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    Wisconsin Lawyer
    August 01, 1997

    Wisconsin Lawyer August 1997: The Risks of Malpractice Cases

    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.


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