Changing Times Require Changing Tactics. One of the most recognized legal symbols of American justice is Lady Justice, the blindfolded woman carrying a sword and a set of scales. She symbolizes the fair and equitable administration of justice, without corruption, greed, prejudice, or favor. Lately, however, she’s been looking for work. It seems that the hallowed halls of justice we call courtrooms are being used less frequently. This is especially true when subrogation claims, which tend to be smaller, liquidated claims, are involved. As a result, the effectiveness of subrogation litigation has necessarily begun to depend on aggressive investigation and innovative pre-trial tactics and claim demands.
A recent study by Marquette University Law School reveals that in Wisconsin alone, civil jury trials fell by 50% in just a little over a decade: 536 in 2004, declining to 269 in 2016. In 2004, fewer than 2.6% of civil cases saw the inside of a courtroom. That percentage dwindled to 1.4% in 2016. The trend is national. As far back as 2004, an article in the ABA Journal entitled “The Vanishing Trial” focused on a major project undertaken by the ABA Litigation Section regarding this phenomenon. In 2002, federal courts tried fewer cases than they did in 1962. Fewer than 3,000 federal court civil trials took place in 2002.
The reasons for the vanishing civil trial are many. It is in large part a symptom of the rising cost of litigation, necessitating resolution of dispute by less-expensive means. Even in light of contingency fee subrogation handling, litigation costs are a driving factor in deciding whether to try a case or work toward settlement. Expert witness fees have risen significantly over the past ten years. Engineers and other scientists worth using charge handsomely for their time. Doctors who must testify as to medical conditions or bills would much rather be practicing medicine than sitting in a dark courtroom hallway waiting to be called to testify or sitting in a conference all day for a deposition. Their rates strongly reflect this preference.
Time is also a factor. Discovery is nauseatingly time-consuming and complex. Responses are intentionally evasive and getting to the truth takes exponentially longer than it did a decade ago. The proliferation of electronic discovery and the man-hours needed to review and organize hundreds of thousands of pages of documents have also contributed to the cost of employing Lady Justice.
Tort reform is another contributing factor to the disappearance of the American civil trial. As civil remedies and rights are constrained and damages are capped, fewer causes of action are being pursued. In Texas, the population rose exponentially from 2005 to 2014, meaning more drivers on the road and more car accidents – a lot more. Ironically, despite the rise in car wrecks, the number of lawsuits filed didn’t go up at all.
Even the evolving role of judges has become a contributing factor to gradual extinction of the civil trial. Judges today are overburdened by overwhelming caseloads, such that getting a case off of his or her docket is often more important than achieving justice. Judges spend more time wearing their mediator and settlement facilitator hats than they do their trial hats. Docket times have expanded to well past a decade in some areas and justice moves exceedingly slow in some urban centers.
Alternative dispute resolution, including arbitration, mediation, etc., has also played a key role in this development. Beginning in the mid-1980s, there has been an increased emphasis on such trial-avoiding tools. Mandatory arbitration clauses are becoming commonplace in contracts. There is a greater emphasis on trying to get cases resolved before suit is filed and defense lawyers are engaged.
Subrogation claims present another factor which calls for avoiding trials if at all possible. Most subrogation cases involve a sum certain – a dollar amount certain for property damage, liquidated medical bills capped to the penny, or a dollar-specific workers’ compensation lien. Defendants in subrogation cases often avoid the risk of a runaway jury or a surprise verdict. They know going into a case what their downside is, and reserve claims accordingly. The challenge then is for innovative subrogation counsel to re-inject that risk into the litigation, by including the insured’s uninsured losses, adding down-time claims, threatening fee-shifting or consumer protection threats, or simply pressing toward trial and turning the finite amount of damages being sought from a liability into an asset. The use of pre-judgment interest, double and treble damages, and other threats of additional exposure should be used whenever possible.
The vanishing trial has had an interesting, positive, side effect. The timing of settlement has changed. Years ago, when the threat of imminent trial was real, settlements routinely took place on the courthouse steps after years of expensive preparation. With fewer cases seeing the inside of a courthouse and alternative dispute resolution playing a larger role, settlements are often occurring just prior to a significant motion hearing, deposition, or discovery deadline.
Subrogation professionals should recognize that there is a skill to effectively resolving cases for maximum value just as there is to trying a case. Most claims adjusters can resolve a $50,000 subrogation claim for $5,000. Engaging effective and aggressive subrogation counsel can easily triple your recovery, even after taking into consideration the contingency fee. Cost-effective, yet aggressive litigation, which still threatens the other side with the realistic prospect of having to try a case, remains the most effective tool for retaining settlement value in a file.
If you should have any questions regarding this article or subrogation in general, please contact Gary Wickert at [email protected].