Lawyers who charge mind-boggling rates are changing the way we resolve disputes. Almost all of us will be sorry.

Photo Credit: 123RF
Photo Credit: 123RF

A quick caveat to begin –I am a lawyer and a good one.  I might be writing this post in a fit of jealous rage. Those facts do not make what I am about to say any less true.

From time to time I attend continuing legal education seminars in which the lawyers universally decry the “vanishing jury trial.”  Judge Patrick Higginbotham, who has served on the Fifth Circuit Court of Appeals for the last 33 years, has made this phenomenon a pet cause. Judge Higginbotham argues that trials are necessary to resolve important issues; if every case settles or pleads, the issue that created the case in the first place remains unresolved. People and companies do not know how to act, whether an activity is unlawful or not.

Legal scholars argue over the policy implication Judge Higginbotham places on trials but no one disputes the factual basis for his contention. Although we have more lawsuits and lawyers, we have less trials.  That decline is in absolute numbers. The number of trials as a percentage of lawsuits filed has declined dramatically. Why is that so?

Some have suggested that judges are issuing more summary judgments, a procedure in which the judge says the law is so clear and the facts so undisputed, that no trial is necessary. But the statistics kept by the federal court system do not back up the claim; summary judgments as a percentage of case resolutions held steady while the number of trials decreased. From that ratio we can safely deduce that parties go to trial less often because they settle or plead their cases more often.

On the civil side of the docket the decision to settle a case is always economic in nature. Three variables control: (1) what is my likelihood of winning; (2) what is my cost if we lose and (3) what is my cost if we win.  In most circumstances parties pay their own attorney’s fees, regardless of the outcome. That equation suggests three more possible reasons we see companies pay  to settle. Either it has become harder to win a case, costlier to lose a case or costlier to try a case. Once again, the statistics suggest the first option is not true. Plaintiffs win right around 50% of the tried cases, just like they always have.

“Follow the money” proves true once again. Cases settle based on cost. Because parties pay their own attorneys’ fees even if they win, the “cost of winning” includes those attorneys’ fees. If a party loses it will certainly pay its own fees. Meaning that attorneys’ fees almost always make up part of the reasons cases settle.

How much of a reason can be seen in today’s Dallas Morning News article talking about the many Texas attorneys now charging upwards of $1,000 per hour for their services. After you let that number sink in, remember that the hourly fees of the “super lawyers” influence the fees charged by the junior partners, associates and paralegals who support the super lawyer. You get a modest team of 5-10 people together for a conference and the burn rate is $5,000 an hour. A trial team of 10-20 lawyers and assistants working hard for a month can easily cost the client several million dollars. Faced with that sort of expense, it is no wonder so many defendants give up the fight.

The impression one gets from the lawyers quoted in the article is that they are a “value add” because without them the jury would surely hammer the client. Which is the genius of the game. As more and more cases settle, it becomes easier and easier for lawyers  to play pretend. With nobody going to trial there is an absence of information about who makes a difference in the courtroom. While some of the lawyers quoted in the article have skins on the wall, I would venture that the vast majority of trial lawyers in this rate neighborhood do not have a long list of multi-million dollar cases actually tried and won. I know this because I have repeatedly seen super lawyers who could not win the high school UIL mock trial competition.

The related problem is that super lawyers charge the same rate no matter the activity they are performing.  Arguing to the Supreme Court? That will be $1,000 per hour. Dictating a form letter repeating what is in a routine scheduling order? That will also be $1,000 per hour, even if the secretary could have done it for free. It is here that the “brain surgeon analogy” breaks down. Brain surgeons get paid mostly to do actual brain surgery. Lawyers  get paid mostly to do 18 months of case work-up before the case settles.  In other words and firmly in the yesterday’s news category, the super lawyers have a pretty good con going.

Don’t believe me? If you are a businessman who pays these guys (and they are overwhelmingly guys), offer them double or nothing, depending on results, on their fees in your next big case. You might find out that their conviction about being “difference makers” has some limits.

What is all that to me?  It is a free market and if one party can persuade another to overpay without resorting to deception, why should I care?  First, it is just irritating. Second, the lawyers use their exorbitant fees as proof of their worth; they have somehow convinced otherwise savvy businessmen that someone  willing to do the same service for less is per se inferior. Third, I believe Justice Higginbotham is right. The jury trial system is important. Greed, more than any other factor, is driving that system to extinction.

Most of all, I just cannot stand the crocodile tears at the legal education seminars. “The jury system is dying!!” they cry. If only clients were willing to fight the good fight, they whisper.  It seems the only salve for their tortured souls is a peek at the checkbook.

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