This is a topic that has intrigued me for some time, namely, the phenomenon of firms that have traditionally represented only defendants or insurance companies deciding to represent plaintiffs, sometimes on a contingency fee basis, which has been limited previously to plaintiffs’ firms. In a post last month, the Wall street Journal Law Blog wrote about a "traditional" Minnesota defense firm that received a contingency fee in excess of $100 million for its work on the Exxon Valdez litigation.
Obviously, the fees can be huge in contingency fee cases. But more than that, many defense firms are realizing that their business model no longer works. A friend of mine who excels at business development and practices law in what remains a more or less traditional defense firm told me that defense firms, including his own, began representing plaintiffs, as a purely business proposition, and not based on any change in philosophy.
For years, corporations on a national and regional level were represented by the same law firms, often by the same lawyers within those firms (think of IBM and Cravath, Swaine & Moore). But as corporations learned that law firms would compete for their business, often by undercutting one another’s rates, a corporation felt free to shift some or all of its work from one law firm to another. There ceased to be loyalty between the client and the attorney, at least on an economic basis.
And defense firms, which were the ones that had come to rely and thrive on work from corporations, realized that they had to replace those lost revenues from somewhere, so representing plaintiffs became a viable option.
I think there are a couple of things to bear in mind here. First, at least based on my experience, defense firms still prefer to represent plaintiffs on a hourly basis, or at least want a healthy retainer. Some of their partners can’t come to grips with the concept of not getting paid, if at all, until the end of the case. But more important, many defense firms don’t succeed with plaintiffs’ work because they are too accustomed to representing the other side. That’s not to say that they can’t learn, but philosophically and logistically, defense firms often can’t make the adjustments required for plaintiffs’ work.
A more practical and effective arrangement is to associate on a given case with a law firm or lawyer who is more familiar and accustomed to plaintiffs’ work. That way, the plaintiff gets the benefit of the larger firm’s resources and the plaintiff’s law firm or lawyer’s experience.
What it means from the perspective of plaintiffs’ lawyers, as many of them will tell you, is that they are now competing not only with one another, but with defense firms. And necessarily, a lot of cases that would have gone to plaintiffs’ law firms and lawyers now go to defense law firms and lawyers because of their contacts or reputations.