Legally Speaking

March 1, 2004 by  
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“One thing I supplicate, Your Majesty, that you will give orders, under a great penalty, that no bachelors of law should be allowed to come here (to the New World) for not only are they bad themselves, but they also make and contrive a thousand iniquities.” – Nasco Nunez de Balboa to King Ferdinand V of Spain, 1513

The fact that the above quote came from the Texas State Bar Journal leads to two observations:
– Texas lawyers have a sense of humor.
– King Ferdinand did not take Balboa’s advice.
As a result of observation No. 2, Texas – and especially Houston – has a lot of lawyers and is getting more. The Houston Yellow Pages has 128 pages of “attorneys” (right after “astrologers”). These include some of the best-known on Earth and, thanks to Texaco and the tobacco industry, some of the richest.

They are also a clubby bunch. A doctor does not have to be a member of the Texas Medical Association to practice medicine in Texas. A journalist does not have to be a member of the Texas Press Association to publish a newspaper in this state. But if an attorney wants to practice law in Texas, he/she must be a dues-paying member of the State Bar of Texas. It’s the law.

Among them are the attorneys everyone loves to hate: the personal injury lawyers, or P.I. lawyers. They are the Rodney Dangerfields of the legal profession. They get no respect. This lack of regard possibly comes from TV ads, billboards and full-page color ads screaming, “Get your share!” Most advertising by lawyers has to be approved by the State Bar of Texas, but somehow the ads by personal injury attorneys seem based more on Gordon Gekko’s line in the film, “Wall Street” – “Greed is good.”

These attorneys, however, may be getting a bum rap. Who else comes to the aid of the average Joe who can’t afford a big-time attorney? It’s a dirty job but somebody’s got to chase the ambulances. And those who do the work seem to please most of their clients. The number of grievances filed by Texans against their P.I. attorneys has dropped markedly in recent years, from 966 in 1994-95 to 428 in 2002-04. This number is less than the number of complaints filed against both criminal and family lawyers.

Personal injury lawyers make up the largest single group of board-certified attorneys in Harris County at 24 percent, but that figure can be misleading. Bill Caraway, president of the 625-member Houston Trial Lawyers Association, explains, “The board of legal specialization designation also includes folks who defend personal injury cases; they represent corporations and insurance companies. So when people disparage trial lawyers, defense trial lawyers are included, too.” Caraway divides his colleagues in the trial lawyer persuasion into three groups: Those who tend to handle smaller cases, those who specialize in mid-level cases and those, like Richard Mithoff, Joe Jamail and John O’Quinn, who are handling the multimillion dollar lawsuits.

Representing plaintiffs against large corporations or insurance companies is a “David versus Goliath situation,” Caraway says. “The common character trait that you find in trial lawyers is that they have a calling or a disposition to defend, stand up for or protect the ‘little guy.’ In most cases, a client (a) can’t afford to pay an hourly fee, and, (b) can’t afford to pay the expenses involved in a lawsuit. In our type of practice, the lawyers typically advance the costs of the lawsuit and earn a fee and get paid back for the expenses only if there is a recovery. If there is no settlement or money recovered from a judgment, then we don’t earn a fee and are out the expenses.” Given this significant economic risk, Caraway says that each case has to be carefully scrutinized and provides a tremendous disincentive to take on frivolous cases.

“Trial lawyers are big believers in individual rights and the freedom to contract,” he says. “In terms of pay, it generally ranges from 33 to 40 percent of the recovery. If a lawyer is paid by the contingency arrangement – a percentage of the settlement or judgment recovered as opposed to an hourly or flat fee – there are some lawyers who have a staggered or stair-step method. For example, one arrangement may call for a one-third fee if a case is settled without filing a lawsuit, increasing to 40 percent if the case is tried; and if the case is appealed, it may go up to 50 percent.”

The last session of the Texas Legislature passed the controversial Tort Reform Act, which is best known for capping noneconomic damages for patients suing for medical malpractice at $250,000. Less known to the layman is a portion of the law that went into effect Jan. 1, 2004. It may reduce a jury’s award of damages and change the way plaintiffs’ attorneys get paid. Under the Offer of Settlement Rule, if a claimant tries a case after receiving an offer to settle and a jury awards less than 80 percent of the amount offered to settle, the plaintiff may be liable to the defendant for litigation costs.

As Caraway explains, “If you had a pretrial offer of $100,000 and a jury determines the damages to be $75,000, the plaintiff’s recovery could be reduced to pay the defense litigation costs. The reduction could encompass all of the noneconomic damages awarded and up to half of the economic damages. Because most contingency cases are based on the amount actually recovered, the lawyer’s fee in a situation like this will likewise be reduced.” But Caraway estimates that 80 to 85 percent of cases are resolved short of a trial.

Prof. Meredith Duncan was formerly with Vinson & Elkins and now is an assistant professor of law at the University of Houston Law Center where she teaches both tort law and legal ethics. She defends some, but not all, of the methods P.I. lawyers use that result in their image problems. “I can understand the public’s misconception,” she says. “It is true that personal injury lawyers may advertise more than most others. That’s based on the kind of business they do. To some extent, these lawyers help people who cannot afford a lawyer. I can understand why some personal injury attorneys might advertise more so than other lawyers.”

As for contingency fees, Duncan, like Caraway, feels that in many cases these fees are often the only answer. “There are some downsides to contingency fees. The upside is that a significant number of people are represented or are able to have a lawyer on a contingency basis that they could not have otherwise. We all have our share of bad apples, and the press loves to publicize the bad things that happen. But I can see all sides of the issue. If I had to choose whether attorneys should be able to have the ads and should be able to work on contingency fees, I feel they should.”

It has often been said that one lawyer in a town goes hungry; two lawyers in a town get rich. If this is the case, Texas lawyers are doing quiet well. According to a study by Lisa Kalakanis, Ph.D., the number of lawyers in Texas is growing rapidly. “The State Bar of Texas membership has more than doubled over the last two decades, rising from some 34,800 active members in 1980 to around 71,200 in 2002,” she says. That’s an increase of more than 100 percent, compared to the state’s population increase in that same period of 53 percent. The number of Texas lawyers is already larger than the population of Bryan or Baytown. At this rate, by next year, there should be 77,800 practicing attorneys in Texas.

In Houston we have 17,833 of them. With 16 percent of the state’s population, Harris County has 28 percent of the lawyers. Looking at it another way, in 1980 there was one lawyer in the state for every 455 Texans. That ratio is now one for every 337 Texans. Harris County has one attorney for every 199 residents, placing it third behind Travis County (one to 120) and Dallas county (one to 171).

There are three law schools in Houston churning out new lawyers, but the highest number of Houston’s attorneys are graduates of the University of Texas School of Law with 22 percent. Right behind the Longhorns are those who attended out-of-state law schools with 21 percent. So, we can see that Houston must be an attractive place for others who want to come here to practice law.

Most people tend to think of lawyers as slightly aging white males. In Houston, most lawyers are slightly aging white males. Our legal community is 72-percent male and 28-percent female. It is 87-percent Caucasian/Anglo, only 4-percent black and 7-percent Hispanic. Almost a quarter of them have been licensed more than 25 years. The median age is 46 years old, 38 percent practice alone, and the largest group, one out of every four, practices litigation.

In all shades and callings, Houston has some of the finest lawyers in the world. And if we are going to have lawyers, they might as well be the best. But what would Balboa say to King Ferdinand V? Probably, “I told you so,” – through his attorney. H
Lynn Ashby has two in-house lawyers: his son and daughter-in-law.

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