PI Lawyers Eye Corporate Work

TORT REFORM legislation signed by Gov. Jim Edgar last year will have a major impact on personal injury lawyers in Illinois. In a word, it will be bad for business-bad enough so that many PI lawyers will take a hard look at what they do for a living and possibly make some significant adjustments.

"Tort reform," says Chicago personal injury lawyer Robert A. Clifford , "has soured a lot of people's thinking about the practice."

Which is just the point. It's clear that taking the luster off of the personal injury business was a major goal of the Republican coalition that put together HB 20, which was signed into law as "The Civil Justice Reform Amendments of 1995," or P.A. 89-7. Reams have been written and thousands of talk show man-hours expended on the subject of litigation run amok, much of it on the theme that the money lawyers make (PI lawyers, that is) is the linchpin of the system.

But the effects of HB 20 are reverberating far beyond the world of personal injury law. The law already has caused some of the state's most successful plaintiffs trial lawyers-Clifford for one-to begin eyeing corporate engagements. A jolt to the legal industry could be in the offing, with boutiques and litigation departments in major firms having to deal with some formidable new competition.

For in-house departments, it adds up to more good news in the category of supply and demand. A group of litigators who don't mind describing themselves as efficient, successful, seasoned and, "for the right case," willing to work on contingency, are poised to make themselves available to the corporation. For the law firms, it can only increase the pressure to become more efficient and to engage in contingency fee and other alternative billing arrangements themselves.

Consultants, expert witnesses and accountants also may see some changes in their business as a result of HB 20. Personal injury lawyers confronting a cap on non-economic damages say they will do what they can to compensate for that cap by intensifying efforts to augment damages on the economic side. And, if the effects of HB 20 are as devastating as some PI lawyers say they are, banks will no longer be setting up trusts for surviving children. Even the business of defense firms could take a hit, because with their maximum exposure cut, insurance companies will re-think what kind of legal bills they are willing to pay for a defense.

Hard to Stomach.
For personal injury lawyers, the $500,000 cap on non-economic damages in Illinois is preferable by far to Wisconsin's $150,000 aggregate cap. The not-so-bad school can argue that relatively few cases will be affected by the cap in Illinois.

But Clifford points out that in a large case involving a severe injury, the $500,000 cap is likely not only to decrease the total award, but to decrease the ratio of non-economic to economic damages, with some troubling consequences. Attorneys' fees and expenses are more likely to eat into the money the jury awards for medical expenses.

Tort reformers say the solution is simple: The lawyers should lower their fees from the customary one-third.

There would still be problems, according to Clifford. He posits the case of an elderly person injured and awarded $5.5 million for future medical costs and the $500,000 limit for non-economic damages.

"Say you charge a fee of only 20 percent, giving you $1.2 million. That sends the plaintiff home-forgetting expenses for a moment-with $4.8 million," Clifford says. "That is less than the jury said the medical expenses would be. I am not happy about being in that business. I don't know how long I want to be in that business."

Currently, Clifford is representing a Brazilian company in a contract dispute with Schaumburg-based Motorola. "This case is strictly commercial," he says. "Breach of contract, breach of warranties, traditional contract claims. But if I could find a way to make it a tort case, don't put it past me. Tortious interference with other contractual relationships might have some bearing. That is a discovery matter."

The Squeeze on PI Lawyers
It's not only the cap in HB 20 that will cut into the personal injury business. The trial lawyers say other provisions will increase plaintiff-side expenses, make a products liability case virtually impossible to mount and make it less attractive for a plaintiff to file a lawsuit. One provision relating to medical malpractice is the source of particular consternation for the PI attorneys. It gives any party in a civil proceeding the right to the plaintiff's entire medical record.

According to Keith A. Hebeisen, a personal injury lawyer in the Clifford Law Offices and winner of more than $7 million in malpractice settlements in the past two years, smaller cases as well as large will be affected by the $500,000 cap.

The reason is that the cap drives the settlement discussions, essentially functioning as a topside limit to the defendant's risk. Therefore cases that might have settled because the insurance company did not want to risk a large non-economic damages award, now go to trial. "They don't have to worry about getting really whacked if they are wrong," Hebeisen says. "The runaway verdict is history if that cap sticks."

The Illinois Trial Lawyers Association is doing what it can to see that it doesn't stick. The organization has mounted a broad constitutional challenge by way of several cases that have been grouped together before Judge Kenneth L. Gillis of the Circuit Court of Cook County Law Division. The challenge is based on a number of theories, but primarily separation of powers.