‘Settlement Mills’: Greedy Attorneys Taking the Easy Way Out

In these litigious times, more lawsuits are being filed than ever before, and personal injury lawsuits are by far the most common type of case. However, due to a combination of factors, some law firms are letting their duties slide. There is a worrying trend in some personal injury firms that are turning into what are called ‘settlement mills,’ and when that happens, the client is the one who loses out.

In 2009, a Stanford law professor named Nora Freeman Engstrom published an article called “Run of the Mill Justice,” for which she actually interviewed attorneys and paralegals at some of the largest, most heavily advertised personal injury firms in the country. What she found was that almost none of their cases actually ever went to trial. Instead, the overwhelming majority of the claims their firm took on were settled, mostly based on past settlement figures instead of current factors.

Why settle so many cases? The reasons Engstrom found were fairly simple, and all linked to one overarching motive: profit.

Sometimes personal injury claims do settle, especially when they involve what are referred to as “soft tissue” injuries (things like sprains, which might be more difficult to assess in terms of severity). Almost 90% of personal injury claims are settled before trial, according to U.S. Bureau of Justice statistics. However, some claims are strong enough where they have a good chance at obtaining a big verdict if the case goes to trial. Settlement mills do not go to trial, because trials can be lost. Instead, settlement mill firms work with insurance companies and settle cases ­even major ones ­ for sums that are sometimes as low as 50% of what a similar case might have obtained from a jury verdict. The rationale is that it is better to be guaranteed a small payout than to spend time and money in a trial that might be lost.

The most common scenario for a settlement mill is to advertise heavily, which draws in a significant amount of clients. Once those clients have retained the firm, their cases are given scant, if any attention from a licensed attorney. Engstrom estimates that while most attorneys handle perhaps 110 clients per year, a settlement mill attorney is assigned files for anywhere between 300 to 400. There are simply not enough hours in the day for an attorney to devote appropriate time to all those files, so they are farmed out to non­lawyers, often called ‘case managers.’ Then these ‘case managers’ often interact with insurance companies, settling for a fraction of what might be obtainable at trial. Many firms even safeguard themselves against going to trial by using a system of tiered contingency fees ­ for example, saying a contingency fee will be 20% if the case settles, but 40% if the case goes to trial.

This practice is, of course, highly unethical; attorneys have a duty to represent their clients competently and professionally, not farm out their cases to non­lawyers (which is an ethical problem in itself). And yet, many firms get away with it: due to their extensive advertising, there is less need to retain happy clients, instead simply replacing them. Since they almost never go to trial, they do not come under the eye of judges or court personnel who might notice anomalies.

Attorneys Mark Kaire and David Heffernan will work with you, and for you. We handle each case personally, and if your claim needs to go to a jury, we will take it to trial to get you what you deserve. Contact our Miami office today.