Texas Insurance Defense and Litigation

More on obscene salaries of newly licensed lawyers

Susan Hackett, of the Association of Corporate Counsels, calls foul on the obscene starting salaries of recent law graduates.  In an article on law.com, she estimates the true cost of brand new attorneys to be about $400,000 per year.  She points out that when you raise the salaries of brand new associates, you also have the raise the salaries of the more-experienced associates as well.  Who pays for it?  The client, of course.

Ms. Hackett goes on to excoriate the outrageous money made by lawyers in the “law firm biz”, and to suggest that corporate counsel put a stop to it:

Is this out of touch with reality? You bet. I'm completely unpersuaded by apologists who suggest that entry-level associate salaries are hardly keeping up with partners' slice of take-home pay. The fact that the associates make less per year compared to their partners than associates 20 years ago did is yet another indicator of how obscene partners' fees and profits are in the law firm biz. Sure, outside counsel are entitled to make as much money as they can, but let's not "justify" these salary increases by suggesting that they're necessary to adequately compensate associates.

*****

So where will in-house counsel draw the line on new associate costs? Why don't corporate clients simply say: We're not paying for this anymore? In-house legal executives need to stand up and exercise their considerable influence. Demand to know -- in detail -- why prestigious firms believe their inexperienced associates provide more value than a successful partner in a less expensive firm or an expert legal service vendor/consultant. Tell them that you're happy to pay high rates for high quality and experience, but you'll be the judge of the value provided. And if they answer that they had no choice but to follow the market in order to attract the same 50 graduates from the same 25 top-ten schools, then label them the sheep that they are, and vote with your feet.

New York Times article on Richard Scruggs and his attack on the insurance industry

The New York Times has run an article on Mississippi attorney Richard Scruggs, is one of the lead attorneys in the Katrina homeowners’ litigation in Mississippi.  It’s an interesting article, and really good PR for a lawyer who knows how to play the PR game.  The story discusses how Scruggs made his “first fortune” in asbestos litigation, his “second fortune” in tobacco litigation, took on the health care industry, and is now taking on the insurance industry.  It’s a good read, although lacking in any real substance or in-depth discussion of the legal issues involved in paying the Katrina claims.

Texas truck accident lawsuit is one of largest verdicts in 2006

Lawyers USA has published a story about the “top ten jury verdicts of 2006”.  The number ten slot is occupied by a Texas lawsuit in which actual damages of $38.5 million were awarded.  It was an underride protection lawsuit in which the jury awarded $36 million to a 25 year-old woman who survived, and $2.5 million to the family of a woman who died.  Here’s a link to the story.

Juror deliberations in the Scooter Libby trial

Law.com has a very interesting story about the juror deliberations in the Scooter Libby trial.  Regardless of whether you agree with the outcome, don’t you wish all juries were this focused, meticulous, and conscientious?

*****

ONE JUROR'S ACCOUNT

Collins, 57, a former Washington Post reporter, was the sole juror to give an account of the deliberations. The other 10 jurors declined to speak to the media, but Collins said, after years as a journalist, "I just figured it would be kind of hypocritical for me to walk away."

By his account, jurors gathered each day on the 6th floor of the courthouse, in a room overlooking the D.C. Department of Motor Vehicles. The room had two long tables and a few cushioned seats. When they arrived the first Wednesday afternoon, everyone looked at each other without knowing what to do. "They don't give you a field manual on how to be a juror," he said.

But the jury was a resourceful one, full of methodical panelists who knew how to take charge and break down complicated material into digestible bits. And that is what they did for the first week, gathering large Post-it notes (2 1/2 by 2 feet) with quotes and information concerning the evidence presented. The jury had some meticulous note-takers, Collins said, including one who calculated how many objections had been sustained during Russert's testimony (25 out of 36). For the first week of deliberations, the jury made no decisions, took no straw polls, but systematically went through the evidence. They asked: Who told the truth? Who lied? Who do we believe?

The debate was not about the war. It was not about politics. Collins said he didn't even know the politics of most jurors during deliberations. (Although he said he learned this morning that at least three were registered independents.) There were "differences of opinion, but no fistfights," Collins said. (For instance, he said one person thought former White House press secretary Ari Fleischer was a "slick willy," while Collins didn't think Fleischer had any motive to lie.)

At times, of course, the jury grew restless and would occasionally glance outside at a small stand with hot dogs and half-smokes. "It was like we were in a cocoon. I would forget what day it was," he said.

But in the end, Collins said, it simply came down to the facts, which pointed to a single answer: guilty. "Opinion had very little to do with it," he said.

What stood out most to the jury was Libby's account that he was "surprised" when he first learned that Valerie Plame worked at the CIA. "The least convincing thing was that Libby was working so hard that he could forget everything," Collins said.

Looking at the Post-its they had amassed, the jury found that in a short period of time Libby had either been told about Plame's employment, read about it, or told someone else at least nine times. "It seemed very unlikely that he would not have remembered about Mrs. Wilson," he said.

There was, he said, just too much evidence. He singled out the testimony from Marc Grossman, former undersecretary of state, who noted that the information about Wilson's wife was an "interesting tidbit." And Collins said that Cheney's handwritten notes on Wilson's op-ed questioning whether Plame sent her husband on a "junket" stood out.

"It was just very hard not to believe that he could remember on Tuesday and forget on Thursday and then remember two days later," Collins said, echoing the rhetoric Fitzgerald used during trial.

While the jury was inclined to believe that Libby had a bad memory, Collins said John Hannah, Libby's former national security adviser who testified for the defense, seemed to hurt Libby. Hannah testified that Libby had an "awful memory," but jurors found that didn't mesh with his comments that Libby had a strong memory for conceptual issues, Collins said.

But when it came to the count about Libby's statements to the FBI about Cooper, jurors were more skeptical. Their eventual decision to acquit on that charge stemmed from the lack of documentation on Cooper's part. Cooper had no notes to back up that Libby confirmed Plame's identity and there was a passage in Cooper's notes that the defense tried to suggest represented Libby's explanation of the conversation. While jurors weren't absolutely convinced about that passage, those questioned "weighed six ounces" and were enough to create "reasonable doubt," Collins said.

On the whole, though, jurors found the key reporters testifying for the prosecution to be credible, he said. Some even thought the defense attorney's badgering of Miller worked against Libby. "Some said I think she seems nice," Collins recounted.

Jurors put little weight in the parade of journalists that testified for the defense. And even though Libby didn't testify at trial, Collins said the jury felt very good about having eight hours of his grand jury testimony.

Despite their decision, Collins said, "We had tremendous sympathy" for Libby. One juror said he didn't want to be judging Libby. "This sucks," Collins quoted the juror as saying. "The belief of the jury was that he was tasked by the vice president to talk to reporters," he said.

Yet, Collins emphasized, "This wasn't about the war ... This wasn't a question of who can we punish for going into Iraq."

Completely unrelated to Texas Insurance Defense: cell phone tricks

This post is completely unrelated to Texas Insurance Defense, but it is so interesting and helpful we thought we would share it with you.  The information is from Ed Poll, an expert on law firm management, and it describes some tricks and hidden functions of cell phones:

Law firm management - Use of cell phones

Cell phones are ubiquitous  - In fact, I fear the next generation of young folks may be born with one arm at a 90 degree angle resulting from their parents seemingly being in a permanent "cocked arm" position.

However, there are things you can do with a cell phone that you may not have realized.  Check out the following:

First:  Emergency
The Emergency Number worldwide for Mobile is 112. If you find yourself out of the coverage area of your mobile; network and there is an emergency, dial 112 and the mobile will search any existing network to establish the emergency number for  you, and interestingly this number 112 can be dialed even if the keypad is locked.

Second:  Locked your keys in the car?
Does your car have remote keyless entry? This may come in handy someday. Good reason to own a cell phone: If you lock your keys in the car and the spare keys are at home, call someone at home on their cell phone from your cell phone.  Hold your cell phone about a foot from your car door and have the person at your home press the unlock button, holding it near the mobile phone on their end. Your car Will unlock. Saves someone from having to drive your keys to you. Distance is no object.  You could be hundreds of miles away, and if you can reach someone who has The other "remote" for your car, you can unlock the doors (or the trunk).

Third:  Hidden Battery Power
Imagine your cell battery is very low. To activate, press the keys *3370# Your cell will restart with this reserve and the instrument will show a 50% increase in battery.  This reserve will get charged when you charge your cell next time.

Fourth:  Disable a STOLEN mobile phone?
To check your Mobile phone's serial number, key in the following digits on Your phone: * # 0 6 #
A 15 digit code will appear on the screen. This number is unique to your handset. Write it down and keep it somewhere safe.  When your phone get stolen, you can phone your service provider and give them this code. They will then be able to block your handset so even if the thief changes the SIM card, your phone will be  totally useless. You probably won't get your phone back, but at least you know that whoever stole it can't use/sell it either. If everybody does this, there would be no point in people stealing mobile phones.

And Finally....

Fifth:  Free Directory Service for Cells
Cell phone companies are charging us $1.00 to $1.75 or more for 411 Information calls when they don't have to. Most of us do not carry a telephone directory in our vehicle, which makes this situation even more of a problem.
When you need to use the 411 information option, simply dial: (800) FREE 411, or (800) 373-3411 without incurring any charge at all. Program this into your cell phone now.

Analysis of issues related to ridiculous salaries for brand new associates

A couple of months ago, leading firms in New York and other large cities announced they would raise the compensation of the new-hires (brand new law school associates) to $160,000 per year.  Law.com has published another excellent story analyzing the effect of this decision.  Their basic point: luring new graduates with salaries that high might entice them to join the firm, but it actually might be counterproductive to the associate’s happiness and longevity with the firm.  Someone has to pay for those raises, and it will not be the partners in the law firm.  Rather, the associates will either have to work even longer hours (or exaggerate their hours!), or the rates will have to go up.  In my opinion, there is no way any client of legal services benefits from this trend.

Here are excepts of the story:

Is Raising Salaries the Best Way to Retain Associates?
Elizabeth Goldberg and Ben Hallman
The American Lawyer

*****

A higher salary "puts more pressure on productivity and hours," says Link, exacerbating precisely the quality-of-life issues that make junior lawyers unhappy.

*****

. . . Money isn't necessarily an associate's first concern. On The American Lawyer's 2006 survey of midlevel associates, Simpson scored much better in terms of satisfaction with benefits and compensation than it did with overall associate happiness.

"What the salary increase can't and won't do is address associates' myriad of concerns about more communication, more feedback and more robust training opportunities," says Miriam Herman of Blaqwell Inc., a legal consulting firm.

As for overall associate happiness, the raise could have a negative impact.

Many firms will ask associates to cover their own raises with longer days or higher productivity. During the last round of hikes, Dechert raised its New York salary from $125,000 to $145,000. At the same time, the firm raised its minimum billables from 1,950 to 2,000 hours, according to associates at Dechert. An associate at Covington & Burling says that even if there isn't a formal change in the requirements, partners will simply expect more hours.

"We don't say, 'Here's your raise, now work 50 more hours,'" says Roger Warin, chairman of Steptoe & Johnson. "But associates know, for most firms, that's the way the math works."

If the raise was a mistake, it was an expensive one. The game of keeping up with the Wall Street Joneses isn't cheap. While $8 million may represent a mere 2 percent of Simpson's net profits in 2005, it does mean that a minimum of $50,000 of per-equity partner profit will be redistributed to the associates. Not that firms intend to cut partner salaries to pay for the raise. While partner profits have grown almost twice as much as associate salaries over the last decade, consultants say that firms will raise either associate hours or hourly rates before they ask partners to pony up.

"They're going to have to squeeze more blood out of the turnip," says Peter Zeughauser, lead consultant at Zeughauser Group.

Of course, turnips, at least those of the associate variety, aren't complaining about getting paid more money.

"Everybody is happy that salaries have been going up," Harvard's Weber says. "But at what cost?"

ABA Transportation Megaconference VIII

The ABA Transportation Megaconference is going to take place in New Orleans March 8-9.  It is one of the premier trucking defense seminars in the country.

Lynn Castagna from our firm will be attending.

Is fast-food the next tobacco?

It has been several years since the first lawsuit was brought against members of the fast food industry, arguing that their practices were predatory and designed to hook consumers on food which is lacking in substance and nutrition.  This law.com article, written by Lianne S. Pinchuk of Weil, Gotshal and Manges, discusses the history of fast food litigation and the issues involved.

(Frankly, we wonder why the plaintiff’s bar has not targeting the suntanning industry, who throughout the seventies lured millions of kids out into the sun with the promise of easy tans.  Those kids, now aging baby boomers, are suffering melanoma and other skin cancers at alarming rates.)

Here are excerpts from the fast food story:

Are Fast Food Lawsuits Likely to Be the Next 'Big Tobacco'?

By Lianne S. Pinchuk
The National Law Journal
02-28-2007

Tobacco companies and fast food restaurants are not treated the same way by the courts, and such disparate treatment is likely to continue. Attempts to use tobacco litigation as a model for fast food litigation have generally failed and will likely continue to fail in the future.

FEW FAST FOOD CASES HAVE BEEN BROUGHT SO FAR

Despite the number of news stories about litigation against fast food companies, there have actually been very few cases. On Aug. 22, 2002, two minor plaintiffs became the center of much media attention (and a considerable amount of satire) when a complaint was filed on their behalf against McDonald's Corp. The plaintiffs alleged that McDonald's engaged in deceptive practices in violation of New York's Consumer Protection Act; that McDonald's was negligent in selling foods high in fat, sugar, salt and cholesterol; that McDonald's failed to warn customers about the ingredients in its food; and that McDonald's negligently marketed food products that were addictive. All of the plaintiffs' claims were initially dismissed, and after multiple appeals and amendments to the complaint, three claims remain against McDonald's. Pelman v. McDonald's Corp., 2006 WL 2663214 (S.D.N.Y. Sept. 16, 2006).

In the remaining claims, the plaintiffs allege that McDonald's promotions and advertisements created the false impression that its food is nutritious; that McDonald's failed to disclose that its use of additives made its food less healthy than represented; and that McDonald's deceptively represented that it would provide nutritional information. Id. at *2.

Because of the lengthy procedural path it took, Pelman has only now passed the motion-to-dismiss stage. Although it is impossible to know how the case will turn out, the Pelman court has discussed some of the hurdles the plaintiffs will face, including showing that McDonald's products played any role in causing their health problems. Pelman v. McDonald's Corp., 2003 WL 22052778 (S.D.N.Y. Sept. 3, 2003). It noted that "[p]laintiffs have not made any attempt to isolate the particular effect of McDonald's foods on their obesity and other injuries." Id. at *11.

Two other suits against McDonald's have dealt with deceptive practices, but not directly with obesity. McDonald's agreed to donate approximately $10 million to charity to settle a suit alleging that McDonald's failed to disclose that its french fries contained beef fat. "McDonald's Settles Beef Over Fries," www.cbsnews.com. McDonald's also donated $7 million to the American Heart Association to settle a suit alleging that it reneged on its promises to remove trans fats from its foods. See www.bantransfats.com/mcdonalds.html. Thus, the settlements and awards so far in fast food class action litigation don't even begin to compare to the hundreds of millions of dollars in damages awarded to individual plaintiffs in tobacco litigation. And there is little reason to believe that such awards may significantly increase over time, given the significant evidentiary burdens faced by plaintiffs, as explained by the Pelman court.

Recent legislative activity has also provided restaurants and food distributors with more legal protections from obesity-related personal injury lawsuits. Twenty-three states have enacted laws that provide at least some protection or immunity to food companies faced with the threat of obesity lawsuits.

Although there has not been any obesity-related litigation in most states, some have nevertheless enacted the statutes as protective measures. Louisiana started the trend by enacting legislation in 2003. La. Rev. Stat. §9:2799.6: "Limitation of liability for damages from long-term consumption of food and nonalcoholic beverages." Such statutes generally provide some immunity from liability arising out of claims concerning weight gain, obesity and obesity-related health problems. Florida's statute, Fla Stat. ch. §768.37, provides that no food manufacturer, distributor or seller "shall be subject to civil liability for personal injury or wrongful death to the extent such liability is premised upon a person's weight gain or obesity, or a health condition related to weight gain or obesity." Some laws mandate that food products may not be classified as defective and unreasonably dangerous for products liability purposes.

Like the other states' statutes, Florida's does not limit liability if a food company fails to provide legally required nutritional information or has provided materially false or misleading information. Claims of deceptive practices, consumer fraud or mislabeling against food companies are traditionally allowed under state deceptive trade practices statutes and are explicitly carved out of the laws that otherwise immunize food companies from obesity-related claims.

Following the various state statutes, the federal government sought to jump on the bandwagon. Republicans in Congress have thrice proposed federal legislation protecting the food industry from "frivolous" suits. The Personal Responsibility in Food Consumption Act, H.R. 339 (commonly referred to as the "Cheeseburger Act"), was first introduced in 2004 and was passed by the House in March 2004. Its purpose was "to prevent legislative and regulatory functions from being usurped by civil liability actions brought or continued against food manufacturers, marketers, distributors, advertisers, sellers, and trade associations for claims of injury relating to a person's weight gain, obesity, or any health condition associated with weight gain or obesity." The Bush administration issued a statement of support, stating that "[f]ood manufacturers should not be held liable for injury because of a person's consumption of legal, unadulterated food and a person's weight gain or obesity." Statement of Administration Policy, March 10, 2004, available at www.whitehouse.gov. H.R. 339 passed, 276-139.

The bill was reintroduced by Rep. Ric Keller, R-Fla, in 2005 as H.R. 554 and on Oct. 19, 2005, was again passed by the House, this time with a vote of 306-120. The White House again issued a Statement of Administration Policy supporting H.R. 554. Neither bill was passed by the Senate. Prior to H.R. 554's vote in the House, the Senate introduced the Commonsense Consumption Act, S. 908. S. 908 was introduced by Sen. Mitch McConnell, R-Ky., in April 2005. It never made it out of committee. Given the recent shift of power in the federal government, it is unlikely that additional statutory protections will be provided to the fast food industry.

INHERENT-DANGER STANDARD WOULD NOT APPLY TO FAST FOOD

The state "cheeseburger bills," however, provide protections to fast food companies that were not afforded to tobacco companies. Unlike tobacco, which is dangerous even when used as intended and in moderation, fast food is not inherently dangerous. Even Philip Morris has agreed that cigarette smoking is inherently dangerous. Haglund v. Philip Morris, 446 Mass. 741 (2006). Thus, most courts facing fast food litigation have not allowed personal injury claims seeking large damage awards.

Anyone who saw documentary filmmaker Morgan Spurlock's 2004 movie "Super-Size Me" in which he gorges himself on McDonald's food daily for 30 days to demonstrate its dangers may argue that McDonald's food can be, like tobacco, dangerous even when used as intended. However, following "Super-Size Me," the documentary "Me and Mickey D" was released, showing a filmmaker who lost 36 pounds by eating at McDonald's three times a day, but choosing lower-calorie foods than those chosen by Spurlock. Moreover, most of us have snacked periodically at a McDonald's without any negative health effects, whereas smoking even periodically has demonstrably detrimental effects to one's health. Because the actual differences between cigarettes and fast food will be known to jurors (and judges), the legal landscape faced by fast food companies is clearly more favorable than that faced by tobacco companies.

The state laws immunizing food companies from obesity lawsuits also provide a different legal landscape than the one in tobacco cases. That difference does not mean that fast food companies will be forever immune from all liability; the protections against personal injury suits mean that plaintiffs are likely to transform their claims into false labeling and consumer fraud claims. Big Food is likely to face increasing claims under some state consumer fraud laws, but damages under such laws are unlikely to match or surpass those awarded in tobacco cases.

Despite the lack of success of obesity-related personal injury cases thus far, it is important to remember that when allegations were first made against tobacco companies, the possibility of large verdicts seemed remote. It was only once the litigation reached the discovery phase and negative internal documents were revealed that large plaintiffs' verdicts became possible. The Big Food cases to date have generally not led to discovery, and only Big Food itself knows what damning documents may exist. If they do exist and are discovered by plaintiffs lawyers, they may provide ammunition for more suits and increasing verdicts. Right now, however, fast food companies are enjoying more protections than tobacco companies ever did, and it appears that Big Food is not the next Big Tobacco.

Lianne S. Pinchuk is an associate in the litigation department of New York-based Weil, Gotshal & Manges. She specializes in mass tort and products liability litigation.