“Five percent of the people think; ten percent of the people think they think; and the other eighty-five percent would rather die than think.” — Thomas Edison
The following vignette explores the ecosystem of the personal injury bar. Although the story is fictional, it is based on the composite experiences of actual lawyers and faithfully tracks the findings of several decades of socio-legal research on the practicing bar. Further, as the stories illustrate, these broad social and economic structures shape the lives of lawyers, often in ways they never anticipated.
If you’re interested in learning more about the history and structure of this practice area, see the bibliography at the end of this vignette.
[Editor’s note: I wrote this vignette nearly 15 years ago as part of Indiana Law’s 1L Legal Professions class. The original purpose was to expose students to key insights from the history, economics, and sociology of the U.S. legal profession. In brief, create a realistic counterweight to pop culture images of lawyers, while sparing students the drudgery (their words, not mine) of dense academic articles. Did it work? I’m not sure. The vignette, which I am bringing back this year, sparked lively class discussion. Still, I am reluctant to conclude that anyone saw my larger points: As we begin our careers, there is a lot we don’t know (about ourselves, our profession, broader society); what looks bad might turn out to be good, and vice versa; there are no riskfree paths; and mostly importantly, it is worth one’s time to connect the dots. Alas, I am older now, and the zeitgeist has changed. Let’s see what happens this year. Haha, I think Edison’s percentages may be off, at least for my students. wdh]
Gwen Breen
Gwen Breen is a 55-year-old trial attorney who maintains a highly successful personal injury practice in downtown Chicago. Gwen was born and raised in rural south central Illinois. Her father was a mechanic and small-time livestock farmer. Her mother managed the household, including assigning chores to Gwen and her five brothers and sisters. Because she got good grades in high school, Gwen’s teachers encouraged her to apply to college. At the time, Gwen had no ambition to become a lawyer, but she was profoundly curious about the world beyond Vienna County, Illinois. Despite her family’s modest circumstances, the low in-state tuition at the University of Illinois circa 1975 put the possibility of college within reach.
By the time she graduated from college in 1979, there was a dramatic surge in the number of women applying to law school. Beyond Atticus Finch (the defense lawyer in To Kill a Mockingbird) and Perry Mason (the television show from the 50s and 60s), Gwen didn’t know much about lawyers. But she knew a lot about livestock, factory work (her college summer job), and waiting tables and bartending, none of which had long-term appeal. As in high school, Gwen had professors who encouraged her to apply. Because of cost, she attended the University of Illinois College of Law. Remarkably, she graduated from law school debt-free in 1982, having supported herself and paid her tuition through several part-time jobs. Years later, she would remark that over 50% of what she needed to know to be a successful lawyer, she learned from waiting tables and serving drinks in college.
In 1982, the U.S. economy was in the midst of a deep recession. Gwen lacked the grades to be competitive for a law firm job in Chicago (her dream, more for the city than the work). And very few small-firm lawyers had the financial wherewithal to hire new graduates. To her dismay, Gwen’s first legal job was back in Vienna County in the Prosecutors’ Office, which she got through a combination of family and work connections. The County Attorney was Doug Colburn, who spent 75% of his time on County work and 50% on his local law practice (yes, that equals 125%). A modest increase in state funding enabled Doug to hire an intern. With these funds, he hired Gwen.
The pay was very low, and the environment (Vienna County) was all too familiar. But the work was nothing like law school—and surprisingly enjoyable.
During the first year, Gwen handled several less serious crimes, including DUI, vandalism, and property theft cases. She also assisted Doug with a murder trial and a sex crimes case. She particularly enjoyed conversations with Doug, in which he sought her opinion on the weight of the evidence and the decision to charge an individual with a crime. Gwen saw the world through the eyes of the defendants—rural folks without much formal education, sometimes overwhelmed by personal or financial hardship. When Gwen stopped to think about it, she was often stunned by the enormous influence and discretion she wielded over the lives of real people. In Vienna County, a significant portion of the criminal justice system was, effectively, run by a 26-year-old farm girl. Should we prosecute this case? What is a fair punishment? What is the best way to prepare this case so we can get this person in jail and out of our community? Nothing in law school or her prior work experience prepared Gwen for this power.
By the time Gwen was 29, Doug had semi-retired. As a result, Gwen was handling virtually all of the County’s significant criminal prosecutions. Although she loved her job, Gwen felt she had outgrown Vienna County. She considered applying for a position in the Cook County Prosecutors’ Office, but was discouraged by the starting pay. Then something unexpected happened. Gwen received a phone call from Edward (“Ned”) Markowitz, someone she knew from her undergraduate days at Illinois. “Would you consider joining my law firm?”
Ned Markowitz
Gwen knew Ned from her waitressing days at Chuck’s Diner, one of her part-time jobs as an undergraduate student. Ned, who was attending law school at the time, was one of Gwen’s regulars. During Ned’s 3L year, Gwen decided to apply to law school and asked Ned for advice. Although Nate was Jewish (Gwen was Catholic) and a “big city” guy from Chicago, Gwen thought he was funny, charming, and honest. Their Saturday morning banter often included their relative states of poverty, as both Gwen and Ned were the first in their families to attend college. Ned’s father was a butcher on the city’s south side, which, as Ned joked, was the urban counterpart of the rural livestock farmer. Gwen and Ned seemed to have a special rapport because they both had to work two or three part-time jobs to pay tuition and rent.
After graduating in 1979, Nate returned to Chicago and took a job at Manford Legal Services, part of the burgeoning legal “storefront revolution” of the 1970s. Cf. Post 059 (discussing the failed storefront revolution). Manford was founded by an idealist Yale Law School graduate, Jay Manford, who left his Wall Street law firm in 1977, in the aftermath of Bates v. State Bar of Arizona. The Bates case effectively ended the prohibition on lawyer advertising and, in turn, opened the door for a new law firm model that tapped into the enormous volume of unmet legal demand among low and middle-class consumers—what Manford called the “low-cost, high-volume” model.
The key to the “low-cost” portion was standardizing and automating the range of legal needs experienced by the typical middle-class family—e.g., drafting a will, getting a divorce, or obtaining workers’ compensation or Social Security disability benefits. According to the model, this standardization was to be achieved through a template-driven computer program. Mass marketing through newspaper and television ads was the core element of the “high-volume” portion of the model.
Manford’s insights may have been obvious to many other lawyers, yet in the Midwest, Manford had virtually no competition. The primary barrier to entry was a lack of capital. Running newspaper and television ads cost tens of thousands of dollars a month, and in the 1970s, computer technology for a dozen storefronts ran into the high six figures. Although many private investors would have been eager to underwrite this business opportunity, the state ethical rules barred splitting profits between lawyers and nonlawyers (see MR 5.4). In Manford’s case, thanks to millions of dollars in family money, he was able to pioneer this new concept without significant competition.
If Manford’s business model had a flaw, it wasn’t the advertising campaign. Almost instantly, the work poured in. Instead, his major problem was Ned Markowitz and people like him. As noted earlier, the model required volume, which meant that unusual or difficult cases were unprofitable because they required additional analysis that the consumer either could not afford or did not expect to pay for. This economic constraint, in turn, flipped the traditional law firm hierarchy on its head. Because payments hinged on the ability to complete form documents through a computer system, legal secretaries were much more integral to the operations of the office than attorneys like Ned Markowitz.
Perhaps it would have been better and simpler for the secretaries to deal directly with the customer, but such an exchange would constitute the unauthorized practice of law. So, in effect, Ned had become a salesman for a series of simple, highly repetitive legal matters that required virtually no independent analysis. Further, the only way to make a decent salary was to sell (quickly) more simple jobs and turn away (quickly) those people with more complex legal problems.
Unfortunately for Mansford Legal Services, nobody goes to law school for the chance to take a low-status, low-paying, unchallenging job that requires turning away clients with the most serious problems. Not surprisingly, attorney turnover was rampant. By the end of his first month (in the fall of 1979), Ned was plotting his way to a new job.
By the summer of 1980, Ned signed on with Bob Petroff, a 66-year-old solo practitioner with an office on the city’s south side. Petroff hoped to transition his lease and referral business to a younger lawyer in exchange for a set of buyout payments (see MR 1.17(a)). Although Petroff was a general practitioner, he was always grateful for a good personal injury case because the contingency basis made it possible to generate a substantial fee. During the year Ned worked with Petroff, they handled two car wreck cases, both of which resulted in significant settlements for Petroff. Ned was surprised by the contrasts between Mansford and Petroff. At Mansford, they didn’t do any personal injury work, but they received many walk-ins and phone calls from people injured in accidents. At Petroff, these types of cases were available only occasionally. The difference, of course, was advertising.
When Ned took over Petroff’s practice the following year (1981), he borrowed $10,000 from his aunt and uncle to place a large ad on the back of the Yellow Pages. At the time, Illinois bar authorities limited lawyers’ ability to claim special expertise. In Ned’s case, the most important elements of the ad were his photograph (he was handsome), his name (to convey that he was Jewish), and the words “handling car accidents and other personal injury matters.” Within a month of publication, Ned was spending half his time answering the phone and screening clients. The other half was spent negotiating settlements with insurance companies, especially by copying the tactics he had learned from Petroff.
Despite the fact that he had never tried a case—and had seldom been inside a courtroom—Ned was underwater with personal injury cases. He was also plagued by feelings of being a fraud. He could sell legal services, negotiate settlements, and take his one-third share. But as he started to interact more with the city’s insurance adjusters, he increasingly heard the refrain, “Maybe we’ll try this case.” Rather than affiliate with another lawyer with trial experience, Ned made the mistake of backing off his settlement demands, which precipitated a slow downward slide in which Ned felt certain that his clients were being underserved. Adjusters called Ned’s office a settlement mill, which made him feel sick to his stomach.
Sidenote: The Brogan Law Firm
The opposite of a settlement mill, at least in Chicago, was the Brogan law firm. The Brogan law firm grew out of the solo practice of Phillip Brogan, an Irish-Catholic Chicagoan who grew up working-class, the son of a police officer, on the city’s north side. Brogan struggled to get through college before joining the army in World War II. When he returned home, Loyola University Law School admitted him under the GI Bill. At the time, undergraduate degrees were not required for law school admission or accreditation.
Upon graduating first in his class, Brogan received a chilly reception from Chicago’s established business law firm. Brogan had three liabilities. First, he was Catholic. Second, he attended a non-elite law school. Third, his entire family network was working class. Thus, with some understandable bitterness, Brogan would sometimes recount how one of his classmates, with far lower marks, got the job at the LaSalle Street law firm he wanted because his uncle was an executive at the gas company.
Yet, as an Irish-Catholic from a large extended family, Brogan had his own resources. He secured his first legal job through his uncle, a well-known priest, who sent him for an interview with the City of Chicago Corporation Counsel’s office. At the time (1949), the office had 100 lawyers, half of whom were “lifers” and the other half destined to become state and federal judges. The Corporation Counsel’s office was part of the political machine built by Mayor Daley and other Irish-Catholic politicians. If Brogan aligned with this political machine, he would eventually prosper through the civil service system.
Brogan’s life took an unexpected turn, however, when he was invited by a fellow fraternity alum, James Halloran, to speak to his fraternity. Halloran was impressed by Brogan’s personal charm and easy rapport with people. Halloran was part of a new breed of Illinois lawyers who tried to separate themselves from the so-called “ambulance chasers.” Halloran’s colleagues would later call him a visionary. His goal was threefold: first, to elevate the professional stature of personal injury lawyers through professional organizations; second, to hone the art of courtroom advocacy to secure large jury verdicts for his clients; and third, to expand the law of tort liability through deft appellate advocacy and statutory reform at the state level, leading the effort to repeal Illinois’ $30,000 cap on wrongful death cases. Regarding this third point, Brogan’s primary argument to the legislators was that he had won $90,000 for the wrongful death of a horse, but in Illinois, a man’s life was only worth $30,000.
When Brogan met Halloran in 1952, Halloran’s vision was slowly gaining momentum and attracting positive attention within the Loyola community and among the legal profession. When Halloran offered him a position in his office, the ambitious Brogan accepted. Halloran’s apprenticeship of Brogan would later evolve into “Brogan University,” because another apprentice under Brogan would forever after possess the skills to evaluate valuable personal injury cases, prepare the case for trial, and persuasively convey that story to a jury. One of the central ironies of Brogan University, however, was that it practiced a form of exclusion very similar to LaSalle Street firms, even if the criteria were different: virtually all its graduates were Irish-Catholic working-class men who attended local, non-elite Chicago law schools.
Over the course of decades, before the advent of lawyer advertising, an informal patronage system evolved within the Chicago personal injury bar. The very best, most complex cases were referred up the food chain to lawyers like Brogan and Halloran, who could try them if an insurance company refused to agree to a settlement near a jury award after a well-litigated trial. In exchange, lower-value cases were referred down the food chain, where the higher volume of simple cases made it easier to make a living as a personal injury lawyer.
When Ned Markowitz placed his first Yellow Pages ad, he did not fully understand the Chicago personal injury bar’s ecosystem. Petroff only said, “If you got a really complicated case, we should call Jeff McGuire.” Ned figured McGuire had a lot of trial experience; he did not realize that McGuire was a graduate of “Brogan U” or that such a vast professional network even existed. Now, Ned was dying on the vine—a Jewish lawyer who got cases through advertising rather than referrals. Lawyers like McGuire were hesitant to partner with Ned because it threatened to pull the plaintiffs’ bar back to the era of ambulance chasing.
Markowitz & Breen
Ned’s strategy to re-level the playing field was to hire Gwen Breen, a tall, attractive farm girl with years of courtroom experience. “Juries will love Gwen,” Ned reasoned, “but insurance companies will hate her.” Ned had one sound card to play. “Gwen, how would you like to come to Chicago?”
In its early years (1985 to 1995), Markowitz & Breen was the ultimate example of division of labor. Breen, the natural salesman, would greet potential clients and sort through the cases for high-value claims. Gwen, drawing upon her years of experience in plea bargaining, would negotiate with insurance companies. When insurance adjusters, knowing Ned’s settlement mill reputation, will tell Gwen that “maybe we need to try this case,” Gwen would say, with a big, sincere smile, “Good. I will enjoy trying this case.”
The plaintiffs’ law practice was also a perfect fit for Gwen’s politics and worldview. Gwen was tired of being underestimated as a woman and tired of having her intellect questioned because she grew up on a farm. And because she dealt only with severe cases, she loved the fact that her skills and legal acumen were the key ingredients in helping clients get the help they needed. Gwen also liked making a comfortable income and living in Chicago, where she eventually met her spouse.
By the late 1990s, however, the Markowitz & Breen model was being widely replicated. To maintain sufficient volume, the plaintiffs’ bar unwittingly entered into an arms race that extended to expensive television advertisements, which required repetition to be effective. Although Markowitz & Breen seemed to be winning the arms race, Gwen was becoming steadily disillusioned with the public persona of her firm, particularly the cheesy nature of its advertising, which suggested getting big bucks quickly. Although she was elected the first female president of the state’s trial lawyers association, the adverse reaction toward Ned – the public face of the firm – was wearing her down.
Larry Ketchum and the Insurance Defense Bar
During the 1950s and 1960s, Brogan and Halloran essentially created an entirely new industry around personal injury. In the courts and state legislatures, they laid the groundwork for a system that allowed six-figure jury verdicts. By the 1970s, Brogan secured his first million-dollar verdict. By this time, the success and muscle of the plaintiffs’ bar had attracted the attention of the insurance companies, which backed legislative proposals for no-fault insurance. When the no-fault insurance campaigns failed, the insurance industry moved toward more sophisticated tactics.
One person who witnessed these tactics firsthand was Larry Ketchum, a classmate of Gwen Breen. Unlike Gwen, Larry had the grades to get a job with Miller Auerbach, a large general practice firm in Chicago. When Larry arrived at the firm in the fall of 1982, he asked to be assigned to the litigation department because he was interested in trial work. Larry soon became the protégé of a senior partner, George Ballmer, who kept over a dozen associates busy representing many of the nation’s largest insurance companies. George’s book of business was based on volume, aggregating the many cases that could not be settled by nonlawyer insurance adjusters and getting them ready for trial. Larry loved the experience he was getting in the courtroom, but the substance of the cases was very narrow. By his third year at the firm, he became pigeonholed as an insurance defense lawyer.
Although Larry did not realize it, insurance defense work was gradually acquiring a negative connotation due to the financial pressures insurance companies were placing on their outside counsel. State courts gradually followed the lead of federal courts in adopting comprehensive rules on pre-trial discovery and motion practice, with the unintended effect of elongating cases and making a quick resolution on the merits virtually impossible. Further, more cases began to rely on expert testimony, which gradually turned into an arms race for both plaintiffs and defendants. The cumulative effect of these changes was a dramatic shift in the respective costs and payoffs of litigation. Since insurance companies are heavy users of legal services, they began taking proactive steps to reduce their costs.
Step one was to apply rate pressure to lawyers like George Ballmer and his large team of associates. This, in turn, had the secondary effect of making George’s work less profitable, which undermined his stature at the firm. By 1988, the tensions led George to start a new firm with other Chicago lawyers specializing in insurance defense work (Ballmer, Lewis & McFee). Larry, who now had a wife and two kids, decided to go with George. Although he did not necessarily like having a specialty that was becoming more price-sensitive to his primary clients, he reasoned that he would never make partner if he stayed at Miller Auerbach. Larry’s reward for his loyalty was a smaller office at a less prestigious address and promotion to partner without a substantial pay increase. His name was also added to the lease, which was a level of personal risk that made him uncomfortable.
Separate and apart from the cost of litigation, the insurance companies launched a broad-based public relations effort to roll back legislation and judicial rulings that favored plaintiffs, a movement dubbed “tort reform” by insurance company lobbyists. From the outset, the goal was to turn public opinion against the plaintiffs’ bar by marshaling evidence of a steady increase in frivolous litigation that clogs the courts and raises prices for ordinary consumers. The most notorious example was Liebeck v. McDonald’s Restaurants, in which a woman won a $2.7 jury verdict against the fast-food giant for injuries suffered when she spilled excessively hot coffee on her lap. The facts of the case were extreme, but the media account told a much simpler, sensationalized story. The San Diego Tribune wrote, “When Stella Liebeck fumbled her coffee cup … she might as well have bought a winning lottery ticket. … This absurd judgment is a stunning illustration of what is wrong with America’s civil justice system.”
A complete account of the story runs as follows. The plaintiff was a 79-year-old woman who spilled coffee on her lap while sitting in the passenger seat of her grandson’s car and trying to add cream and sugar. The hot coffee was soaked into her sweatpants, causing third-degree burns over 6% of her body (i.e., penetrating through the full thickness of the skin to bone or muscle) and permanent scarring that covered 16% of her skin. According to the surgeon who applied the skin grafts, the injuries were among the most serious burn cases from hot liquids he had ever treated.
Liebeck, a lifelong Republican who had never filed a lawsuit, wrote a letter to McDonald’s stating that the coffee was unreasonably hot and should not be served to customers at that temperature. Her letter requested that the coffee machine in question be checked for defects, that the policies on coffee temperature be reviewed, and that her medical expenses be reimbursed. When the company rejected her request for a policy change and offered her $800, she retained a lawyer. It turned out that McDonald’s had litigated other cases involving excessively hot coffee and had paid substantial damages. The company manual specified that coffee should be made between 195 and 205 degrees and served between 180 and 190—hot enough to cause permanent, disfiguring third-degree burns within seven seconds.
Liebeck was awarded $160,000 in compensatory damages and $2.7 million in punitive damages, primarily because McDonald’s had knowledge of the danger and had refused to correct it despite numerous customer injuries. The judge subsequently reduced the punitive damages to three times the compensatory damages (a cap formula championed by the tort reform movement). Liebeck ultimately accepted a lesser amount to end the litigation before appeal. These aspects of the case, however, received far less media attention. Thereafter, the McDonald’s coffee cup case became a staple of the tort reform movement, which was overwhelmingly financed by insurance companies.
The Lives of Lawyers
The immediate and intended effect of the McDonald’s coffee cup case was to reduce public opposition to legislation that capped compensatory and punitive damages. This effort succeeded in many states. But the broader, more subtle impact was on juror pools, which were inclined to view plaintiffs’ lawyers and their clients with suspicion or hostility. This aspect of the tort reform movement played out in unexpected ways for lawyers like Gwen Breen, Ned Markowitz, and Larry Ketchum.
Empirically, juries were becoming less generous over time. So rather than settle cases at so-called nuisance value, insurance companies increasingly decided to take them to trial. The long-term goal of this strategy was to reduce the total number of claims by subjecting the plaintiffs’ lawyers to the risk of adverse jury verdicts and absorbing all associated costs. With fewer plaintiffs’ victories and lower overall damage awards, a large proportion of small cases started to go away.
For Larry Ketchum, the systemic impact of tort reform was significant. Because more cases were being litigated rather than settled, the insurance company put even more pressure on his rates. By his own admission, Larry had, for a period of 30 years, taken the road of least resistance. In 2004, this led to an offer to manage insurance defense cases for one of his clients, a large national insurance company (what’s commonly known as “staff counsel”). Although the pay was less than his partnership draw at his law firm, he was thrilled to be rid of the stress of billable hours and of keeping multiple claims managers happy so the work would keep flowing. From the insurance company’s perspective, hiring Larry was part of an overall effort to reduce its reliance on outside counsel. Recent case law held that it was not a material conflict of interest for an insurance company lawyer to represent a defendant (cf. MR 1.7, cmt. 13). Larry’s job is now to streamline the litigation process with the goal of reducing total costs; it is also to set settlement values based on the quality of the plaintiffs’ counsel. In the company database, Gwen Breen has one of the highest ratings. “That is good,” thought Larry. “I really like Gwen.”
In contrast to Larry Ketchum, the impact of tort reform on Markowitz & Breen was the need to increase volume to find cases that actually had economic value from the firm’s perspective. Although more potential clients were calling the firm, a smaller proportion were being taken as clients. The merits of the case were completely separate from the analysis of whether the case could be cost-effectively litigated—the firm, after all, was bearing all the financial risk. As Ned’s advertising became more aggressive, Gwen decided to leave the firm and start her own practice with another trial lawyer with similar personal and professional sensibilities. Her greatest asset was her reputation: she was a stellar advocate and a person of unquestioned integrity. From her professional activities, she was also very well known. So, entirely by accident, she became the beneficiary of a referral network similar to Brogan’s, albeit composed of Chicago lawyers from a different generation.
Ned remained at the firm, confiding in Gwen that he understood her position. “For me, there aren’t many options. I am a marketer and a businessman, not a lawyer. This is all I know.” Ned believes that his expertise in marketing may be especially valuable in the years to come, as a first wave of sophisticated legal products begins to replace legal services. “The idea behind the storefront revolution remains true—there is an untapped market of legal need. I hope someday I can figure out how to do it. Maybe social media is part of the solution.”
References
William Haltom & Michael McCann, Distorting the Law: Politics, Media and the Litigation Crisis (2004) (chronicling the role of media coverage in shaping the tort reform movement).
Sara Parikh & Bryant Garth, Philip Corboy and the Construction of the Plaintiffs’ Personal Injury Bar, 26 L & Soc. Inquiry 269 (2005) (chronicling the career and impact of legendary Chicago plaintiffs’ lawyer Phil Corboy).
H. Laurence Ross, Settled Out of Court (1980) (exploration of the structure and economics of the industry insurance circa 1970, including the interaction between aggrieved victims, insurance adjusters, and lawyers).
Jerry Van Hoy, Franchise Law Firms and the Transformation of Personal Legal Services (1997).
Notes:
Gwen Breen is based on an Indiana Law alum who remains active with the Law School.
Ned Markowitz is a composite of several lawyers drawn from the world of franchise law firms and high-volume personal injury practice.
Phillip Brogan is based on the life of the late Phillip Corboy, a legendary Chicago plaintiffs’ lawyer who continued to practice law into his late 80s. Corboy’s firm was called “Corboy U” by its alumni. Brogan’s mentor, James Halloran, tracks Corboy’s relationship with his mentor, James Dooley.
Larry Ketchum is a composite of dozens of lawyers who practice insurance defense in law firms and/or as staff counsel.