It Was the Best of Times, It Was the Worst of Times: The Precarious Nature of Plaintiffs' Practice in Texas. Stephen Daniels and Joanne Martin*

Transcription

1 It Was the Best of Times, It Was the Worst of Times: The Precarious Nature of Plaintiffs' Practice in Texas Stephen Daniels and Joanne Martin* It was the best of times, it was the worst of times, it was the age of wisdom, it was the age offoolismess, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way... I Plaintiffs' lawyers practice in inherently unstable markets that are shaped both by the relevant legal rules that define formal procedures and causes of action, and by the broader legal environment in which they work. 2 Legal rules and that broader legal environment are never static, and even small changes can affect plaintiffs' lawyers' practices in significant ways. As one Texas plaintiffs' lawyer simply put it, "we live on the edge of extinction all of the time." '3 The 1990s were an especially challenging period for Texas plaintiffs' lawyers in the wake of tort reform's legislative changes and aggressive public relations campaigns, and in light of a very different state supreme court. 4 To stay in business, plaintiffs' lawyers must be able to American Bar Foundation, 750 North Lake Shore Drive, Chicago, IL The authors would like to thank the conference participants for their comments and suggestions. The authors would also like to thank Professor Stephen Gilles and the participants in the panel "Tort Out of Court," at the 2002 Association of American Law Schools Meeting, for their comments and suggestions on an earlier version of a part of this Article. 1. CHARLES DICKENS, A TALE OFTWo CrnEs 1 (Oxford Univ. Press, 1987) (1859). 2. The legal rules define formal procedures and causes of action. The broader legal environment includes the attitudes jurors bring with them as well as the processes for settling the bulk of cases that do not go to trial. In addition, their work is shaped by the geographic environment from which claims emerge; by the one-shot nature of their client base; and by the contingency fee system on which they rely almost exclusively. See Stephen Daniels & Joanne Martin, "We Live on the Edge of Extinction All the Time:" Entrepreneurs, Innovation and the Plaintiffs' Bar in the Wake of Tort Reform, in LEGAL PROFESSIONS: WORK. STRUCTURE AND ORGANIZATION 149, (Jerry Van Hoy ed., 2001). 3. Unless otherwise attributed, all quotes by Texas lawyers in this Article are taken from interviews we conducted at the end of the 1990s. Transcripts are on file with the authors. See the Methodological Appendix, infra Part V. 4. Typical of plaintiffs' lawyers' views of the Texas Supreme Court is the assessment of a Houston attorney: "Our Supreme Court is just barely to the right of Atilla the Hun, and you know, all of the defense people know it." HeinOnline Tex. L. Rev

2 1782 Texas Law Review [Vol. 80:1781 respond successfully to the challenges posed by the market, and not all do. 5 Our interest in this Article is exploring why the 1990s were the worst of times for some Texas plaintiffs' lawyers, while being a relatively better time for others. Our earlier work has described some of the ways in which Texas plaintiffs' lawyers have reacted to the changes they see in the market for their services. We have examined the pessimism of many "bread and butter" plaintiffs' lawyers (those handling low- to modest-value cases) who have watched their practices shrink and their profit margins evaporate. 6 Their reactions to the changes around them have been largely defensive, geared only to immediate survival. For them, it is a matter of "hunkering down" and hoping for the best. A Fort Worth lawyer whose practice relied heavily upon low- to modest-value car wreck cases summarized the situation bluntly: "Without cash flow coming in you can't pay your bills and you can't fund your cases... We are in a brutal process of some [lawyers] being weeded out, and I may be one of them." Six months after he was interviewed, this lawyer was out of business. Other lawyers were more graphic in characterizing their predicament. One said, "It's Darwinism-survival of the fittest." For many lawyers, the 1990s were indeed a season of darkness, a winter of despair. We have also described the more optimistic view of the innovators who are trying something other than just riding out the storm. 7 These lawyers look for opportunities within the changing plaintiffs' market and innovate in an effort to exploit those opportunities. They explore or develop new markets for their contingency-fee-based services (such as commercial litigation, nursing home cases, or new arenas in products liability). They also experiment with different ways of organizing their practices (such as the creative use of technology), especially with regard to the perennial challenge of a contingency fee practice-getting clients. The innovators presume that wherever the market is headed, it will not return to the past. For some of these lawyers, the 1990s were more a season of light, offering some spring of hope. Building on our earlier work, this Article focuses on the structure of the Texas plaintiffs' bar in order to present an integrated picture of what was happening to lawyers at the end of the 1990s. It is based on ninety-six in- 5. If nothing else, the contingency-fee system and the "one-shot" nature of the client base make this type of law practice an especially precarious enterprise. A plaintiffs' lawyer must be able to maintain a steady flow of clients with injuries the civil justice system will compensate adequately at a cost that will allow the lawyer to make a profit. 6. See Stephen Daniels & Joanne Martin, "The Impact It Has Had is Between People's Ears:" Tort Reform, Mass Culture and Plaintiffs' Lawyers, 50 DEPAUL L. REV. 453, (2000) (detailing the effects of tort reform on jury attitudes and awards). 7. Daniels & Martin, supra note 2, at HeinOnline Tex. L. Rev

3 20021 Plaintiffs' Practice in Texas 1783 depth interviews with Texas plaintiffs' lawyers and a large-scale mail survey with 554 useable responses! It takes as its starting point the premise that all lawyers in private practice must make a profit if they are to continue offering legal services. 9 Profit is the minimum requirement for achieving anything else a law practice hopes to accomplish. In other words, everybody must first generate enough business and income from it to "keep the lights on." The challenge for many plaintiffs' lawyers at the end of the 1990s was keeping the lights on.' 0 Our discussion is divided into three broad parts. The first outlines the structure of the Texas plaintiffs' bar. The Texas plaintiffs' bar is not a monolithic structure or one with a small handful of well-known "heavy hitters" and a mass of anonymous "plodders." It is a complex hierarchy, and some knowledge of it is necessary to understand what was happening to lawyers' practices at the end of the 1990s, because practices differ according to position in that hierarchy. The second Part describes plaintiffs' lawyers' perceptions of the changes in the market environment in which they work-their "common sense" notion of things. It is necessary to know something of this "common sense' because it is what plaintiffs' lawyers rely upon in trying to figure out how to "keep the lights on." Following a logic that ties aggressive political and public relations campaigns for tort reform to changes in jury behavior, and then to changes in "going rates," these lawyers conclude that their working environment has substantially changed for the worse. The third Part examines lawyer reactions to those changes and how those changes affect their practices. It also takes into account alternative explanations for changes in practices, such as increased competition. Our findings describe what may be a contracting plaintiffs' lawyers' market in which some lawyers are facing dark and uncertain futures, while others are facing brighter ones. As a general proposition, whether one is going "direct to heaven" or going "direct the other way" (as Dickens might say) seems to depend on where in the structure of the Texas plaintiffs' bar one is situated. I. The Texas Plaintiffs' Bar A. The Size and Basic Structure of the Plaintiffs' Bar The size of the Texas plaintiffs' bar is hard to know with precision, in part because there is no simple definition of what a plaintiff's lawyer is. Is it 8. For a more detailed discussion of our methods, see the Methodological Appendix, infra Part V. 9. Daniels & Martin, supra note 2, at See Joseph Calve, Poured Out, TEXAs LAW., Dec. 16, 1996, at 1 (describing the financial difficulties of many Texas personal injury lawyers). HeinOnline Tex. L. Rev

4 1784 Texas Law Review [Vol. 80:1781 a lawyer who is certified in personal injury trial law by the Texas Board of Legal Specialization? If so, the plaintiffs' bar will be relatively smallfewer than 1700 in Is it simply a lawyer who is a member of the Texas Trial Lawyers Association (TTLA) or the Association of Trial Lawyers of America? Is it a lawyer who does only plaintiffs' work on a contingency fee basis, or is it a lawyer who does any plaintiffs' work at all? We are interested in lawyers for whom plaintiffs' work done on a contingency fee basis accounts for a substantial part of their business. For our mail survey (conducted in late 1999 and early 2000), we drew from a list of 5284 Texas lawyers provided by the TILA in late What makes the list especially useful for our purposes is the fact that it included more than just TTLA's current members. It included current TrLA members, former 'ITLA members, and lawyers identified by TILA as "prospects"-lawyers thought by its members on the basis of their local knowledge to be practicing at least some amount of plaintiffs' work and who have never been TrLA members. While not an ideal source, it represents the best available estimate and list of the population of Texas plaintiffs' lawyers at the end of the 1990s 12 More specifically, we limited our study to lawyers for whom plaintiffs' work done on a contingency fee basis accounted for at least 25% of their caseload at the time of our survey or at some time during the five previous years. Table 1 presents data, as reported by our survey respondents, on the percentage of current business made up of plaintiffs' work. It shows that the bulk of the lawyers in our survey are not simply lawyers who occasionally do some plaintiffs' work; they are plaintiffs' specialists who devote most of their practices to such work. The largest percentage (131, or 23.7%) does plaintiffs' work exclusively, and only one-quarter of them have more than 50% of their business in something other than plaintiffs' work. For the lawyers we interviewed, none devoted less than 50% of their caseload to plaintiffs' work, and some reported a concentration as high as 90%. In short, it makes sense to talk not only of an identifiable Texas plaintiffs' bar, but to talk of one comprised of lawyers who have chosen to specialize in this particular legal market. 11. See CAROL L. CANNON & KEVIN J. PRIESTNER, STATE BAR OF TEXAS, STATISTICAL PROFILE OF THE STATE BAR OF TExAS MEMBERSHIP ( ) 5 (June 2001), available at (last visited Apr. 25, 2002). The profile reported 1660 Texas lawyers certified in personal injury law. Id. 12. According to the State Bar of Texas, there were 61,662 in-state lawyers practicing in The TrLA list, then, represents 8.6% of the in-state lawyers in Even if we assume that this list misses some lawyers who consider themselves to be plaintiffs' lawyers, the percentage of Texas lawyers who are plaintiffs' lawyers is unlikely to be more than 10% or 11% of in-state lawyers. Id, at 6 n.3. HeinOnline Tex. L. Rev

5 20021 Plaintiffs' Practice in Texas 1785 TABLE I PLAnMiFFS' WORKAS CURRENT PERCENT OF CASELOAD (n=552) Percentile 10th 25th 50th 75th 90th %Plaintiffs' Work 25.0% 50.0% 90.0% 99.0% 100% Mean: 74.47% Median: 90.0% Mode: 100% (n=131) Texas plaintiffs' lawyers do not see themselves as fungible. There is a structure and a hierarchy within the plaintiffs' bar, and the best way in which to describe this structure is to categorize lawyers on the basis of the value of their average contingency fee case. Doing so will not capture everything that is important, such as a lawyer's reputation for professionalism and integrity, but it does seem to capture the most important indicator in the eyes of plaintiffs' lawyers of where someone is situated in the hierarchy. For instance, in talking about the unsavory reputation of a well-known Texas plaintiffs' lawyer with a record of winning big cases, a Houston lawyer said, "He's a good lawyer... I don't know if he chased that airplane or not [getting clients], but if I was on that airplane, I'd want him to be my lawyer. If I walk out of here and get hit by a truck... then I would like to have X take it [the case]." One way to illustrate this attitude is to look at what factors draw referrals of big cases to some lawyers rather than others. As one lawyer said: In order to get that big case, what's going to happen is some lawyer is going to bring it to you. And the reason he brings it to you is because, at least in his mind, you have a reputation for being equipped to deal with it, and equipped to get a good result, which is important to him because he's going to get a referral fee. And so what you'll have, I think, in just about any community... is a handful of what everybody considers to be the "heavy hitters." The ones that for some reason always end up with the big cases... And the reason one of those guys gets it is because it is taken to him or her by some other lawyer because of their reputation. The legal community has to see the firm in such a way that they believe the firm will get a good result and can finance the case... People have to know you have the money. When it comes to defining the pecking order, then, it is the size of the cases successfully handled that counts most. Table 2 presents data on the average value of the contingency fee cases handled by the survey respondents over the twelve months prior to the survey. While the mean is just over $1 million, 90% of the averages are under that amount. The median value is a far more modest $37,000, which indicates that most plaintiffs' lawyers' practices are not built on big, complex cases involving millions of dollars. They are built on more modest cases. HeinOnline Tex. L. Rev

6 1786 Texas Law Review [Vol. 80:1781 TABLE 2 VALUE OF AVERAGE CONTINGENCY FEE CASE 12 MONTHS PRIOR TO SURVEY (n=546) Percentile 10th 25th 50th 75th 90th Case Value $5,000 $15,000 $37,000 $200,000 $1,000,000 Mean: $1,002,181 Median: $37,000 Since we want to describe the Texas plaintiffs' bar in terms of its structure, a straightforward way of doing so is to categorize lawyers by quartiles calculated on reported average case value. The first group, 138 lawyers, includes those with average case values of $14,999 or less. The second group, 141 lawyers, includes those with average case values between $15,000 and $37,000. The third group, 134 lawyers, includes those with average case values between $37,001 and $200,000. The last group, 139 lawyers, includes those with average case values greater than $200,000. We will label lawyers with average case values below the median as "bread and butter" lawyers and divide them into two groups representing the first two quartiles-bread and butter 1 (BB1) and bread and butter 2 (BB2). The lawyers above the median we call "heavy hitters," and we divide them into two groups representing the third and fourth quartiles-heavy hitter 1 (HH1) and heavy hitter 2 (HH2). A closely related aspect of a lawyer's place in the plaintiffs' bar structure is the geographic market in which he works. 13 The variation in geographic scope of markets follows the average case size. In the survey we asked lawyers to place their practices into one of three simple geographic markets: local, meaning most cases come from the county in which a lawyer's principle office is located or from adjacent counties; regional, meaning a substantial number of cases come from one or more Texas counties non-adjacent to the principle office site; and state-wide/national, meaning a substantial number of cases come from all over Texas or from other states. Table 3 shows the variations among the four groups of lawyers.' 4 As we go up the hierarchy, geographic markets become broader in scope. Few lawyers in the lower two groups work statewide or beyond. 13. Throughout this Article we will refer to Texas plaintiffs' lawyers in the masculine because they are overwhelmingly male. Among the respondents to our survey, 85.7% are male. In 2000, 73.0% of members of the State Bar of Texas were male. Id. at Throughout this Article we use simple tests of statistical significance when we present data on relationships and differences, like those involving geographic scope of market and a lawyer's place in the plaintiffs' bar hierarchy. Such tests are used to determine whether the observed relationships and differences among respondents to a survey like ours actually reflect the larger population, or whether the observed relationships and differences could have happened by chance. What is important are those relationships and differences among the respondents to our survey that are not likely to have occurred by chance. The associations found in Table 3 are statistically significant using the standards typically found in social science research, meaning that they are unlikely to have occurred by chance. For an explanation of tests of statistical significance, see the discussion of the Texas plaintiffs' lawyers survey in the Methodological Appendix, infra Part V. HeinOnline Tex. L. Rev

7 2002] Plaintiffs' Practice in Texas 1787 Their practices may be so localized that they concentrate on a particular neighborhood or ethnic community. A San Antonio lawyer provides an example: "I think over time I've had a good many calls from people simply saying, 'I live in this area' or 'I pass your office,' et cetera. So I'm trying to build something more in terms of tapping the neighborhood." 5 TABLE3 GEOGRAPHIC MARKMS Bread & Butterl Bread & Butter2 Heavy Hitterl Heavy Hittcr2 (n-138) (n=141) (n=134) (n=139) % Local % Regional % State/Nation chi square , sig..000 The heavy hitters are less likely to be so localized. HH1 lawyers, for instance, try to expand their markets by developing geographic niches. They target particular parts of the state either because they see a market opportunity or because they believe juries are more pro-plaintiff. For instance, a medical malpractice firm in Central Texas has targeted East Texas and the Panhandle as market opportunities. One of the partners said: We file a lot of suits and get a lot of cases from the Lubbock/Amarillo area [the Texas Panhandle] and from the Jasper/Lufkin area [East Texas] and we don't work too much down in South Texas... Of course, Lubbock has got a big medical community up there and things happen. The East Texas area has terrible medical care period, so bad things happen there. A San Antonio lawyer talked about a regional practice that is based, in part, on places with friendlier juries. He described his geographic market as "San Antonio and the counties within fifty or one hundred miles, except we do a bunch of border work which is Eagle Pass, Del Rio, and Laredo. Because there aren't very many lawyers there and those are very good counties for plaintiffs." Another San Antonio lawyer works in the same area for much the same reason: "It's still a decent place to try a case." Lawyers handling larger, more complex cases may need an even broader geographic market in order to find enough of the cases in which they specialize. An HH2 lawyer located in San Antonio described his geographic market as, "Well, it's Texas." At the extreme end of this spectrum, some of 15. A lawyer whose practice concentrated for years on one minority area in Dallas provides another example. He spoke with some pride about his commitment to the community: "Most of my clients are minority. The reason that is so is because it has always been so. I represented granddaddy. He sent his kids and his relatives and his friends, and I represented them. Now, I'm working on the grandkids." HeinOnline Tex. L. Rev

8 1788 Texas Law Review [Vol. 80:1781 these lawyers have no real geographic boundaries to their market. Said one about his caseload: "The pharmaceutical is national, and aviation is national." A lawyer specializing in serious injuries suffered by oil rig workers has cases from almost anywhere, even those involving injuries occurring in the North Sea. B. The Lawyers The examples above all help to illustrate the differentiation and hierarchy in the Texas plaintiffs' bar. To flesh out the structure a bit more we will describe some key practice characteristics of the lawyers in each of our four groups, and we will rely upon Table 4, which presents data on those characteristics for each group. The data are organized to allow easy comparisons among the four groups. 1. The Bread & Butter 1 Lawyer.-This is the lawyer at the bottom of the plaintiffs' bar hierarchy, for whom the average value of contingency fee cases is quite modest (see Table 4). Among the four groups of lawyers, he is the most likely to be a solo practitioner and to work in a local geographic market (see Table 3). 1 6 While his practice is almost exclusively plaintiffs' work done on a contingency fee basis, it is less concentrated on this type of work than the practices of lawyers in the other three groups. As Table 4 shows, the BB 1 lawyer has the highest volume of open cases, but again these are cases of lower value. While he does not get substantially more calls than lawyers in the other groups, he does sign a higher percentage of those calls to a contingency fee contract. 17 The largest percentage of the BB1 lawyer's cases come through referrals from former clients. As a San Antonio solo practitioner described it, "you represented somebody, did them a good job and their brother or sister, friend at church has an accident, and they say, my lawyer did a good job, call him," Unlike the other three groups of lawyers, the second largest percentage of cases for this group comes from advertising (see Table 4, row labeled "% of Cases From"). Among all forms of advertising, the largest percentage of business comes from the Yellow Pages (14.8% of cases). 18 Lawyer referrals, though tied with advertising for the second largest source of business, are less 16. Of all Texas lawyers in private practice, 36% are solo practitioners, 24% work in firms of two to five attorneys, and 18% work in firms of more than 60 attorneys. CANNON & PRIESTNER, supra note 11, at In his study of Wisconsin lawyers who handle contingency fee cases, Herbert Kritzer found that "lawyers reported accepting cases from a mean of 46% (median 45%) of the potential clients who contacted them." Herbert M. Kritzer, Contingency Fee Lawyers as Gatekeepers in the Civil Justice System, 81 JUDICATURE 22, 24 (1997). 18. For a comparative picture focusing on Wisconsin lawyers, see Herbert M. Kritzer & Jayanth K. Krishnan, Lawyers Seeking Clients, Clients Seeking Lawyers: Sources of Contingency Fee Cases and Their Implications for Case Handling, 21 LAW & POL'Y 347, (1999) (finding that contingency fee lawyers get most of their business from referrals rather than from advertising), HeinOnline Tex. L. Rev

9 2002] Plaintiffs' Practice in Texas 1789 important for the BB1 lawyer compared to the lawyers in the other three groufps. This is indicated in Table 4 by the small percentage of BB1 lawyers who Use mailings to other lawyers as a way of generating business. 19 TABLE4 PRACTICE CHARAcrERiTCS AND PLACE IN THE MERARCHY - 2BBIlle A-=38 1HCn fii~ -'I H Cn'tl39) Mean: S6,828" S22,863* $76.515* $3.8Ml Average Case Value Median: $7.250"* S25.000** S71.000** S750K** % Solo Practitioner 55.8% 45.9% 32.8% 15.8% % 2-5 Lawyers in Firm 35.5% 40.9% 45.5% 50.5% 70.0%* 72.5%* 73.3%* 82,0%* % Plaintiffs' Work 85.0%** 80.0%** 90.0%** 95.0%** 116.2" 49.5* 48.6* 482* Number of Open Cases 45.0** 35.0** 25.0** 20.0"* Number of Calls per 21.9" 18.3" 18.5' 16.8' Month 12.5"* 10.0** 10.0** 8.0"0 % of Calls Signed to 35.1%* 27.0%* 26.8%* 17.9%* Contract 30.0%** 20.0%** 20.0%** 10.0%** Clients: 36.4% % of Cases From Advertis'g: 20.0% Clients: 34.1% Lawyers: 42.2% Lawyers: 553% (top two by %) Lawyers: 20.0% Lawyers: 31.9% Clients: 26.2% Clients: 18.2% % Who Advertise 72.5% 71.2% 65.7% 71.2% (top two for those who YellowPage:60.9% YellowPage: 6.8% YcllowPage:50.7% YellowPage:48.9% advertise) Internet: 18.1% Internet: 21.1% Internet 20.1% Intemet:28.1% % Using Mail to Other Lawyers 2.9% 6.5% 6.7% 252% Auto: 51.2% Auto: 40.0% Auto: 27.1% Med Mal: 20.7% % of Caseload (top Domestic: 7.7% Domestic: 7.3% Med Mal: 13.1% Auto: 14.7% three by %) Criminal: 4.8% Med Mal: 6.9% Products: 8.8% Commercl: 12.9% % of Caseload Medical Malpractice 3.2% 6.9% 13.1% 20.7% % Handling No Auto Cases 7.4% 8.8% 18.2% 44.9% % Certified 23.9% 39.4% 34.1% 40.1% % Who Claim a Specialization Auto: 47.8% Auto: 41.3% Auto: 37.3% Med Mal: 31.3% (top two by %) Litigation: 21.0% Litigation: 26.8% Litigation: 26.1% Litigation: 26.9% Settle Before Filing: Settle After 51.2% Filing/Before Trial- Settle After Settle After Settle After 33.9% Filing/Before Tria: Fiing/Before Tria: % of Cases Disposed by Fding/Before Trial: Settle Before Filing: 41.3% 43.3% (top two by %) 22.4% 31.6% Mediation: 31.5% Mediation: 40.7% % Disposed by VerdictrTrial 6.7% 6.1% 8.5% 12.1% Net Income from Law Practice $ ,999 S S 'designates mean ** designates median 19. In contrast to lawyers in the other groups, the BBI lawyer is the most likely to use television advertising-13% do. HeinOnline Tex. L. Rev

10 1790 Texas Law Review [Vol. 80:1781 The BB1 lawyer handles simple, mundane issues. Table 4 shows, for instance, that a very small percentage of the BB1 lawyer's caseload is made up of medical malpractice cases. A number of these lawyers said they primarily handle "vanilla car wreck cases," meaning low-value cases without serious injury or death that will not go to court. In fact, the BB1 lawyer's practice is built on automobile accident cases. This is perhaps best illustrated in Table 4, which shows that just over one-half of the BB 1 lawyer's caseload is made up of such cases (row labeled "% of Caseload"), more so than for the other three groups. 20 As one such lawyer described his practice, "We do anything from car wrecks to on-the-job injuries as long as its not workers' compensation-we exclude that... Probably on a percentage basis, 70% of my cases are car wreck... It can be as small as $2,000." The only other area accounting for 5% or more of his docket is domestic relations. If he claims any particular specialization within the broad area of a plaintiffs' practice, it is most likely in automobile accident cases-more so than for the other three groups (Table 4, row labeled "% Who Claim a Specialization"). The BB 1 lawyer is the least likely to be certified as a specialist by the Texas Board of Legal Specialization. 21 In short, the BB 1 lawyer is a plaintiffs' practice generalist who handles relatively simple, mundane cases in somewhat greater volume than his counterparts higher in the plaintiffs' bar structure. He takes very few of his cases all the way to a court verdict, and consistent with the nature of his caseload, just over one-half of his cases are settled before filing. The next largest percentage is settled after filing, but before trial. His net income from his legal practice fell between $100,000 and $124, The BB2 Lawyer.-Some differences begin to appear as we move up the hierarchy to the BB2 lawyer. Table 4 shows that he is less likely to be a solo practitioner than the BB 1 lawyer, but more likely than the lawyers in the two groups above him in the hierarchy. Like the BB 1 lawyer, his practice is almost exclusively plaintiffs' work done on a contingency fee basis, but Table 3 shows that his geographic market is not as narrowly local as that of the BB 1 lawyer. 20. Table 4 shows that only 7.4% of BB 1 lawyers said they handle no auto cases (row for "% Handling No Auto cases"). This is the smallest percentage among the four groups of lawyers. 21. As a point of reference, the State Bar's statistical profile reports that only 9% of the membership is certified by the Texas Board of Legal Specialization. See CANNON & PRIESTNER, supra note 11, at For 2000, the State Bar reported a median income of $109,282 for all lawyers in private practice in Texas. DEP'T OF RESEARCH & ANALYSIS, STATE BAR OF TEXAS, 2001 PRIVATE PRACTITIONER INCOME REPORT 4, available at research/2001ppir.pdf (last visited Apr. 25, 2002). A figure is reported for plaintiffs' lawyers, but there were only 13 respondents for this category. id. at 14. HeinOnline Tex. L. Rev

11 2002] Plaintiffs' Practice in Texas 1791 This lawyer has fewer open cases than the BB1 lawyer, meaning a smaller practice. He receives fewer calls per month from potential contingency fee clients than the BB1 lawyer, and a smaller percentage of those calls result in a signed contingency fee contract. Like the BB1 lawyer, the largest percentage of the BB2 lawyer's cases come through referrals from former clients. Unlike the BB1 lawyer, however, the BB2 lawyer gets almost an equal percentage of cases not from advertising, but from lawyer referrals. This is a conscious strategy. A younger BB2 lawyer from Austin said: "My partner and I have established relationships with about eight or ten firms around town that regularly send us cases, and we have both made a bit of an effort to promote ourselves within the community and among lawyers." Consistent with these efforts, the BB2 lawyer is a bit more likely to use mailings to other lawyers in the effort to attract referrals. Like the BB1 lawyer, the largest percentage of the BB2 lawyer's caseload is made up of automobile accident cases. The percentage, however, is not as large. The BB2 lawyer is a bit more likely to try handling more complex matters-like medical malpractice-than is the BB1 lawyer. 3 If the BB2 lawyer claims any particular specialized expertise within the broad area of a plaintiffs' practice, it is most likely in automobile accident cases (although the percentage is lower than that for BB1 lawyers). Litigation is the next most likely specialization (at a higher percentage than the BB1 lawyer). He is not likely to be certified by the Texas Board of Legal Specialization, but more likely than the BB 1 lawyer. The BB2 lawyer takes very few of his cases all the way to a verdict. Unlike the BB 1 lawyer, however, the majority of his cases are not concluded by a settlement before filing. The largest percentage is settled after filing but before trial; his practice, while mundane, is not as commonplace as the BB 1 lawyer's. Regardless, the subtle differences between BB1 lawyers and BB2 lawyers do not translate into a higher net income. Like the BB1 lawyer, the BB2 lawyer's net income from his legal practice fell between $100,000 and $124, The HHJ Lawyer.-The HH1 lawyer is different, in several key respects, from the lawyers in the lower two groups of the plaintiffs' bar hierarchy. As Table 4 shows, his cases are worth much more. He is less likely to be a solo practitioner and more likely to work in a small firm of two to five lawyers. While his practice is almost exclusively plaintiffs' work done on a contingency fee basis, Table 3 indicates that he is less likely to 23. The BB2 lawyer is somewhat more likely than the BBI lawyer to handle medical malpractice cases (53.7% do not handle them, compared to 65A% of BBI lawyers), commercial cases (71.3% do not handle them, compared to 80.1% of BBI lawyers), and products cases (59.6% do not handle them, compared to 69.9% of BB1 lawyers). HeinOnline Tex. L. Rev

12 1792 Texas Law Review [Vol. 80:1781 work primarily in a local geographic market than either of the BB lawyers and more likely to work in a statewide or national market. The HH1 lawyer's practice is modest in size. He may have as many as fifty open cases, but probably fewer, and he receives an average of fewer than twenty calls per month from potential clients. Only a minority of those calls results in a signed contingency fee contract, the rate being about the same as that for BB2 lawyers and lower than that for BB 1 lawyers. In contrast to both BB1 and BB2 lawyers, the largest percentage of the HH1 lawyer's cases comes from lawyer referrals. In fact, some of these referrals may come from lawyers lower in the plaintiffs' bar hierarchy. For instance, one HH1 lawyer said: There are plaintiffs' lawyers that may not want to get into litigation. The gentleman who was just here talking to me is a friend from law school. He'll take a case until he has to file suit on it. Once he files suit, he sends it to us. A lot of lawyers are like that. They don't want that. They want to see if they can flip them with the insurance company and get them done. If it involves anything more, they will get rid of them. We have a ton of referring lawyers just like that. 24 Consistent with a greater reliance on lawyer referrals, the HH1 lawyer is more likely to use mailings to other lawyers as a marketing tool and less likely to rely on advertising, especially in the Yellow Pages. Again, the largest percentage of this lawyer's caseload is made up of automobile accident cases, but at a rate much lower than that for the BB 1 and BB2 lawyers. Cases involving more complex matters, like medical malpractice and products liability, comprise a larger percentage of this lawyer's business than is the case for BB1 or BB2 lawyers. 25 In short, the HH1 lawyer handles fewer simple, mundane issues and is more likely to handle more complex matters. If he claims any particular specialized expertise within the broad area of a plaintiffs' practice, it is most likely in automobile accident cases, but again at a rate lower than that reported for BB 1 and BB2 lawyers. Like them, however, he is not likely to be certified by the Texas Board of Legal Specialization. The HH1 lawyer takes very few of his cases all the way to a verdict, but he is slightly more likely to do so than BB 1 or BB2 lawyers. Unlike the BB 1 lawyer, the majority of his cases are not concluded by a settlement before filing. Consistent with a caseload less reliant on simple, mundane cases, the 24. This is reminiscent of the BB1 lawyer-just over one half of his cases are settled before filing (51.2%). See Table Compared to BB 1 and BB2 lawyers, criminal (3.9%) and domestic relations cases (3.2%) are less important for the HH1 lawyer. A larger percentage of HH1 lawyers do not handle any of these cases. Of HH1 lawyers, 83.3% handle no criminal cases and 84.8% handle no domestic relations cases. By comparison, 77.2% of BB1 lawyers do not handle any criminal cases and 65.4% do not handle domestic relations cases. For BB2 lawyers, the percentages are 77.2% and 70.6%. Most HH1 lawyers (53.4%) also say they handle at least some medical malpractice. HeinOnline Tex. L. Rev

13 2002] Plaintiffs' Practice in Texas 1793 largest percentage is settled after filing, but before trial, and mediation is more important for the HI1 lawyer. The differences between the HH1 lawyer and the BB1 and BB2 lawyers do translate into a higher net income. His net income from his legal practice fell between $125,000 and $149, The HH2 Lawyer.-The HH2 lawyer is different from those in the lower echelons of the plaintiffs' bar hierarchy, and in some respects he is also different from the HI1 lawyer. He is unlikely to be a solo practitioner (see Table 4). Rather, he is likely to work in a small firm of two to five lawyers. His practice is almost exclusively plaintiffs' work done on a contingency fee basis, more so than lawyers in any of the other groups. Table 3 shows that he is the least likely to work primarily in a local geographic market and the most likely to work in a statewide or national market. One of these "heavy hitters" described his practice as "pretty well statewide... in a two-week period I tried three cases. I tried a legal malpractice case for the plaintiff... in Dallas; I tried a personal injury case in Amarillo involving two pick-ups that came together on a country road; and I tried an intentional infliction of mental distress case in Austin... All these were big cases." The HH2 lawyer's caseload is modest in size. He may have fewer than fifty open cases. He receives the lowest number of calls from potential clients per month and reports signing the lowest percentage to a contingency fee contract. He can do this because the average value of his contingency fee cases is far larger than the values for the other groups. Over one half of the HH2 lawyer's cases come through referrals from other lawyers, 26 and he may invest heavily in cultivating lawyer referrals and in marketing himself and his firm. Said one HH2 lawyer: Last year... we spent about $80,000 on programs that were designed to touch our former clients--our referring lawyers-and make sure that we were, you know, they were sure that we wanted their business... If my referring lawyers go away, I'm in trouble... I'll always have to be thinking about new referring lawyers... That's why we're spending a lot of time, energy, and money on them... We have this year a new business development program in which each lawyer sat down with... our consultant and said, okay, where am I most likely to be able to improve my business sources... We've been working to tailor a new business development program around each lawyer [in the firm] and then a couple of programs around the partners, like we're going to do a little golf tournament with some of tried-and-true referring lawyers. We're 26. For HH2 lawyers with highly specialized practices, almost all of their business may come from lawyer referrals. For instance, one Houston medical malpractice specialist said that "probably 90% of our cases are from other lawyers." The lawyer who is quoted above about his three trials in two weeks said that "over 75% of my practice was and is referrals from other lawycrs." HeinOnline Tex. L. Rev

14 1794 Texas Law Review [Vol. 80:1781 mentioning them in our newsletter... They really get stroked for sending us business. 2 7 Consistent with this, as Table 4 shows, the HH2 lawyer is by far the most likely to use mailings to other lawyers as a way of generating business.2 a As we might expect, referrals from former clients are much less important for the HH2 lawyer. Advertising is even less important, producing only 6.9% of cases. He is the most likely among the four groups of lawyers to use the Internet for marketing purposes, which is consistent with a greater reliance on lawyer referrals for business. 2 9 Unlike lawyers in the other three groups, this lawyer does not have the largest percentage of his caseload in automobile accident cases. In fact, as Table 4 shows, over 40% of HH2 lawyers handle no automobile cases. The largest percentage of his caseload is made up of medical malpractice cases, followed by automobile cases and commercial matters. Cases that are important for lawyers in the lower echelons of the hierarchy comprise only a small proportion of this lawyer's business. Criminal and domestic relations, for example, each comprise less than 2% of his caseload. Over 90% of lawyers handle no criminal work (91.9%) and no domestic relations work (91.2%).30 The HH2 lawyer, in short, handles very few simple, mundane issues, focusing instead on a smaller number of more complex and higher value cases. If the HH2 lawyer claims any particular specialized expertise within the broad area of a plaintiffs' practice, it is most likely in medical malpractice, rather than automobile. The next most likely reported area of specialization is litigation. While he, too, is not likely to be certified by the Texas Board of Legal Specialization, the HH2 lawyer is the most likely among the four groups to be certified. The HH2 lawyer takes few of his cases all the way to a verdict, but is more likely to do so than the lawyers in any of the other three groups. Consistent with a docket made up of more serious, complex cases, few of his cases are concluded by a settlement before filing. The largest percentage is 27. This lawyer's description of his firm's plans for getting business is n excellent illustration of how different the practices of HH2 lawyers are from those of BB1 lawyers. 28. A Dallas medical malpractice specialist sent his marketing brochure to every lawyer in private practice in Texas. A Houston medical malpractice specialist, more modestly, sent his brochure to every lawyer practicing in areas from Houston to San Antonio and south. 29. The lawyer who relies heavily on client referrals for business, of course, is not likely to want to use something as impersonal as the Internet. Instead, he does things that keep his name in the minds of his former clients, like sending birthday or holiday cards. In contrast, the HH2 attorney who relies on lawyer referrals wants information on his firm to be readily available to other lawyers (whether they know the HH2 personally or not) who are looking to refer a case to a firm with a successful track record. 30. In comparison, the percentages for BB1 are 77.2% not handling any criminal cases and 65.4% not handling domestic relations cases. For BB2, the percentages are 77.2% and 70.6%. In contrast, only 58.8% of HH2 lawyers handle no commercial cases, compared to 80.1% for BB1I and 71.3% for BB2; and 76.5% of HI-I2 lawyers handle no mass tort cases compared to 92.6% for BBI and 88.2% for BB2. HeinOnline Tex. L. Rev

15 20021 Plaintiffs' Practice in Texas 1795 settled after filing, but before trial or through mediation. The differences between the HH2 lawyer and those in the other three groups translate into a higher net income. His net income from his legal practice fell between $150,000 and $199,999. As we move up the hierarchy within the plaintiffs' bar, we find important differences in lawyers' practices. Practices in the higher echelons are very different than those in the lower echelons. How a lawyer gets his business changes, moving from word-of-mouth client referrals to lawyer referrals (and the use of marketing rather than advertising). Those in the lower echelons work mostly in a consumer market in which the person bringing the case to the lawyer is the injured party. Those in the higher echelons work mostly in a referral or a lawyer's market in which the person bringing the case to the lawyer is another lawyer-the referring lawyer. As we go from a consumer's market to a referral or lawyer's market, the geographic scope of a lawyer's practice broadens. The nature of business also changes, away from the simple, mundane and low-value cases to the more complex and higher value cases, and away from the mainstay of automobile cases to those involving more complex issues like medical malpractice, products liability, and commercial matters. As we move up the hierarchy, the lawyer receives fewer calls from potential clients on a monthly basis and signs fewer of those to a contingency fee contract. The lawyer becomes choosier about the cases he will take. And he is more likely to take a case to trial. As we will see in the next section, perceptions of and judgments about changes in the market environment also vary by where in the hierarchy a lawyer is situated. In Part Ill, we will see that the effects those changes have on lawyers' practices vary in a similar way. 11. Lawyers' Perceptions of Changes In The Market Environment Plaintiffs' practice has always been a precarious enterprise because the market in which these lawyers work is an inherently unstable one. The oneshot nature of their clients and an almost exclusive reliance on the contingency fee makes plaintiffs' lawyers' practices especially sensitive to changes in the law-both the law on the books (the formal law) and the law in action. Most basically, the law on the books creates, alters, or obliterates causes of action, and causes of action, in turn, define substantive markets in which plaintiffs' lawyers choose to work. 3t Changes in the law may provide new or enhanced opportunities for some plaintiffs' lawyers, but they can also put others out of business. 32 For instance, a number of lawyers we interviewed (BB1 lawyers whose practices are built on low-value automobile 31. See Daniels & Martin, supra note 2, at ; Jerry Van Hoy, Markets and Contingency: How Client Markets Influence the Work of Plaintiffs' Personal Injury Laityers, 6 INT'L J. LEGAL PROF. 345, 345 (1999) (arguing that plaintiffs' attorneys seek out clients based on markets that are defined by geography and substantive specialization). 32. See Daniels & Martin, supra note 2, at HeinOnline Tex. L. Rev

16 1796 Texas Law Review [Vol. 80:1781 cases) said that a change to no-fault automobile insurance in Texas would probably destroy their practices. 33 Also important in shaping the practices of plaintiffs' lawyers is the law in action or the broader legal environment in which plaintiffs' lawyers work. Here we are talking about the processes, rules, and "going rates" that define the ways in which most injury claims are handled. Few of these matters go to trial. Instead, most are handled through informal processes that lawyers and insurance companies have developed. 34 These processes have their own standards or "going rates" for valuing cases which, in turn, are usually tied to what juries decide in the few cases that do go to trial. 35 Lawyers may build their practices around these informal settlement processes and "going rates" for particular types of cases. For example, a lawyer may have a high-volume practice concentrating on lower value automobile cases-a practice built on a particular set of informal processes for settling cases without trial (less risk and less expense) and particular understandings about how much and what kind of damages can normally be expected for certain situations ("pain and suffering" being x times demonstrated medical expenses). 36 Changes in these informal processes and going rates can have a serious impact on lawyers' practices. Insurance companies, for instance, may see that plaintiffs are winning fewer of the cases that go to trial or that juries are awarding less in those that do. As a result, the insurance companies may take a much harder position in negotiating settlements or offer less money to plaintiffs. The practical effect of such a change is that less money will go to the plaintiffs' lawyer, who relies almost exclusively on the contingency fee. A Dallas lawyer with a higher volume practice told us, "Two years ago, the average [settlement] per case was $1,100 more for the routine auto case. That's pretty significant when you're doing small cases to begin with." The 1990s were a challenging time for plaintiffs' lawyers in Texas and elsewhere, as this practice area became even more precarious because of tort reform. 37 The tort reform effort includes not only the formal legal changes 33. As one such lawyer put it, "The next shoe to possibly drop is no-fault auto insurance... and that would put me out of business." 34. See HERBERT M. KRrrZER, LET'S MAKE A DEAL: UNDERSTANDING THE NEGOTIATION PROCESS IN ORDINARY LITIGATION (1991) (describing how some lawyers and insurance companies have handled personal injury cases); H. LAURENCE Ross, SETTLED OUT OF COURT: THE SOCIAL PROCESS OF INSURANCE CLAIMS ADJUsTMENT 5 (2d ed. 1980). 35. For a discussion of jury verdicts and "going rates," see STEPHEN DANIELS & JOANNE MARTIN, CIVIL JURIES AND THE POLITICS OF REFORM (1995). 36. For a discussion of the informal processes for settling such cases that includes the use of such "multipliers," see Ross, supra note 34, at It is important to note that such multipliers are not used rigidly. Rather, they are used to provide a framework in which to settle a matter. Id at In private correspondence regarding multipliers, Herbert Kritzer has emphasized this point. 37. See generally James Gilbert et al., Overcoming Juror Bias in Voir Dire, TRIAL, July 1997, at 42, 42 (arguing that "potential jurors come to court already influenced by deliberate propaganda aimed at discrediting plaintiffs and their lawyers"). HeinOnline Tex. L. Rev

17 2002] Plaintiffs' Practice in Texas 1797 made, but also the political and public relations campaigns waged by the reformers. Since those campaigns did much to affect the broader market environment surrounding civil litigation, plaintiffs' law,ers were exposed to events that affected their practices in numerous ways. 3 In the next section we will examine Texas plaintiffs' lawyers' perceptions of these changes and their consequences through a comparison of the BB1 lawyers and the HH2 lawyers described in Part I. Examining the lawyers at the "extreme" ends of the spectrum highlights the importance of structure within the plaintiffs' bar and shows that changes in the environment can have a differential impact. A. Perceived Effects of Fonnal Legal Changes Tort reform has been a major political issue in Texas since at least the 1980s. 39 Our interest is in the changes that occurred in Texas in the 1990s and how they may have affected plaintiffs' lawyers and their practices. In our survey, we asked lawyers whether each of a set of formal legal changes tied to tort reform and instituted in the mid-1990s, plus the 1991 changes in workers' compensation laws, affected their practices positively or negatively. Tables 5a and 5b present the responses for BB1 and HH2 38. Daniels &Martin, supra note 6, at See Joseph Sanders & Craig Joyce, Off to the Races: The 1980s Tort Crisis and the Lanv Reform Process, 27 HOUS. L. REV. 207, (1990) (describing mid-1980s tort reform efforts in Texas). 40. Specifically, we chose to focus on the six tort reform measures the Texas Department of Insurance (TD1) focuses on in its evaluations of tort reform for rate reductions purposes, plus the 1991 changes in workers' compensation. According to the TDI: In conjunction with the tort reform legislation enacted by the 73rd and 74th Texas Legislatures, article of the Texas Insurance Code was added by the 74th Texas Legislature. Article requires that insurers pass through to policyholders the savings that accrue from the tort reform legislation on a prospective basis. Article also requires that the commissioner of insurance hold a hearing on or before September 1 of each year to determine the percentage of equitable across-the-board reductions in insurance rates required of insurers writing lines and sublines of insurance addressed in article In addition, article requires the commissioner to 'assemble information, conduct hearings and take other appropriate measures to assess and evaluate changes in the marketplace resulting from the implementation of this article and to report findings and recommendations to the legislature'... In evaluating the effects of tort reform, TDI staff primarily focused on six pieces of tort reform legislation: (1) changes in joint and several liability; (2) changes in recovery of exemplary damages; (3) penalties for frivolous lawsuits; (4) changes in the Deceptive Trade Practices Act (DTPA); (5) changes in venue requirements; and (6) medical negligence reforms (considered only in connection with medical malpractice insurance for doctors and hospitals). TEXAS DEP'T OF INS., REPORT TO THE TEXAS LEGISLATURE: INSURANCE RATE REDucrnONS RESULTING FROM TORT REFORM (2000), available at http'l/ commish/lctortrptleg00.html (last visited Apr. 25, 2002). The TDrs website also includes an excellent short summary of each of these tort reform measures. See TEXAS DEP'T OF INS., 1997 TORT REFORM ROLLBACK INFORMATION: TORT REFORM LAWS (1997), available at http.// (last visited Mar. 30, 2002). For a discussion of HeinOnline Tex. L. Rev

18 1798 Texas Law Review [Vol. 80:1781 lawyers, respectively. While none of the changes we tested had a generally positive effect on the practices of either group of lawyers, not all had an especially strong negative effect either. For instance, at least three-quarters of the respondents in these two groups reported that the institution of sanctions for bringing frivolous lawsuits has had no effect on their practices. 41 The economic realities of a contingency fee practice should make frivolous lawsuits rare for lawyers like those in our survey who are plaintiffs' specialists. Over one-half of each group also responded that the introduction of expert witness and bond requirements for filing medical malpractice suits had no effect on their practices. 42 Once again, the economic realities of the contingency fee may explain this. Medical malpractice cases are expensive and risky, and as we saw earlier, BB 1 lawyers handle very few of them. As one BB1 lawyer said about medical malpractice cases, they "are way too technical... Easily you can spend $100,000 without blinking., and we don't have that kind of cash laying around." If a BB1 lawyer were to take a medical malpractice case, we would assume that he would be careful about choosing and preparing that case because losing it could put him out of business. HIH2 lawyers, some of whom are malpractice specialists, do handle more of these cases. These lawyers can afford to take higher value cases that cost more to prepare. They screen cases very carefully and take only a small number of the cases that come to them. TABLE 5A PERCEIVED EFFEcrs OF LEGAL CHANGES ON LAWYERS' PRACTICES (BB 1 LAWYERS) PERCENT OF RESPONDENTS Area of Change Positive No Effect Negative Workers' Comp (n=132)* 5.3% 19.7% 75.0% Punitive Damages (n=131)* 2.3% 47.3% 50.4% Medical Malpractice (n=131) 9.9% 52.7% 37.4% DTPA (n=129) 5.4% 46.5% 48.1% Venue (n=129)* 2.3% 57.4% 40.3% Joint and Several (n=131)* 5.3% 37.4% 57.3% Frivolous Suits (n=131) 7.6% 75.6% 16.8% * indicates that the difference in responses between BBI lawyers and 12 lawyers are statistically significant at.05 or better. the 1991 workers' compensation changes, see generally Tony Korioth, Workers' Compensation Law, 45 Sw. L.J. 697 (1991). 41. There is no statistically significant difference in the responses for the two groups of lawyers for this question (chi square=4.204, sig..122). 42. There is no statistically significant difference in the responses of the two groups to this question (chi square=1.233, sig..540). HeinOnline Tex. L. Rev

19 2002] Plaintiffs' Practice in Texas 1799 TABLE5B PERcEiVED EFFECTS OF LEGAL CHANGES ON LAWYERS' PRACTICES (HH2 LAWYERS) PERCENT OF RESPONDENTS Area of Change Positive No Effect Negative Workers' Comp (n=139)* 5.0% 46.0% 48.9% Punitive Damages (n=139)* 7.2% 24.5% 68.3% Medical Malpractice (n=136) 5.9% 58.1% 36.0% DTPA (n=136) 4.4% 45.6% 50.0% Venue (n=135)* 6.7% 31.9% 61.5% Joint and Several (n=139)* 5.6% 13.7% 80.6% Frivolous Suits (n=139) 5.0% 84.9% 10.1% * indicates that the difference in responses between BBI lawyers and HH2 lawyers arc statistically significant at.05 or better. The only other formal change generating a similar response pattern from both groups of lawyers is the Deceptive Trade Practices Act (DTPA). 43 However, neither group of lawyers handles many of these cases; for both, the mean percentage of caseload composed of these matters is under 4%. If, however, we look at those lawyers among all respondents to our survey (lawyers from all four groups) for whom DTPA cases make up 10% or more of their caseload, the picture changes. There are eighty-one such lawyers, and 71.6% responded that changes in the DTPA had a negative effect on their practices.4 The other four legal measures in Tables 5a and 5b did, apparently, affect the two different groups of lawyers differently. For each measure, the difference is statistically significant. 4s The changes in workers' compensation laws were felt more strongly by BB1 lawyers than by HH2 lawyers. Threequarters of the BB1 lawyers responded that those changes had a negative effect on their practices. Although Table 5a does not include this level of detail, almost two-thirds of BB1 lawyers (65.2%) said it had a strong 43. Again, there is no statistically significant difference in the responses of the two groups to this question (chi square=0.415, sig..812). 44. If we look at those lawyers among all respondents for whom medical malpractice makes up 10% or more of their caseload, the percentage saying that changes in medical malpractice had a negative effect on their practices does go up. But the difference is not as great as for DTPA. For the 164 lawyers for whom malpractice made up 10% or more of their caseload, 48.9% said the changes in the law had a negative effect on their practices. 45. For the difference between the two groups with regard to workers' compensation cases, chi square=21.633, sig..000; for punitive damages, chi square=15.791, sig..000; for venue, chi square=16.303, sig..000; and for joint and several liability, chi square=20.028, sig HeinOnline Tex. L. Rev

20 1800 Texas Law Review [Vol. 80:1781 negative effect. 46 Workers' compensation cases were a very important part of the practice of lawyers in the lower echelons of the hierarchy. The 1991 changes (which among other things placed new limits on attorneys' fees and who paid them) had a two-fold effect on the practices of these lawyers. These cases provided a regular source of income that covered a small practice's overhead. In addition, these cases created a client base that, in turn, produced referrals of new business. The comments of one BB 1 lawyer are illustrative: The difference was that I had at any given point in time twenty five to thirty five workers' comp cases. You make 25% [the pre-1991 fee] on it. You pay your office overhead and that funds the rest of your practice. That is the difference, I don't have that now [and] referrals from the workers' comp client base are kind of dried-up. In comparison, under one-half of HH2 lawyers responded that the changes in workers' compensation had a negative effect, and an almost equal percentage said their practices had not been affected by this formal change. 47 Three of the formal tort reform changes-caps on punitive damages, venue constraints, and limitations on joint and several liability-were felt more strongly by HH2 lawyers than by BB1 lawyers. Over two-thirds of HH2 lawyers reported that caps on punitive damages had a negative effect, compared to one-half of BB1 lawyers. In addition, an almost equal percentage of BB1 lawyers responded that the cap on punitive damages had no effect on their practices. Regarding constraints on venue selection, over 60% of HH2 lawyers responded with an assessment of a negative effect, compared to 40% for BB1 lawyers. Over one-half of the B31 respondents said their practices had not been affected by this reform measure. Finally, unlike the BB 1 lawyers, most HH2 lawyers said that new limitations on joint and several liability had a negative effect on their practices. These differences make sense in light of the differences between the types of cases these two groups of lawyers handle. Caps on punitive damages, venue constraints, and limitations on joint and several liability are likely to be more important for lawyers handling higher value, more complex cases. The practices of RB 1 lawyers, as we saw earlier, are built on simple, low-value cases (predominantly automobile accident cases), and BB1 lawyers work almost exclusively in local markets. Changes in venue rules, for instance, are not likely to pose a problem for such a practice. The practices of HH2 lawyers are very different. Constraints on venue selection can disrupt established working networks and make it more 46. For reasons of clarity, Tables 5a and 5b use a collapsed three-point scale. In the survey we used a five-point scale: strong positive, somewhat positive, no effect, somewhat negative, strong negative. 47. Where there was a negative effect for these lawyers, it was probably the referral network that brought to them third-party cases that emerged from workers' compensation cases. HeinOnline Tex. L. Rev