How Are Medical Malpractice Defense Lawyers Paid?

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Many variables factor into the price of a defense attorney and the mechanics of how they will be paid. In cases of medical malpractice, the defense attorney is selected from the liability insurance company’s stable of lawyers or firms. This favored group of firms handles all of the litigation dealt with by the insurance company. These attorneys have coined the term “insurance defense” to refer to this realm of litigation, and although they may not work exclusively for the insurance company, it constitutes a sizable chunk of their work. It may very well be their financial “life blood.” Because these attorneys’ duty is to defend the physician – but they are commissioned by the insurance company – certain problems arise, such as a conflict of interests and somewhat divided loyalties. Whereas the plaintiff attorney works exclusively for their client, the defense attorney answers to a company whose chief concern is their own financial well-being, not necessarily the professional reputation of the accused. Furthermore, these defense attorneys may be handling more than one case at a time.

Medical Malpractice Defense Specialists

If a physician is insured and a claim is brought against him or her, the insurance company will supply them with a defense specialist. In theory, the defense attorney’s primary duty is to the client they are defending, but it’s the insurance company that signs off on his paycheck. In short of that defendant ever being sued again for malpractice, the defense attorney is looking at one-time customer – their continued employment depends on how well they protect the interests of the insurance company, not necessarily the career of the physician. If a legal move may be beneficial to the client but costly to the insurance company, they may advise the defense lawyer against it.

In many cases, the insurance company may effectively “own” the law firm handling the defense. Despite operating under the name of its proprietary attorneys, (Smith, Jones & James, for example), these attorneys are paid employees of Big Liability Insurance Company. The depiction of divided loyalties may be too generous, as the lawyers’ loyalties might be decidedly unilateral.

In other areas of defense litigation, the defense lawyer’s pay will hinge on a few key elements: the relative complexity of the case, their experience in the field, and geography (a Manhattan attorney will charge more than an attorney in rural Oklahoma, generally speaking.) Their performance in the case will evidently affect their professional reputation; their duty is to the would-be client who has solicited their services and will be reviewing them in the aftermath of the case. They may ask for an up front legal fee, the median of which is $1,500, according to consumer reports. The cost for full representation is usually more, in the neighborhood of $2,000 to $3,500. Some lawyers negotiate an hourly fee structure, in which their client pays them a fixed sum per hour of labor spent on the case. A good ballpark figure for an hourly defense attorney fee is $150, although this could be significantly more depending on the location and nature of the case.

Assuming Risk in Medical Malpractice Cases

Contingency fees are not foddered cases. These are conditional fees in which the lawyer is only paid if they obtain a favorable outcome in your case. These are normally used in cases of prospective plaintiffs in personal injury cases who do not have the working capital to commence their claim, so they secure their attorney with a contingency fee – promising the lawyer a portion of the settlement should they win the case. Contingency fees have a number of advantages and drawbacks, with the majority of advantages being allotted to the plaintiff who is taking on no financial risk.

The attorney, however, assumes a great deal of risk when they take on a contingency fee case, and for this reason, they charge as much as 45% of the final settlement to compensate for the risk of taking the case. If the potential reward were too paltry, it would likely be difficult to find plaintiff attorneys who would enter into contingency fee agreements. Nevertheless, contingency fees have no place in defense litigation. This is the territory of fixed fees, advances, retainers and hourly bills.

Due to the fact that prospective ‘damages’ (monetary awards from the court) are not an element of defense litigation, there is no settlement to be used a bargaining chip. Contingency fees do certainly motivate the prosecution to provide the best possible representation, in part because their own financial interest is at stake. Regardless, the plaintiff benefits from a higher caliber of zealous and thorough legal representation. Contrastingly, defense litigators have no such fiery motivation to provide the best possible representation. This is not to say that defense attorneys in medical malpractice cases poorly represent their clients. On the contrary, the majority of malpractice suits are successfully defended, dropped, settled or dismissed due to the efforts of these attorneys.

The future of their legal careers and relationship with the insurance company hinges on their ability to secure a favorable result for the defendant. However, the best result for the insurance company will be favorable for the defendant by default although it may not be the best result for them. Because their payment is certain (unlike medical malpractice plaintiff attorneys), there is no financial incentive for the defense attorney to aggressively defend the client with the same zeal. One might say that their secure financial relationship with the insurance company breeds a degree of complacency in the courtroom. Insurance defense attorneys are usually paid less than defense attorneys at private firms who have no relationship with an insurance company. In exchange for lower pay, they have the certainty of constant work from the insurance company. Private attorneys charge more for their services but are able to offer a more personalized and focused defense because they answer directly to the defendant who is paying them. The hourly rate for an insurance defense attorney may be between $175 and $200. A private defense attorney may cost $300 an hour.

In their rules of professional conduct, the state of Washington explicitly prohibits those who pay lawyers to render legal services to someone else from directing that lawyer’s professional judgment.

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