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August 19, 2005

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» $253 million Texas Vioxx verdict from Overlawyered
$229 million were punitives. Jim Copland and Jonathan Wilson comment at Point of Law, which has given the issue extensive coverage. Our previous posts on Vioxx are here. Evan Schaeffer, who is handling Vioxx claims... [Read More]

» $253 million Texas Vioxx verdict from Overlawyered
$229 million were punitives. Ted posted on the case Jul. 11 when the trial opened. Jim Copland and Jonathan Wilson comment at Point of Law, which has given the issue extensive coverage. Our previous posts... [Read More]

» Merck from ProfessorBainbridge.com
Drug giant Merck lost the first of 4000-odd Vioxx suits pending against it. The odds that Merck eventually ends up pulling a Johns Manville and resolving these cases via bankruptcy reorganization just went up - a lot. The verdict was [Read More]

» Merck from ProfessorBainbridge.com
Drug giant Merck lost the first of 4000-odd Vioxx suits pending against it. The odds that Merck eventually ends up pulling a Johns Manville and resolving these cases via bankruptcy reorganization just went up - a lot. The verdict was [Read More]

» $253 million Texas Vioxx verdict from Overlawyered
$229 million were punitives. (AP/Forbes, AP/BusWk, Reuters, W$J). Ted posted on the case Jul. 11 when the trial opened. Jim Copland and Jonathan Wilson comment at Point of Law, which has given the issue extensive... [Read More]

» Ernst v. Merck - one more view from PointOfLaw Forum
1. You might've thought that you needed to marry a billionaire to get $24 million from a one-year marriage, but we now know that that a one-year marriage to a 59-year-old Wal-Mart produce manager with arteriosclerosis is worth $24 million... [Read More]

» Ernst v. Merck - one more view from PointOfLaw Forum
1. You might've thought that you needed to marry a billionaire to get $24 million from a one-year marriage, but we now know that that a one-year marriage to a 59-year-old Wal-Mart produce manager with arteriosclerosis is worth $24 million... [Read More]

» Merck from ProfessorBainbridge.com
Drug giant Merck lost the first of 4000-odd Vioxx suits pending against it. The odds that Merck eventually ends up pulling a Johns Manville and resolving these cases via bankruptcy reorganization just went up - a lot. The verdict was [Read More]

» $253 million Texas Vioxx verdict from Overlawyered
$229 million were punitives. (AP/Forbes, AP/BusWk, Reuters, W$J). Ted posted on the case Jul. 11 when the trial opened. Jim Copland and Jonathan Wilson comment at Point of Law, which has given the issue extensive... [Read More]

» $253 million Texas Vioxx verdict from Overlawyered
$229 million were punitives. (AP/Forbes, AP/BusWk, Reuters, W$J). Ted posted on the case Jul. 11 when the trial opened. Jim Copland and Jonathan Wilson comment at Point of Law, which has given the issue extensive... [Read More]

Comments

Jeff

The good guys? Give me a break.

I'd take the scientists and physicians at Merck over ATLA any day. After trial lawyers bankrupt the pharmaceutical industry, perhaps ATLA can offer some continuing ed classes on pharamcology and biochemistry. Lord knows society needs someone willing to do drug development.

Stan

Jeff,

Since I am well aware that Evan is too polite to say anything like this, allow me to go ahead and state that you are quite obviously an idiot. Your simple minded analysis is idiotic and your blind loyalty to a drug company is idiotic.

Thanks,

Stan

John Day

Jeff - I hope you will feel free to share with us any facts that you have that support Merck's position in this matter. If you take your position simply because you hate lawyers, hate plaintiffs, or have a blind love pharma, just say so.

Eh Nonymous

I'd just like to say that, despite the bad blood brewing over this quite large verdict for a single plaintiff whose case had causation issues, that:

I have a blind love for pharma, specifically Merck.

It's true. Big crush. Sort of a schoolboy puppy love kind of deal.

That's why I'm not in that kind of work. I'd just hate to make Merck have to cry. And I rather suspect that a c.$250m verdict, even if appealed and fully deserving of reduction or reversal for retrial or something, does in fact make Merck cry. Also its shareholders who optimistically held onto the stock, rather than staying in and gambling that the verdict would be good. Stock prices in an efficient market (and the NYSE isn't bad, when nobody's cheating) reflect all public information. Still, as soon as the verdict was out, Merck stock dropped something like $2. Actually, Reuters says "Shares were down $2.36 or 7.76 percent at $28.05 on the New York Stock Exchange late on Friday."

So that's, like, a total bummer.

The punitives case here bothers me a little. Unlike the McDonald's case, which as Ted has reason to know I really knew nothing about the procedure and knew all about the emotional parts of the case, and thought McD's should have been _punished_ to _deter_ them, I'm not sure Merck's actions were naughty in the same way. May ha' been, I'm not aware that they were, and that they should be not just liable (to the tune of c. $20m) but also punished. An unusual situation.

I predict more legislative action, perhaps by Congress. Save the gun manufacters? Done. Save the class action defendants? Attempted (although as has been noted, CAFA will wind up harming many defendants). Certainly class action _plaintiffs_ were harmed, so maybe it's a push for the parties and just a loss for federal courts. Save the possibly negligent or worse pharma companies? Is it next?

Lou

Evan, here is your chance to redeem yourself. Cap the amount you will pay yourself on the recovery in your first Vioxx case you try and win. Isn't 33% or more egregious when the recovery is the size of the Texas one?

Evan

Lou: You think I need redeeming? You must have come here from Overlawyered.

In all seriousness, there's been plenty written about contingency fees on this weblog, including a very long post here. It won't change any minds, but it explains how I look at contingency fees, and there are some good comments by others.

CAvH

The liberal lawyer-mafia will fight against any reasonable reform with everything they have, because every third or so $ in their pockets comes fromk trial lawyers.

I did some simple mathematics and if we assume that there is 4000 cases pending versus Merck and Vioxx that will follow precedent by first case, Merck will have to pay out ONE TRILLION $$$$$!!!!!

I don't know about you others, but bankrupting a major pharmaceutical company in order to fill the pockets of trial lawyers, democratic politicians and a few jackpot justice puppets sounds excactly like the kind of justice America is experiencing these days.

CAvH

Mike

CAvH, are you making the banal point that plaintiffs' lawyers seek to further their own self-interest? Wow.

By the way, did you know that lawyers at firms defending Merck (Williams & Connolly were their trial counsel) often bill between $300 (for someone fresh out of law school) and $1,000 an hour (for a partner's time). A lot of people are making a lot of money in law (though most lawyers are middle class rather than rich). What's your point?

As soon as there are caps of defense lawyers' legal fees, I'll support caps on plaintiffs' lawyers fees. But so long as defense lawyers are charging $12 or so each time their hearts beat, your argument that the plaintiffs' lawyers are a mafia won't move anyone.

Ted

Williams & Connolly is hardly a typical defense law firm; they'd reject most Harvard Law School applicants.

Mike, has it occurred to you that the reason there is market demand for the best defense lawyers such that they can charge $300-$800/hour is because so many trial lawyers are trying to take billions of dollars from corporate coffers over tenuous claims like Mrs. Ernst's? If trial lawyers didn't have the Cloud-Cuckooland power to bankrupt corporations, defense firms wouldn't be able to justify their fees.

Eh Nonymous

Ted: hee hee.

That said, there's an unfortunate tying of the billion-dollar corporate cultures (which do good business, fine, or bad business, not fine) with their not merely conspicuous consumption - see Tyco and that famous shower curtain - by the executives but intentionally intimidating wild excess of spendage, which the corporate defense bar at the upper income brackets is then obligated to imitate...

If plaintiffs' lawyers overcharge, then we should think about capping them. Hey, we do: in a billion dollar case, 33% is rare. 25% is more common, and an unlucky prevailing plaintiff's firm (meaning the firm, not the plaintiff, is unlucky) will get their costs - meaning, filing fees and duplication - and a 1% or 2% fee. Since their actual costs, including salaries and expert fees and the rest are so expensive that a return of 1/50th when bringing a case, even a big case, might make it unprofitable to even try.

That might be good from your POV, Ted, particularly in this case with the utterly weird causation problems, but the economics of law firms make more sense to me on the plaintiff's side.

Plaintiffs:
- eat what they kill (contingency fee)
- don't have as many repeat players, but can still be sued for malpractice; maximum incentive to not cheat or pad bills, minimum incentive to cheat the legal system at the behest of a profitable client. (Unfortunately, maximum incentive to bring many borderline-meritorious claims. That's the nature of the beast)
- don't necessarily need to cozy up to corporate clients who expect ostentatious dressing, eating, and driving from their lawyers
- don't have to live by the billable hour; quality of life can be higher, stress can be lower, competition is more inter-firm than intra-firm (at least for associates), and the pressure to stab a fellow in the back is I would think much lower, or at least much different. Greed rather than fear.
- must still justify fee awards by a rationality-basis check of the percentage, cross-checked against a lodestar with a reasonable hourly rate.

That's not to say the system isn't still gamed, indeed sometimes by a judicial system that abdicates its responsibility and cooperates with excessive awards to the prevailing (recovering) plaintiff and a defendant that is glad to be out of the case... but laziness on whatever side is still less awful than cheating.

You know where I believe much of the "cheating" of the system lies: where no law suits are filed.

Regards,

Eh N.

Matt

"If trial lawyers didn't have the Cloud-Cuckooland power to bankrupt corporations, defense firms wouldn't be able to justify their fees."

I wonder just how many corporations out there have actually been bankrupted by individuals pursuing personal injury claims? What percentage of all our companies?

Then, I wonder how many corporations have gone bankrupt because of outright theft by their executives leaving shareholders holding the bag. What percentage of all our companies that is?

Then, I wonder how many corporations have gone under due to the actions of another corporation - theft of trade secrets, anti-trust violations, etc. What percentage of all companies that is.

Perhaps Ted can enlighten us. Maybe then we can share his outrage.

chuck

Evan,

I've never taken Vioxx. And I don't know anyone who has. Am I still entitled to a recovery from Merck?

Mike

Ted a quibble, and then a question. Although you're right that W&C is hardly the typical defense firm, most AmLaw 100 firms bill in the range I cited.

Second, should defense lawyers' legal fees be capped? $800 an hour is a lot of money. Given that most guys in trial work at least 16 hours a day (and most usually 20 hours a day), six days a week, that gives us $76,800 to $96,000 a week. That also doesn't include the $300/hr rate of people fresh out of law school. Thus, after a lengthy trial, defense lawyers will charge several hundred thousands dollars in fees. This, of course, does not include the pre-trial fiddle faddle.

So, should defense counsel's fees be capped?

Mike

Also, Ted, I really want to avoid a chicken-egg argument? Namely, are legal fees so high because plaintiffs lawyers can bankrupt a corporation (and thus the corporation will pay top dollar to defeat the plaintiff's lawyers)?

My question is this: Assuming the market allows defense lawyers to charge the fees they charge, should the nonetheless be capped? Currently the market allows PI lawyers to charge a lot of money. Yet you want PI lawyers' legal fees to be capped. So the market alone cannot justify legal fees.

I'll show a card: my views on the contingency fee are similar to Giacalone's (David never had to live off a contingency fee, so his views are a bit off, but they're in the ballpark.) But I also think that, in principle, $800 an hour is too much for anyone's time. But if the market allows defense firms to bill at this rate, then the lawyers charging those fees, by definition, are worth that much.

Why can't the same be said of PI lawyers? Why must we look to extra-market arguments when discussing their fees?

Ted

Matt asks: I wonder just how many corporations out there have actually been bankrupted by individuals pursuing personal injury claims?

Several dozen major corporations, costing tens of thousands of jobs, including Dow Corning, which didn't even produce an unsafe product.

While several corporations have recently gone under due to poor business plans (for example, Enron's highly leveraged overinvestment in broadband), and in some of those corporations, the executives were also guilty of self-dealing, I'm not aware of any major corporations that have gone under because of self-dealing.

Mike: You will note that I've never argued that plaintiffs' lawyers' fees in individual cases should be determined by anything other than the market. (I have said that plaintiffs' lawyers have diverted far too much money from productive portions of the economy, but that's a different issue.) AEI is publishing a monograph shortly arguing that caps on plaintiffs' attorneys' fees in individual cases are counterproductive. If anything, I think there should be more market mechanisms for plaintiffs' lawyers' fees, and it's a mystery to me why every class action representation question isn't resolved by a reverse auction.

mythago

If trial lawyers didn't have the Cloud-Cuckooland power to bankrupt corporations

Trial lawyers hardly *want* to bankrupt corporations, now, do they?

Matt

Ted,

I find it humorous that you find paying yourself millions while misstating the accounting figures a "poor business plan" but not "self dealing". I suppose that's what happened at PHICO, as well? What a fine line you walk.

Did you ever come across those percentages, by the way? Dozens of major corporations and tens of thousands of jobs due to lawsuits!! Wow. I'm sure no one has ever lost their job due to corporate malfeasance or mismanagement, much less their life. Tell me, when can we expect Overbusinessplanned to come out? You could work on it from your mountain getaway in Libby, Montana.

When you get those percentages, let me know. I'm itching to share your anger at the American juror!

Dick King

My big problem with this verdict is that the compensatory damages are so outrageous. $25 million for the wrongful death of a 60 year old middle level WalMart employee? The left loves to tell us how lousy a WalMart job is, so his lifetime compensation isn't very impressive.

Or was it loss of consortium? I have no doubt that she loved the guy, but they had been married about a year and had known each other about three! Nor did they have extensive plans involving future children or decades of world travel. She was over 60 years old as well.

I have an alternate hypothesis. I think the jurors wanted the total damages to be extreme, and to make that happen they needed to pad the compensatory damages.

Someone on the jury knew that the punitive damages were limited by the State Farm decision -- it made a bit of a splash in the media and it is relatively recent -- so in my opinion they did two things. First, they decided what damages they wanted to assess, about a quarter of a billion dollars. How did they decide this? Probably by their estimate of the net worth of the company, but of course they didn't put it in writing. Then they divided that amount in a 9:1 ratio, concording with the Supreme Court decision that punitive damages should generally exceed compensatory damages by no more than a factor of nine. Then they called the remaining $25 million the compensatory damages to make this award at least facilly in concordance with State Farm.

-dk

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