Mediation is a time set aside when the parties to a claim or lawsuit get together to try to resolve the matter without having to go to trial. The mediator is a neutral person, usually an attorney, retired judge, or insurance company adjuster, who facilitate settlement discussions.
Unlike arbitration or trial, the mediator can’t impose a decision on the parties. It’s up to both sides show up with authority to negotiate in good faith and, if possible, settle the claim. If the parties can’t reach an agreement, though, they are still free to go to trial.
Most mediators and attorneys that have significant experience with medical malpractice cases in Texas, will tell you that an overwhelming majority of them settle. I don’t know of any scientifically accurate studies or reports to back it up, but the general consensus is that 85–90% of Texas medical malpractice cases settle at mediation or before trial.
The goal of settlement from a defense perspective is to eliminate a claim or lawsuit by paying one sum of money. Defendants settle cases for variety of reasons, including the risk of an adverse jury verdict, the cost of litigation, and the impact of negative publicity.
Defendants, their attorneys, and insurance companies evaluate cases before mediation. Insurance companies or self-insured defendants set a reserve or authority, which is a settlement range that they are authorized pay to resolve the case, before mediating. In the process of arriving at that number, defendants and their representatives consider various factors, including the impact of attorney’s fees and expenses on the willingness and ability of the plaintiff to settle.
Attorney’s fees, expenses, and mediation
Generally, lawyers represent plaintiffs in medical malpractice cases based on a contingency fee of 40%. I believe that the free market arrived at this percentage because of the overall complexity of medical negligence cases, including the requirement to hire expensive medical experts to explain information and concepts that aren’t generally known to members of the public or the jury.
Plaintiffs’ lawyers also advance case-related expenses. In medical malpractice cases, the overwhelming majority of case expenses come from payments to expert witnesses. Other than medical expert fees, out-of-pocket case expenses include medical record fees, billing record fees, filing fees to the clerk of the court, process server fees, court reporter fees for depositions, travel expenses for depositions, and research fees.
As an aside, while I don’t know of any experience medical malpractice attorney who charges less than a 40% contingency fee, and when it comes to the area of case expenses, many firms vary on how they handle them.
Some law firms charge their clients interest for case expenses that the attorney advances from the moment each expense is incurred. While this practice is allowed by the State Bar of Texas, Painter Law Firm advances case expenses on behalf of our clients without charging interest. When deciding on the attorney you want to hire for medical malpractice case, it’s important to find out whether you’ll be charged interest on case expenses. I also recommend making sure that the contract with your attorney doesn’t require you to reimburse case expenses in the event that there is no recovery.
On the front end of the claim, contingency fees are welcomed by plaintiffs who lack the financial ability to be able to find inexpensive medical malpractice claim attorneys. Plaintiffs have no obligation to pay attorney’s fees unless there’s a recovery at mediation, settlement, or after the jury verdict. Then, and only then, the plaintiffs’ attorneys are paid 40% of the gross recovery. In the contingency fee model, all of the risk of a zero recovery is on the shoulders of the plaintiffs’ attorney.
At the time of settlement, though, it’s natural and reasonable for plaintiffs to begin thinking about the impact of attorney’s fees on a potential settlement. It’s fairly common for us to get the question of whether the defendants will pay the plaintiffs’ attorney’s fees on top of the settlement. In my experience, the answer is “no.”
Defendants leave it up to the plaintiffs’ side to figure out how any money paid in a settlement will be divided. This not only includes the arrangement between the plaintiffs and their attorneys, but also the amount that each individual plaintiff will receive.
Rabbit trail: The one time that attorney’s fees are available
Even though this is an article about mediation, I can’t resist taking one swipe at my favorite punching bag, Texas tort reform.
The only time that Texas law allows a party to receive attorney’s fees in a medical negligence case is when a part of the tort reform statute is satisfied. Texas Civil Practice & Remedies Code Section 74.351 requires medical malpractice plaintiffs to produce at least one medical expert report and accompanying curriculum vitae (resume) within 120 days of each defendant filing an original answer in the lawsuit.
If the plaintiff misses the deadline or the court finds that the expert report is insufficient under the statute, after the defendant objects and files a motion to dismiss, then the court must dismiss the case and award attorney’s fees to the defendant. Talk about adding insult to injury, literally!
If you’ve been seriously injured because medical malpractice, it’s important to hire an attorney with direct, significant experience in handling these complex cases from the beginning, through mediation or trial verdict.