Holding Back The Floodtide: The Role Of Contingent Fee Lawyers
By Herbert M. Kritzer
Amid the ongoing debate about the supposedly "litigious American,"
there is no recent systematic assessment of the role of lawyers,
particularly contingent fee lawyers, as the gatekeepers of the civil
justice system. Yet such an assessment is crucial to understanding the
civil justice system, given that the only way most people can pursue
compensation or other redress through the courts, outside of small
claims venues, is by hiring a lawyer. Other than practice areas such as
divorce, hiring a lawyer most often means paying the lawyer on a
contingency basis.1 The nature of the
American contingency fee - the fact that it is actually a percentage or
commission fee - means that lawyers' economic self-interest is a major
determinant in how contingent fee lawyers exercise their gatekeeping
Lawyers as gatekeepers
This economic self-interest has led to the common image of the
contingent fee lawyer as a hustler or ambulance chaser. Undoubtedly, a
contingent fee lawyer wants profitable cases, 2 and there are a variety of ways to seek them
out. However, many cases that come to the lawyer lack merit or adequate
fee potential either because of
lack of damages or absence of insurance coverage. Simple economic
theory predicts that the contingent fee lawyer should decline such
How do contingent fee lawyers handle potential cases that the public
brings to them? How often and why do lawyers turn down cases? Other than
an occasional journalistic report, 3 we know
almost nothing about how, and with what result, contingent fee lawyers
screen potential cases. 4 A 1995-96
study of contingent fee legal practice in Wisconsin offers the first
systematic information on these and other questions. This study, which
employed survey, observational and interview methodologies, looked both
at lawyers who accept only contingent fee cases and at lawyers who
combine contingent fee work with work paid on some other basis.
The flood, or trickle, of phone calls
Screening potential cases is a key part of contingent fee practice.
At the extremes, Wisconsin contingent fee lawyers can receive thousands
of calls a year or less than one call a month. But what are the typical
Figure 1 shows the
number of calls by practice area received by Wisconsin contingent fee
practitioners. The figure reveals that almost a quarter (23 percent) of
all respondents receive fewer than 12 calls per year (less than one call
per month) compared to only 11 percent who receive 250 or more calls per
year (more than about one call per day). About 35 percent receive
between 12 to 49 calls per year (at least one call a month but less than
one a week), and another 30 percent handle between 250 to 999 calls per
year (more than one call a week but less than one per day). For purposes
of analysis, the survey assumes 50 weeks and 250 days per year.
Not surprisingly, the number of calls a lawyer receives varies with
the nature of the lawyer's practice. As Figure 1 shows, the volume of
calls for lawyers with personal injury plaintiff practices tends to be
much higher than for other practice areas, with most personal injury
lawyers receiving at least one call a week (although 15 percent report
fewer than one call per week). In contrast, about 75 percent of lawyers
who did at least some contingent fee work but whose practices did not
concentrate on personal injury plaintiffs work received fewer than one
call per week.
What happens when the phone rings?
There is considerable variation in how lawyers and law firms handle
the screening process. In most offices (64 percent), a lawyer handles
the initial screening. Typically, a receptionist will transfer a call to
a lawyer as soon as it is clear that the caller is a potential client.
If no lawyer is available, the receptionist might get some initial
information or simply take a phone number for a lawyer to return the
call. In another 26 percent of the offices, either a lawyer or a
nonlawyer handles the initial screening depending upon who is available
when a call comes in. Only 8 percent of the respondents reported that a
nonlawyer typically handles the initial telephone contact from a
potential client. As the number of calls increases, nonlawyers are more
likely to handle some or all of the initial screening.
Accepting potential cases
This initial contact is crucial, because lawyers decline about two
thirds (67 percent) of all rejected cases during the initial phone call.
Lawyers handling larger numbers of calls decline more on the first call.
For example, lawyers handling 1,000 or more calls per year decline 77
percent of eventually rejected cases during the first call. Lawyers with
fewer than 50 calls per year decline about half of the eventually
rejected cases during the first call. About 5 percent of the rejected
cases reflect a potential client who failed to appear at the first
scheduled appointment. Lawyers decline the balance of all eventually
rejected cases at or after the first appointment.
Looking at numbers of contacts
Figure 2 shows that
in the aggregate, 5 Wisconsin lawyers accept
as clients 28 percent of the potential clients who contact them. A small
number of high-volume lawyers and firms heavily influence this overall
acceptance rate. 6 Figure 2 shows that
acceptance rates vary depending upon the number of calls a lawyer
receives from potential clients. Lawyers receiving fewer than one call
per day accept about half of the potential cases; those receiving one to
four calls per day (250 to 999 calls per year) accept around 40 percent;
those receiving the largest number of calls (1,000 or more per year)
accept 10 to 15 percent.
Another way to view acceptance rates is to look at each lawyer's
individual acceptance pattern rather than to compute aggregate
acceptance rates. Figure
2 also shows the median acceptance rates for the same groups
discussed above. Looked at this way, the median lawyer accepts 43
percent of his or her potential cases. The difference between this
overall median and the aggregate figure reflects the fact that the
aggregate figure is more heavily influenced by high-volume practitioners
than is the median figure. In a sense, the aggregate looks at acceptance
rates in terms of the likelihood that a typical case will be accepted,
while the median looks at it in terms of the likelihood that a typical
lawyer will accept a case if it is offered.
Figure 2 masks the
variation from lawyer to lawyer, because even after controlling for the
number of calls a lawyer might receive, some lawyers accept a large
percentage of cases while others do not. This is clearly evident in Figure 3, which shows a
type of graphic display called a "box and whisker" plot or "boxplot." Figure 3 shows a box for
all lawyers (at the top) and a box for each comparison group (defined by
the number of calls the lawyer receives from potential clients). Four
components in the figure are noteworthy.
- The heavy vertical line in the middle of each box corresponds to the
median acceptance rate for each group, and shows the same values (in a
different way) as does Figure 2. The variations in
medians shown in Figure
2 also are evident here.
- The horizontal lines extending from each box (the "whiskers") show
the overall range of acceptance rates. For all groups except the highest
volume lawyers, Figure 3
shows that lawyers range from accepting almost no cases (0 percent) to
accepting all or virtually all cases (100 percent).
- The length of each box shows the range of "typical" acceptance
rates. Typical here means the group of lawyers falling in the middle
when lawyers are ranked from lowest to highest acceptance rates. Taking
all respondents, the middle group accepts from about 25 percent to
almost 70 percent of the potential cases, a spread of 45 percentage
points. The lengths of the boxes for most of the groups are somewhat
shorter than is the box for all respondents. The highest volume group
has the shortest box length, showing only a spread of 13 percentage
- The last noteworthy component is where the box is placed. Boxes
shifted to the left of center represent lower acceptance rates. The
ranges for the middle groups of low- and medium-volume lawyers (1 to 99
contacts per year) fall in the 30 to 70 percent range. In contrast, the
middle group among the higher volume lawyers (100 to 999 contacts per
year) fall in the 20 to 50 percent range, with the middle group of
highest volume lawyers (1,000 or more contacts) in the 5 to 18 percent
In summary, Figure 3
shows that, with the exception of the highest volume lawyers, there is a
great deal of variation in acceptance rates.
Looking beyond case volume. There are some
interesting variations in acceptance patterns that go beyond case
volume. Variations in acceptance rates by type of case, for instance, do
not show up in the statistical data.
For example, lawyers accept very few potential medical malpractice
cases. This was very evident from observing
lawyers over a three-month period. I saw lawyers consider 14
potential medical malpractice clients; only one of these potential
clients was offered a retainer agreement to sign, and that retainer did
not involve the malpractice aspects of the case. One of the lawyers I
observed spent a lot of time in phone calls with potential medical
malpractice clients, explaining that the reality of medical malpractice
compensation was very different from talk at cocktail parties. He would
laboriously explain that:
- negative outcomes did not equate to malpractice;
- proving negligence was extremely difficult;
- it was not necessarily clear that an error had significant
consequences (For example, did a failure to diagnose a cancer for six
months make any difference in the treatment and/or outcome?);
- temporary pain did not imply major damages; and
- even if negligence could be proved, the costs of pursuing a medical
malpractice claim were likely to exceed the compensation that could be
Other types of cases can be difficult to win or involve issues that
most nonlawyers and potential clients do not understand. As a result of
much of the rhetoric about the litigation crisis and tort reform, many
nonlawyers have distorted ideas of what constitutes a compensable
injury. For example, while weather-related slip-and-fall injuries are
common in Wisconsin, such injuries often are problematic with regard to
potential tort remedies. My observation at one firm occurred during
winter, and I overheard several calls from potential clients who had
been injured after slipping on snowy or icy walks. The lawyer handling
the calls spent much time determining when the fall occurred and
explaining to the caller that property owners have a period of time to
clear the walks before they become liable for injuries.
Lawyers also frequently turned down routine worker's compensation
cases. For many of these cases, even though the claimant can (and will)
collect benefits, there is limited fee potential for lawyers because by
statute they are only entitled to fees with regard to disputed benefits.
For many, perhaps most workplace injuries, there is nothing in
Reasons for declining cases
The foregoing discussion leads to the question: Why do lawyers
decline cases? The survey asked the lawyers what percentage of the cases
they declined was due to:
- lack of liability;
- inadequate damages or inadequate fee potential; 7
- combination of liability and damages;
- the case was outside the lawyer's area of expertise; and other
Figure 4 shows the
aggregate percentages for each of these four reasons. 8 As the first set of bars show, absence of
liability clearly is the most common reason for declining a case, alone
accounting for almost half of the cases declined. Inadequate damages
alone are much less likely, at least overall, to be the reason for
declining a case. While inadequate damages may be more important in some
types of cases, such as medical malpractice, even there my observation
of lawyers as they screened cases indicates that liability problems
Figure 4 shows that
liability issues loom largest for the high-volume practitioners, which
is not surprising. Their efforts to generate large numbers of contacts
lead to many calls from persons with injuries for which there is no
legal recourse. The greater concern about damages for those with low and
medium volumes probably results from many of those practitioners not
being proficient in handling contingent fee cases and not being set up
to handle smaller cases, which require the efficiencies of volume.
Gatekeeping and its implications
Contingent fee lawyers do function as gatekeepers to the civil
justice system for individuals who believe that someone has caused them
harm. Simply put, the typical lawyer declines more cases than he or she
accepts. While some lawyers do aggressively seek clients, those same
lawyers turn away most potential clients who call them.
Some civil justice system critics contend that virtually anyone
seeking representation eventually could find a lawyer willing to take
any potential case on a contingency basis; however, there is no
systematic evidence supporting this contention. Only seven out of the
465 lawyers in the survey for whom an acceptance rate could be computed
took all of the cases they were offered, and six of those lawyers had
had contacts from six or fewer potential clients.
A potential client who is turned away from one office can contact
other firms in the hope of finding a lawyer willing to take the case.
Some people do contact many lawyers, and some people do find a lawyer to
take a case after it has been declined by a first or second or third
lawyer. There was at least one case that was declined by one of the
lawyers I observed and accepted by another. I also listened in on
several calls from potential clients who reported that another firm had
not wanted their cases. Still, I know of no systematic evidence that
large numbers of people engage in extended searches to find a lawyer to
take a case that a first or second lawyer has declined.
One recent study of medical malpractice claims in Florida found that
almost half of the claimants had contacted more than one lawyer before
signing a retainer, but fewer than 5 percent contacted four or more
lawyers (16 percent contacted three or more). 9 Another recent national study of victims of
all types of injuries found that of the claimants who hired a lawyer, 26
percent contacted two lawyers but only 5 percent contacted three or
One important function of the screening process is to correct
distorted perceptions about compensation levels. During the observation
in lawyers' offices, it was clear that news coverage and reform rhetoric
has led some consumers to have wildly unrealistic views of the
compensation for various injuries. In response, lawyers repeatedly
explained to potential clients, "It's a good thing your case is not
worth all that much, because if it was it would have to mean that you
were in much worse shape than you are. Instead of a shoulder sprain, it
would probably mean that you were a quadriplegic."
The unanswerable question is whether lawyers turn away too many or
too few potential clients. The contingent fee system encourages
potential clients to contact a lawyer because the client will bear
relatively little economic risk if the lawyer says the case is worth
In types of cases where consumers are unfamiliar with issues like
causation, responsibility and compensable injuries, lawyers will have to
turn away many callers. Lawyers also may turn away potential clients who
have valid cases but that do not meet the lawyers' criteria of fee
potential. It is unlikely that these potential clients would be willing
to pay a lawyer hourly to pursue such cases.
Lawyers inevitably will make some mistakes in their screening
decisions, either turning away good winnable cases or accepting
unwinnable cases. Lawyers make these decisions based heavily upon their
own interests, but in doing so they shield potential clients from
substantial risks they might otherwise have to bear.
Many recent litigation reform proposals would alter the incentives
driving contingent fee lawyers' decisions to take or decline potential
cases. Demands for such reforms come in part from the widely held
perception that lawyers bring too many cases that should not be brought,
particularly in areas like medical malpractice. This misperception
persists even though lawyers are reluctant to take medical malpractice
cases, as noted earlier.
Medical malpractice presents an interesting dilemma. As it turns out,
even if lawyers accept only a small proportion of unmeritorious cases
and a large proportion of meritorious cases, the mix of accepted cases
is likely to involve a large number of cases ultimately found to be
For illustrative purposes, assume that 10,000 people sustain injuries
during medical treatment, but only 500 (5 percent) of these are due to
negligence. Further assume that 1,000 (10 percent) of injured patients
seek legal representation regardless of whether the injury was due to
negligence (How is the patient/client to know?); 50 of these patients
will have been injured due to negligence and 950 not due to negligence.
After initial investigation, lawyers correctly accept 90 percent, or 45,
of those 50 patients whose injuries are due to negligence and
incorrectly accept only 10 percent, or 95, of those 950 patients whose
injuries are not due to negligence. This means that even though the
lawyers make the correct decision 90 percent of the time, only 32
percent of the cases they accept will turn out to be due to negligence.
Understanding the gatekeeping role of contingent fee lawyers in the
civil justice system is crucial to finding ways to make the system work
more fairly and efficiently. An irony of some recent litigation reforms
aimed at reducing the number of cases that contingent lawyers pursue is
that many of those reforms actually can make the system look worse. For
example, a frequent concern about the civil justice system is that jury
verdicts have skyrocketed in recent years (we do not know whether that
is true in Wisconsin). Litigation reforms that make lawyers more
cautious and selective in accepting cases will lead lawyers to seek out
those cases with the largest, surest payoffs. 12 The result could be a decline in the number
of cases being brought or going to trial, but a sharp increase in the
size of verdicts and settlements. Proposed reforms must include the
gatekeeping calculus if we are to fully understand the impact of changes
to the civil justice system.
||wisc kritzer polisci edu Herbert M. Kritzer is
professor and chair of political science and professor of law at the
University of Wisconsin - Madison. He has conducted extensive empirical
research on the American civil justice system and on other common law
1 See Herbert M. Kritzer, The Justice Broker:
Lawyers and Ordinary Litigation, 58-59 (New York: Oxford University
Press, 1990), reporting that relatively few individual litigants use fee
structures other than contingent fees for nondivorce cases; even in
practice areas such as contracts, contingent fees are the most common
type of fees for individuals.
2 See Michael J. Saks, Do We Really Know
Anything About the Behavior of the Tort Litigation System - and Why
Not?, 140 Iowa L.R. 1147 at 1190-92 (1992).
3 Mark Crane, Lawyers Don't
Take Every Case, Nat. L.J. 1 (Jan. 25, 1988).
4 The only published systematic
study is more than 25 years old. That study only dealt with medical
malpractice cases. It found that lawyers turned down seven out of eight
medical malpractice cases they screened. See Stephen C. Dietz, C. Bruce
Baird and Lawrence Berul, The Medical Malpractice Legal System,
Appendix, Report of the Secretary's Commission on Medical Malpractice,
95-101 (Washington, D.C.: U.S. Dept. of Health, Education and Welfare
(OS) 73-89, 1973).
5 The aggregate figures are
computed by adding all of the contacts the lawyers reported and all of
the cases the lawyers accepted, and dividing the latter by the former.
For all lawyers, the aggregate number of contacts was 63,574 and the
aggregate number of cases accepted was 17,811.
6 One extreme outlier that reported
an extraordinarily high contact volume and an extremely low acceptance
rate has been omitted from the analysis; inclusion of that one
respondent would in itself substantially change some of the patterns
7 This language was meant to
capture cases in which there were problems with finding a source of
compensation (that is, lack of or inadequate insurance coverage).
8 For information on how the
aggregation was done, see supra, note 5.
9 Frank A. Sloan et al., Suing
For Medical Malpractice, at 75 (Chicago, IL: University of Chicago
10 Deborah Hensler et al.,
Compensation for Accidental Injuries in the United States, at
133-34 (Santa Monica, CA: The RAND Corp., 1991).
11 This illustration is based on
Saks, supra note 2, at 1193-95.
12 Id., at 1192.