The Risks of Malpractice Cases
The pattern of returns lawyers obtained in medical malpractice cases
highlights the relationship between risk and effective hourly rates. One
of the observed lawyers was working on a large medical malpractice case.
At one point we worked through the likely outcomes of the case and their
probabilities (these ranged from a 50 percent chance of getting nothing
to a 10 percent chance of getting $8 million). We estimated that his
"expected" fee was $500,000 (although his actual fee could range as high
as $1.7 million under the rules governing legal fees in medical
malpractice cases in Wisconsin). Given the amount of time the lawyer had
devoted to the case, and what was yet to come, we estimated that while
he might make as much as $1,100 per hour, his expected effective hourly
rate was $330.
When later examining the 40 medical malpractice cases in the sample
from the survey, the median effective hourly rate was only $38, which is
what is shown in Figure 1.
However, this rate reflected in part that 45 percent of the medical
malpractice cases resulted in no payment at all. The maximum effective
hourly rate reported was $2,900; and 10 percent of the cases had
effective hourly rates of $1,000 or more. The mean effective hourly rate
was $334, and the aggregate effective hourly rate across all 40 cases
was $338 per hour. Medical malpractice work produces a very good return
on the investment of the lawyer's time, but a lawyer faces some very
substantial risks in undertaking this work.
Wisconsin Lawyer
