceal public health hazards

355

—are as yet unanswered.

Fortunately, in light of the limited information revealed by this

transparency reform measure, we need not confront the propriety of

secret settlements head-on. Closing statements are most likely to

reveal the amount paid to resolve certain, big-ticket litigation. If it is

known, for example, that a particular plaintiffs’ lawyer is litigating an

important product liability case against a given manufacturer, then lit-

igation comes to a halt, and, sometime later, a closing statement

reveals that the lawyer has settled a product liability claim for a large

sum, interested observers would connect the dots. This revelation

would lead to a number of likely consequences, including increased

litigation against the manufacturer and decreased demand for its

product or products. Those on opposite ends of the political spectrum

would no doubt disagree about the desirability of these results, but

there is, at the least, a strong argument that these effects are wholly

consistent with the core goals of the tort system.

356

While the revela-

tion might spur litigation, in other words, there is little reason to

believe that unmeritorious litigation would result.

3. Undue Reliance on Gross Recoveries

A third possible critique of my closing statement proposal is that

clients would flock to the firms with the highest gross recoveries, even

though gross recovery attained is a noisy signal. Large recoveries, that

is, might be more a consequence of the raw material received (i.e., the

greater intrinsic value of the case), as opposed to any actual legal

talent displayed.

This argument is right but limited. One empirical study is most

revealing. In 1988, Stephen Spurr published a study of lawyer quality

using confidential New York closing statement data obtained through

a court order.

357

In the study, he compared mean recoveries attained

354

See David A. Dana & Susan P. Koniak, Secret Settlements and Practice Restrictions

Aid Lawyer Cartels and Cause Other Harms, 2003 U. I

. L. R

. 1217, 1225 (“[T]he

argument that the availability of secrecy agreements affects overall litigation or settlement

rates or the average time needed to consummate settlements lacks any evidentiary sup-

port.”); cf. Diana Digges, Confidential Settlements Under Fire in 13 States, L

. W

KLY

U.S.A., Apr. 30, 2001, available at 2 Ann. 2001 ATLA-CLE 2796 (Westlaw) (concluding

that per capita litigation rates actually fell in Florida following enactment of a state statute

restricting secret settlements).

355

Marcus, supra note 353, at 464 (discussing paucity of hard data).

356

See Dana & Koniak, supra note 354, at 1227 (“To the extent our system of tort and

other systems of liability serve socially desirable dual ends of deterrence and corrective

justice, anything that impedes potential plaintiffs from learning about and bringing valid

claims and receiving full compensation is undesirable.”).

357

Spurr, supra note 270, at 90 n.6.

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884 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

by a “[r]andom sample of lawyers” to the mean recoveries attained by

a sample of “[h]igh-quality lawyers and law firms,” identified as such

by the New York Law Journal based on “information obtained from

lawyers and judges.”

358

Spurr concluded that high-quality lawyers and

law firms had a mean recovery more than four times higher than their

“random” counterparts ($96,979 versus $20,197).

359

Now, there is no doubt that Spurr’s data involved significant

noise; the claims of the high-quality and random lawyers were surely

not created equal, either as to size or quality. More and worse, med-

ical buildup might have inflated some lawyers’ claims, giving them an

illegitimate leg up. But, for our purposes, none of this matters. Even if

prospective clients myopically focused on gross recovery attained (as

opposed to focusing on, say, ratios, which mitigate somewhat the raw

material problem), and even if gross recovery is highly imperfect, it

would probably be good enough. While more and more recent infor-

mation is admittedly needed, available data suggest that publicizing

information about gross recoveries would prompt even unsophisti-

cated prospective clients to identify the very lawyers that sophisticated

legal professionals (fellow lawyers and judges) identified as those of

the highest quality—and without any payment of hefty referral fees to

get there.

ONCLUSION

Settlement mills came into being in the late 1970s and early 1980s

on the heels of the Supreme Court’s Bates decision, and shortly after

no-fault auto plans were debated, and ultimately rejected, in most

states. Born in the policy space left by no-fault’s formal demise, settle-

ment mills have managed, quite improbably, to achieve many of its

vaunted benefits. No-fault proponents have traditionally derided the

tort system as a slow, expensive, court-clogging lottery, which leaves

many needy accident victims uncompensated and delivers to others

compensation far in excess of their actual loss. Settlement mills

address these criticisms by delivering to an apparently expanded set of

claimants fairly standardized, predictable sums, with relatively little

delay, at comparatively low systemic cost. And settlement mills’

358

Id. at 93 tbl.1 & n.11.

359

Id. at 108. This disparity mostly holds when the cases obtained from practitioner

referrals are excluded. Id. at 93 (calculating $84,070 versus $18,210). A study by Stephen

Daniels and his co-authors also underscores the fact that success and gross recovery data

can be illuminating. Daniels analyzed certain Wisconsin malpractice lawyers’ recoveries

over a thirteen-year period and found a sizable and consistent separation between the

recoveries attained by the most and least successful practitioners, even when an attempt

was made to control for injury severity. Daniels et al., supra note 119, at 19–20, 36.

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October 2011] SUNLIGHT AND SETTLEMENT MILLS 885

impact appears to be widely felt. In recent decades, as settlement mill

representation has become more prevalent, statistics suggest that a

wider pool of auto accident victims are seeking compensation for acci-

dental injuries;

360

auto accident filings comprise a smaller slice of

court dockets;

361

and the chance that any particular auto claim will

produce a lawsuit has decreased dramatically.

362

In sum, policy

makers failed to address the vexing problem of auto accidents, and

settlement mills took shape, however imperfectly, to fill the regulatory

void. Much of what is good about settlement mills, in fact, can be

traced to the fact that they represent a partial substitution for no-fault

legislation.

But no-fault’s failure is not the firms’ only forbearer. Settlement

mills can also trace their lineage to policy makers’ repeated and spec-

tacular failure to confront the vexing problem of attorney choice. It

has long been known that lawyer quality matters and that certain law-

yers tend to achieve better results for their clients.

363

It has also long

been known that individuals, and particularly those of limited means,

have trouble finding quality counsel. Karl Llewellyn drew attention to

this problem back in 1938, likening an individual’s selection of an

attorney to pulling a prize out of a “grab bag.”

364

In 1969, the Model

Code warned, “A layman who seeks legal services often is not in a

position to judge whether he will receive proper professional atten-

tion.”

365

And the Supreme Court highlighted this problem in its 1977

Bates decision.

366

Yet, policy makers have never addressed the issue of attorney

choice head-on. Policy makers have failed to construct a regulatory

architecture that broadly ensures adequate attorney quality. And in

the three decades following the Bates decision, policy makers have

failed to police the accuracy of attorney ads and—despite the

Supreme Court’s clear admonition to do so—have also failed to arm

prospective clients with information which would permit them to

360

See supra notes 115–16 and accompanying text.

361

ENSLER ET AL

., supra note 87, at 8 & tbl.2.1, 9 & fig.2.2, 32; N

’

FOR

TATE

OURTS

, E

XAMINING THE

ORK OF

TATE

OURTS

26 (Brian J. Ostrom et al. eds., 2002).

362

See Mark J. Browne & Joan T. Schmit, Patterns in Personal Automobile Third-Party

Bodily Injury Litigation: 1977–1997, at 16–17 (Sept. 2, 2004) (unpublished manuscript) (on

file with the New York University Law Review) (showing “paradoxical evidence” that,

between 1977 and 1997, “the likelihood that an insurance claim resulted in a legal claim

filing decreased . . . while the likelihood that the claim led to attorney representation

increased”).

363

See supra note 260 (providing citations).

364

Llewellyn, supra note 2, at 116.

365

ODEL

ODE OF

ROF

’

ESPONSIBILITY

EC 3-4 (1969).

366

Bates v. State Bar of Ariz., 433 U.S. 350, 370 n.23 (1977).

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886 NEW YORK UNIVERSITY LAW REVIEW [Vol. 86:805

“place advertising in its proper perspective.”

367

It is in this regulatory

void that settlement mills, with their over-the-top ads and under-the-

radar practices, have also developed. And policy makers’ malaise in

the face of the vexing problem of attorney choice has enabled that

which is most problematic about settlement mills (e.g., the incompe-

tent representation of the most seriously hurt, the sub rosa delegation

to non-attorney personnel, and the curiously high fees) to take root.

In this Article, I have proposed a system to dramatically increase

transparency in one segment of the legal services industry. The pro-

posal is far from perfect. Some clients can be counted on to ignore the

data, no matter how clearly the information is conveyed; some firms

would no doubt discover ways to manipulate their standings; and

some of the anticipated benefits I lay out would surely prove elusive.

But the mandatory, public filing of closing statements would force set-

tlement mill operations out of the shadows, while, at long last, giving

all prospective personal injury clients the ability to “place advertising

in its proper perspective.” And this, I submit, represents a significant

step forward.

367

Id. at 375.