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What are the Characteristics of a Settlement Mill Law Firm?
According to research by Stanford Law School professor Nora Engstrom that was published in the Georgetown Journal of Legal Ethics in an article titled "Run-of-the-Mill Justice," settlement mill law firms may display 10 different characteristics. Of the 10, all settlement mills have four key characteristics, and the remaining six indicate that a firm might be a settlement mill. The four key characteristics of settlement mills are as follows:
- The firms are high volume;
- The firms obtain most of their clients from their aggressive advertising tactics;
- The firms are treated more like businesses than law firms; and
- The firms rarely, if ever, take cases to trial.
In addition to these key characteristics, other factors may indicate that a law firm is operating as a settlement mill. Most of these firms charge tiered contingency fees. For example, they might state that they charge a 33 percent contingency fee if a case is settled without filing a formal lawsuit, 40 percent if a lawsuit is filed and higher if it is litigated through trial. These types of tiered fees might encourage clients to want to settle their cases quickly so that they pay lower fees.
These firms also do not conduct rigorous screening of their cases and often accept nearly all cases that come to them, meaning that they accept more low-dollar claims that other firms would not agree to take. Most settlement law firms also do not provide any meaningful interaction between the attorneys and their clients. Instead, paraprofessionals handle a majority of the casework with the lawyers sometimes only seeing the clients when they come in to get their settlement checks. Settlement mills often offer incentives to their negotiators to settle cases quickly or have quotas for settlements that they must meet. Claims at settlement mills are resolved much faster than at other personal injury firms. A majority of the claims are resolved in less than eight months from the dates of the accidents. Finally, settlement mill law firms very rarely file lawsuits, resolving most of their clients' cases outside of the court system.
Some personal injury firms have advertising budgets that may cost as much as $1 million or more per year. If you are wondering how these firms are able to pay those large advertising bills, the answer is straightforward. Most simply become what are known as settlement mills. The goal of these firms is to get as many cases in the door as possible and to settle them quickly. In most cases, these types of firms settle claims in a short period of time for much less than the clients may have obtained by choosing a conventional attorney.
In Los Angeles, residents are inundated with advertisements on television and on billboards for personal injury attorneys. Some of these ads include slogans and contain material that is designed to have an emotional impact. If you are wondering why so many personal injury lawyers frequently advertise on TV or billboards, the reason that they do is money. The types of firms that have large advertising budgets are focused on getting as many cases through their doors. The advertisements are designed for the law firms to get hundreds of calls each month. These firms often have huge advertising budgets of hundreds of thousands of dollars per year.
While you might think that getting a settlement within mere months of your accident sounds appealing, it is not a good idea to hire a settlement mill personal injury attorney. These firms do not thoroughly investigate their cases and use the same formulas that insurance companies use to determine the potential ranges of values.
Personal injury attorneys who do not work for settlement mills spend time conducting in-depth investigations of their clients' cases before they send demand letters to the insurance companies. This may allow them to build strong cases for their clients that clearly show the liability of the other party. Insurance companies know the difference between settlement mill attorneys and conventional personal injury lawyers. When there is a settlement mill attorney involved in a case, the insurance companies tend to quickly settle the claims because they can get away with paying out the bottom dollar. When there is an experienced personal injury attorney who is willing to litigate cases to trial and has amassed a successful track record for his or her clients, insurance companies may settle in order to avoid a trial that they might lose. As a consequence, these cases are often settled for much higher amounts than the claims that are handled by settlement mills.
