New Estimate: Asbestos Plaintiff Firms ‘Pocket’ $2 Billion Annually
How much of a victim’s settlement or jury award should go to contingency attorneys is always a touchy subject, so it’s no wonder that a new estimate that plaintiffs’ firms “pocket” $2 billion per year is getting attention.
Some context: that’s more than President Obama and Governor Romney spent on their 2012 race – combined.
Such estimates are fairly rare, in part because legal firms don’t exactly make those numbers public, basically treating it as a trade secret. Litigation is virtually case-by-case, and neither defense nor plaintiff’s share much information, even among themselves.So the credible estimate from Mark A. Behrens, a prominent D.C.-based defense-side attorney who made the claim during a Los Angeles tort reform gathering, is bound to be repeated. (More on his math in a moment.)
It’s also worth noting that asbestos-related conferences are a bit of a community gathering, so it’s likely that many of those in Los Angeles knew that the Behrens number comes amid some ongoing debate: back in September, during a nationally-focused event in San Francisco, two of the industry’s more vocal participants had at it.
In that exchange, Joe Rice, a consensus pick for Top 10 asbestos-victims’ lawyers in America, locked horns with Charlie Bates, chairman of the economic consulting firm Bates White, which works for the defense side. Mr. Rice implied through both language and facial expression that some figures, like $2.5 million per-case, were low for the “value” of a mesothelioma case. After a quick exchange, Mr. Bates flatly asked “well, how much are you getting Joe?”
The query brought laughter, but no number. Figuring out what elite attorneys like Mr. Rice are “getting” for cases is the stuff of dreams for defense firms.
Which brings us back to the Behrens $2 billion per year estimate. After a background interview, Mr. Behrens offered this specific statement via email: “The asbestos plaintiffs’ bar may pocket $2 billion or more annually as a result of payouts from the asbestos bankruptcy trust and civil tort systems.”
About his math: During the backgrounding conversation, Mr. Behrens outlined several sources to support that estimate, including trade journals, government studies and even a RAND Corp. report. His research indicated that three sources of asbestos payments – insurance, trust funds and defendants, likely pay around $7.9 billion per year, but some of that insurance money goes to pay defendant firms’ legal fees. Of course, estimating how much of that total payout goes to victims’ legal cost is difficult, in part because firms have varied client agreements. He settled on 36 percent, to arrive in the “ballpark” of the $2 billion estimate.
The $2 billion figure would explain a lot, and not just why lawyers can afford to pay for all those “mesothelioma” ads. We’ve noted before that financial pressures may have contributed to creating “Perjury Pawns,” and this illustrates just how much pressure there really is.
Nobody expects the “how much is too much?” question to be answered anytime soon, but very quickly the “Behrens number” estimate is becoming part of that debate.