An article in the West Virginia Record discusses a survey of physicians complaining about questionable expert witnesses in medical malpractice cases. For some reason, physicians seem to think that experts will say whatever they’re paid to say. But the president of the West Virginia Trial Lawyers Association denounces the survey, including the doctors’ complaints about experts being paid on contingency:
“And you can’t have contingency experts. I abhor that, anyway. There are State Bar rules are [sic] against that.”
In fact, pretty much everyone agrees that it’s unethical to pay expert witnesses on a contingency fee basis. Most states seem to have explicit ethical rules against it; New Jersey certainly does.
But how effective do you think those rules are? They didn’t stop Nagel Rice and Mazie, a New Jersey plaintiff’s law firm, from trying to weasel out of paying its expert witness recently for his work on a med-mal case, leading the expert to sue the firm for his fees. Why did Nagel try to get out of paying? Because, as Nagel admitted in his testimony in that case, they had lost the med-mal lawsuit:
And I said, “And in addition to that, we lost the case. It’s cost my firm over $100,000 in out-of-pockets.” I said, “So, I want you to consider two things: one, it was your first time on the stand; two, I think your 17 hours is really heavy-handed; and, number three, we took a blood bath in this case. And what I do with experts over the course — I’ve been doing this almost 30 years is that where you take a huge loss, experts will virtually always work with you.”
In case that wasn’t clear, he clarified, according to the New Jersey Law Journal (subscription required):
Nagel says his firm does not seek discounts from experts on losing verdicts. Rather, expert witnesses who have an ongoing relationship with his firm tend, of their own volition, to increase their bills in the event of a victory and to cut them after a defeat.
Yup. Spontaneously. “Of their own volition.” If there’s a difference between charging more if you win/less if you lose, and a forbidden contingency, let me know.
Incidentally, perhaps Nagel ought not to have invested $100,000 in the med-mal case in the first place, without doing a little due diligence. One reason that they might have lost was because the plaintiff’s claim that she suffered severe back pain and was permanently disabled by her doctor was successfully undermined by the defendants. As explained by the Appellate Division (PDF):
Video surveillance tapes showed Meegan walking, driving, bending over to talk to children, and lifting her daughter’s bicycle into the back of a car, all without any difficulty whatsoever.
Oops. Pesky facts.
30 Comments
Did you catch this nugget:
One of the bases for appeal was that the “judge erred in failing to tell the jury that Dr. Taylor had malpractice insurance for this claim.”
IANAL, but I always thought the plaintiff’s argument went like this:
1) The defendant hurt me
2) This is how much he hurt me
There is no third step that states
3) This is how much insurance he has
Having been an Expert Witness (not in a medical case), I came under a fair amount of pressure to re-word and change emphasis on certain things in my written report.
On one of three issues, I was pursuaded that the wording I used could be misinterpreted, and changed it accordingly. But otherwise no, Ethics is not just a county next to Thuthex in England.
The issue never came to trial, it was obvious where liability lay, and it was also obvious that the most of the fears of the people paying me were groundless.
Never attribute to Malice what is adequately explained by Incompetence.
Computer Forensics is challenging, requires the same meticulous care and documentation of each step that you find in Bomb Disposal, and OMG how it PAYS! A year’s salary for a month’s work, and I was told I could have quadrupled my fee.
Without detracting from the many good points made in the West Virginia Record article, it was misleading in one respect. It quotes the Executive Director of CALA (twice) criticizing a radiologist who gave opinions in numerous cases “without ever seeing the patients”. What it and the CALA rep overlook is that radiologists always do their interpretations and provide their reports without seeing the patient. That is how their job is done in normal everyday medical practice.
Two quick points:
1: “For some reason, physicians seem to think that experts will say whatever they’re paid to say.” I believe that problem occurs with defense witnesses, too.
2: In my stint at a personal injury law firm, I saw several expert witnessess cut their fees when a case was lost or settled for less than was expected. But I *never* saw one raise his or her fees in case of a win. The expert witnessess were usually hired at an hourly rate, and sometimes on a flat-fee. I would see a breach of duty to the client if the attorney let the expert unilaterally raise contractually agreed upon fees.
I have been following your site for some time now, and while I often agree with the premises of your various articles, here I have to disagree.
I don’t see how your skepticism (concerning this firm’s experience with experts adjusting fees according to the firm’s result) is justified. Lawyers often do the same thing, even where the agreement is not based on a contingency. The practice is a simple recognition that the patient/client’s ability to pay has likely been severely reduced by the result in Court.
As for your insinuation that the case ought never to have been brought to trial, again, I cannot see how you can make this assessment knowing nothing about the file. Video surveillance of the type referred to in your article is often withheld from plaintiff counsel under rules that allow this where the evidence goes to the credibility of a witness.
Our legal systems in Canada and the U.S. may not be perfect, but what you reveal here is nothing that deserves the criticism you imply.
Franco, the problem isn’t the videotape showing her to be healthy. The problem is the fact that she’s healthy.
As for a witness altering fees based on outcome, even if not against the rules, that’s something a jury would be entitled to know.
The problem with experts reducing their fees if the side for which they testify loses is that, if this becomes a regular practice, equivalent to contingency, experts will have a financial interest in the outcome of the case. Insofar as they are witnesses rather than advocates, this would be highly improper. If it happens only once in a while, when an expert testifies for impecunious plaintiffs who lose the case much to his surprise, it might be alright. A potential solution, of course, is for experts to testify and be paid by the court, not the parties.
Bill, I like the idea of experts being paid by the court, as it would prevent one side from financially outgunning the other. Any suggestions on how to ensure neither side can game the system, especially in jurisdictions in which judges are biased towards plaintiffs or defendants?
I just finished working a case in Mississippi where the plaintiff’s expert filed a lien against the plaintiff’s future award or settlement and admitted in deposition that she was working on a contingency basis.
Does Justinian realize how jaw-dropping his remark is? I discuss at Point of Law.
Justinian, I think the point was that fee negotiation is as much a part of the ongoing business relationship between the two parties (the law firm and the expert) as it is the up-front agreement. The expert may reduce his or her fees if the case is lost, because that would earn him the respect of the law firm and encourage them to give him their “business” later. It’s good “customer service”. The law firm may choose to increase the amount they pay the expert if a case is won, because an expert that is as much a business partner as a witness deserves some of the loot, making the expert more likely to want to work with the law firm in the future. I don’t think the experts unilaterally raise their fees; I think they simply do it on paper at the suggestion of the law firm.
But I too find serious ethical problems in these arrangements.
But, you know, even if the relationship between law firm and expert witness were heavily controlled, and experts compensated uniformly and without ties to whether the case was won or lost, the simple fact that the law firms could choose to hire or not hire them in the future is still financial incentive to skew your testimony. There is such a thing as a plaintiff-friendly expert witness (just as there are defense-friendly ones), and law firms seek these people out when they’re looking to hire an expert.
Franco, is the expert hired by the law firm, or by the client? If the client’s paying the bills, it makes sense to negotiate something reasonable if they aren’t likely to be able to pay. But if the client is the law firm, I doubt they’re in a position where they don’t have the money to pay their expert. Yes, they may be taking a hit on that particular case, but that’s a risk they chose to take, and they almost certainly are prepared to absorb it.
Ted, since you don’t have comments enabled at POL, I’d appreciate it if you’d post the following for me:
The law firm in question was in Texas, not in Michigan. I’ve never worked for a Michigan law firm.
To save you the trouble, the applicable rule is 3.04:
“A lawyer shall not:
(b) falsify evidence, counsel or assist a witness to testify falsely, or pay, offer to pay, or acquiesce in the offer or payment of compensation to a witness or other entity contingent upon the content of the testimony of the witness or the outcome of the case.”
I am not privy to the exact circumstances surrounding the fee drops, but I was present during one conference call in which the expert on his own offered to drop his fee because of a smaller-than-expected settlement. As I read 3.04, it’s not a violation for the attorney to accept it; paragraph (b) isn’t mentioned in the comments. The acceptance of the lower fee also doesn’t appear to violate Texas Ethics Report 458: http://www.law.uh.edu/Libraries/ethics/Opinions/401-500/O458.html
Ted, even if you disagree with my interpretation of the rules, I hope you’ll acknowledge that any ethical failure was my employer’s, and not mine.
“Any suggestions on how to ensure neither side can game the system, especially in jurisdictions in which judges are biased towards plaintiffs or defendants?”
The system-gaming would have to take place during expert selection, since there’s no way to influence them by payment. The rules would have to outline procedures for coming up with a mutually-agreed-upon expert, and insofar as the rules could be made proof against system-gaming, that’s where it would be done.
The important part of the system is not whether there is a contingency fee for the testamony or not, but whether the Jury knows the expert’s potential motivation. The problem with the present system is that contingencies exist but are hidden. Even when known to the other side, it would be likely impossible to bring this information to the Jury so that the incentives of the expert can be properly weighed.
I read Texas Ethics Report 458 as fairly clearly barring attorneys from entering into such agreements: “witnesses should always testify truthfully and should be free from any financial inducements that might tempt them to do otherwise.” And, of course, the relevant opinion is Opinion No. 553: “It is clear under Rule 3.04(b) that a lawyer cannot acquiesce in the payment of compensation to a witness contingent upon the content of the witness’s testimony or upon the outcome of the case. An expert witness can be paid a reasonable fee for his or her services under Rule 3.04(b)(3), but Rule 3.04(b) prohibits use of an expert witness who has a contingent interest in the outcome of the case.” I’ll make the geographic correction. (I note that your blog has yet to make several corrections, while OL and POL make same-day corrections when errors are noted.)
The POL post identified you as a paralegal, and people understand that paralegals have no control over the hiring and payment of experts.
David wrote:
“The law firm may choose to increase the amount they pay the expert if a case is won, because an expert that is as much a business partner as a witness deserves some of the loot, making the expert more likely to want to work with the law firm in the future. I don’t think the experts unilaterally raise their fees; I think they simply do it on paper at the suggestion of the law firm.”
I would be astonished if a law firm suggested an expert raise their fees, either before or after the testimony.
And even if I as a physician happened to be the recipient of such a preposterous offer, I would vociferously refuse it because to accept would be as unethical as to lower my fees in the case of a big loss so as to secure future business with this client firm.
As an attorney, if I were hiring a witness who made such an offer (as to lower his fees) I would question his/her ethics, and never ask that witness to work for me again, no matter how cheaply. And if the expert tried to raise fees in the event of a big win, I would not hesitate to report the “expert” (be they defense or plaintiff) to his or her specialty society and state medical licensing board. Every medical association’s ethics rules for expert witnesses prohibits contingency fees, and these are just examples of same.
As was pointed out, to some extent every expert is already acting unethically and certainly flirting with contingency when s/he agrees to testify in a case in which his or her testimony cannot be fully supported by the literature and other evidence of standard practice by peers. Or even when s/he agrees to review a case, but only accept payment in the event that s/he can support the case. A great article which illustrates this, though not exclusively in the medical setting, is
“Opinions for Sale: Confessions of an Expert Witness” by Moss, http://www.legalaffairs.org/issues/March-April-2003/review_marapr03_moss.msp
An old yet still relevant, SUPERB law review article which covers all the myriad ways in which experts (be they defense or plaintiff) consciously or unconsciously operate on contingency with their “business partners” instead of acting as neutral educators, is Samuel Gross, 1991 WILR 1113-1214.
I have also written on the subject in Emergency Medicine Clinics of North America (24(2006), 715-731.
Thanks for making the geographic correction, but I believe you may want to rethink your analysis, as
553 doesn’t apply to this situation either.
The agreement was for a physician’s services at a particular hourly rate. Of his own volition, the physician offered reduce his invoice. Since the original fee agreement was not contingent upon the outcome of the case, I don’t see a violation of Texas rules.
A physician that gets one rate when he wins and another rate when he loses has a de facto contingent fee as discussed in both David’s original OL post and my POL post.
To be specific, Justinian, the ethics rules prohibit paying contingency fees, not merely entering into contingency fee agreements at the beginning of a case. You can’t get around the rules by putting a legitimate agreement on paper and then altering it orally later.
Ted, I don’t disagree with you about de facto contingent agreements. I just want it to be clear that there was no contingent fee agreement with the expert in this case, de facto or otherwise.
I also wanted to thank Dr. Andrew for the link to “Opinions For Sale:” as it was a great read.
You have a habit of Argument Clinic techniques, Justinian. Repetition of a statement that has been rebutted several times without acknowledging the rebuttal is trolling, not argumentation. Twice you have described a contingent fee arrangement with the expert where the expert and attorney agreed that the expert’s fee was based on the success of the case. That you refuse to acknowledge that that is what you have described is your problem, not mine.
Justinian,
Your usage of “de facto” leads me to beliv that you don’t know what it means. Either that, or Ted’s last post (about simply repeating rebutted statements without acknowledging the rebuttal) is spot on.
Care to tell me which it it?
Ted, you are putting words in my mouth. I *never* said or implied that there was any agreement, either oral or in writing, in which the expert’s fee was linked to the success of the case.
I am not denying that such agreements sometimes happen, but I am unequivocally stating that such an agreement never happened in THIS INSTANCE.
For whatever reason – perhaps sympathy for the plaintiff, perhaps hoping for future business, or perhaps out of guilt for padding his invoice – the physician in question offered on his own to reduce his invoice because the client got a small settlement.
You have yet to acknowledge what I’ve actually written, let alone rebut it “several times.” Perhaps you’re assuming the attorney I worked for tried to skirt the rules and enter into an under-the-table contingency agreement, but such an assumption can only be based upon your own prejudices towards plaintiff’s lawyers and not upon any evidence I’ve presented.
For crying out loud, Justinian, your words are right here in black and cream on this very page: “In my stint at a personal injury law firm, I saw several expert witnessess cut their fees when a case was lost or settled for less than was expected.”
For reasons I explained, that’s the economic equivalent of a contingency fee agreement.
Is it possible that a lawyer accused of these facts could escape regulatory sanction? Well, given Texas’s record of not disciplining attorneys for egregious fraud (e.g., the Baron & Budd Script Memo and Fabila v. Chrysler), it’s certainly possible that the disciplinary authorities would also ignore these particular facts. It doesn’t change the reality that it is economically indistinguishable from transactions that are explicitly barred by the rules. If the regular pattern and practice is to have these discounts (and, as you said, you saw it “several” times in your short employment history), and they’re not disclosed, it’s also a fraud on the court. There’s no reason to perceive the transaction as any less unethical because the expert suggested it first, and you haven’t provided one, even as you’ve agreed that it’s a de facto contingency fee agreement.
WHO suggestd it is completely irrelvant, JL.
If it is commonplace for the fees paid to be higher on a win or big settlement and lower on a loss of small settlement, no matter who suggests the changes, it is de facto contigency fees.
Again, as has been said several times now, WHO makes the changes in the pay is completely irrelevant; the “WHO” question is the defense you keep coming back to.
OK, I’ll make this my last post in this thread lest it go on forever.
1: I am only privy to the exact nature of the reduction in ONE case, in which I was present during the phone call in which the expert offered to drop his fees. I know for a fact there was no prior agreement in place regarding raising or lowering the fees dependent upon the outcome of the case. The expert had already received payment for a previous invoice prior to the case being settled.
2: Any time ANY fees were reduced, it was fully disclosed and signed off by the client. I NEVER saw fees increased, even in one case that settled for six figures higher than expected.
3: I did not in any post agree that this instance was a contingent fee agreement. There was no prior written or oral agreement that the expert’s pay depended upon or would be modified in any way by the outcome of the case. I cannot answer whether or not in the other instances I saw this happen there was or was not such an agreement, as I wasn’t present.
4: From time to time, we were able to convince treating physicians, ambulance companies, etc. to lower their bills, too. The savings was disclosed to and authorized by the client, who then received a larger settlement. Since the client entered into the agreement with those service providers prior to contacting us, I don’t see an ethical violation.
5: In some cases, WE dropped our fees in order to ensure the client received a fair settlement. In one case small case I worked on, we waived all of our fees. That’s not unethical, either. It was just us trying to do right by our clients.
7: I have never denied that de facto contingency fee agreements may occur in the industry, and if they do they are unethical. I am fairly confident they didn’t occur at my law firm because quite frankly, we rarely had any cases big enough to warrant one; $1,500 in expert fees isn’t that big of a deal.
7: Thanks for the links about Texas. In my experience there, I found the judicial system in Texas to be ridiculously corrupt and full of ethical violations. This is just more evidence.
Deoxy and others: If you care to continue this discussion via email, you are more than welcome to do so, or you can bring it to my comment thread. Out of respect for Ted and Overlawyered, I’ll drop it here.
Justinian, you lose a lot of credibility when you contradict yourself within the same comment thread and fail to acknowledge it. And it’s offensive when you refuse to engage what other commenters actually say, and instead make irrelevant points (such as #3 and #5) that have nothing to do with the underlying discussion; that’s the sign of trying to muddy the discussion.
But you do interestingly dig yourself deeper with another irrelevant point, #4, since it suggests that settlement negotiations were done in bad faith by misleading the opposing party about the true extent of the economic damages.
I said I wasn’t going to post another comment. I hope you’ll forgive me but I can’t let the “dig yourself deeper” comment stand without response.
We settled the case, got the check from the insurer, and then made arrangements to start paying the bills. At that point is when the fee was reduced, not prior to or during settlement negotiations, so we mislead no one.
And btw, point 3 IS on topic because the topic shifted to an attack on the actions of my former employer. More fully describing those actions is certainly relevant.
And to all, a good night.
Sandbagging is sandbagging. The plaintiffs’ attorneys are repeat players and surely know that the bills they’re showing to defense counsel do not reflect the amounts that will be negotiated.
Your #3 is still irrelevant, because the distinction you make is without an economic difference when the experts are repeat players and the practice of fee reductions after the fact are commonplace.
Not to keep beating this horse…but I am just blown away.
JL first describes his firm as paying an expert on what is very simply a contingency basis. there is no need for creative interpretation here, it is a SIMPLE financial concept and Ted is right on that rebates and bonuses related to outcomes fit that definition precisely…as almost everyone here seems to understand.
Then, he comments on how disturbed he is by the “unethical Texas legal system.” Finally, he defends the forbidden contingency expert agreement as “doing right by our client.”
your firm WAS the “unethical, corrupt” party in this case…no matter who you were “trying to do right by.”
And by the way…this expert was “doing right” for himself, not your client: by appeasing a long term client so he can keep running from court room to court room picking up checks…