Litigation and Trial - Max Kennerly : Philadelphia Trial Lawyer Max Kennerly : Business and Commercial Litigation : Civil Attorney : The Beasley Firm : Philadelphia Pennsylvania

Professor Richard Epstein of the University of Chicago published an opinion piece in yesterday's Wall Street Journal on medical malpractice.

"Embarrassingly ignorant" would be a charitable description. Eric Turkewitz calls it "flat out false."

How bad was it? Turkewitz caught two outright falsehoods:

American courts commonly think it proper for juries to infer medical negligence from the mere occurrence of a serious injury.

and

American plaintiffs are sometimes spared the heavy burden of identifying particular acts of negligence, or of showing the precise causal connection between a negligent act and an actual injury.

Neither of these are true, as described in Turkewitz's article.

But it doesn't even end there. Here's another line:

American judges frequently let juries decide whether honest mistakes are negligent.

It is hard to put into words how embarrassing, shocking and insulting it is to see a law professor who has written textbooks on torts question how we (or who we let) "decide whether honest mistakes are negligent."

An "honest mistake" is negligent. It's what it means to have been negligent: you made a mistake. You neglected your duty. You failed to exercise the care that a reasonable, prudent person would exercise under the same circumstances. If a physician had intended the harm, it wouldn't be medical malpractice, it would be battery, an intentional tort.

And that is how it should be: a physician should be responsible for damages they caused the patient by neglecting their duty. If the patient neglected to drive safely, ran a red light, and injured the physician, the patient would be responsible for the damages they caused the physician. It's why we have insurance: to pay for the damages we mistakenly cause others.

Putting aside Professor Epstein's "honestly mistaken" description of medical malpractice law, let's consider his solution to the "disturbing" medical malpractice system (which he vaguely and ridiculously concludes causes a full 10% of US health costs by way of defensive medicine):

What is needed is the replacement of juries with specialized commissions like those in France, which help reduce litigation expenses and promote uniformity in case outcomes across regions.

Naturally, Epstein doesn't go into any detail about his proposal, so there's nothing even to critique.

On the subject, however I recently noted that Philip K. Howard's health courts proposal (in the New York Times) was "unlikely to make results any more 'reliable' than now, unless you presume that judges are systematically biased in favor of one side or the other" and that "Howard's process for choosing a 'neutral' expert and the materials they opine on will probably make medical malpractice litigation more contentious, expensive, and uncertain."

Epstein's ephemeral proposal would likely suffer the same problems if he actually spelled out the details. But he has no need to worry about that, he can just 'negligently' draft a new column filled with errors about some other field of law.

Finally, he concludes:

The best reform would be to allow physicians, hospitals and patients to contract out of the liability mess by letting the parties reject state-imposed malpractice rules. They could, for example, choose to arbitrate, to waive jury trials, or to limit damage recovery. Stiff competition and the need to maintain reputation should keep medical providers in line in such a system.

That is to say, Epstein wants to transplant to medicine the same fine extrajudicial system we use for credit cards, used car buying, and check-cashing.

Thanks, but no thanks.

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The AmLawDaily reports Study: Law Firms Have "Little or No Interest in Change," CLOs Say:

Altman Weil's 2009 Chief Legal Officer Survey received responses from 183 CLOs--about 15 percent of the 1,222 corporate law departments invited to participate. Sixty-two percent of respondents worked for companies with over $2 billion in revenues. ...

The study revealed that 25 percent of CLOs surveyed said they were putting a 'high' amount of pressure on their outside panel firms to change "the value proposition in legal service delivery," as opposed to simply cutting costs. Another 37 percent rated the pressure as medium, while 38 percent said there was a low degree of pressure on outside law firms to change.

When asked how serious firms are in changing their service models, only five percent of CLOs surveyed said firms are serious about changing their structure. Another 20 percent gave firms some credit for implementing efforts towards change, but an overwhelming 75 percent rated firms as having "little or no interest in change."

Simultaneously, Legal Blog Watch reports on the many firms in fact 'changing their structure' by moving to an apprenticeship model:

With the economy down, law firms have less work. That means they've got more time -- or at least, slightly more appetite -- for training new associates. As the National Law Journal reports, a number of firms -- most recently, 659-lawyer firm Howrey -- are moving toward an apprenticeship model, with new associates spending time attending classes and shadowing partners on client matters. Associates participating in the Howrey program are still expected to generate billable hours, though the requirements are reduced to 700 hours in their first year. And to help subsidize the costs of the $3 million training program, the firm is cutting first-year salaries from $160,000 to $100,000, with a $25,000 bonus that can be applied to repay student loans.

Several other firms have launched similar efforts, including Drinker Biddle & Reath, Dallas-based Strasberger and Price, which recently introduced apprenticeship-type programs, and Atlanta-based Ford & Harrison, whose "Year One" training program was rolled out last year.

Law Marketing Portal goes into the details of the CLO survey:

“This combination of inside and outside reductions means not only that in-house lawyers will assume greater workloads, but also that Chief Legal Officers will need to become more strategic about triaging work, allocating resources, and, in some cases, tolerating higher levels of risk,” says DiLucchio.  “And when they do hire outside counsel, you can bet that they will be shopping for value.”

 

The importance of price when hiring outside counsel declines as the importance of the work being done increases, according to the survey.  In addition, there is a direct correlation between the importance of a firm’s capabilities and the importance of the matter to the corporation.

In normal industries, increasing value is often a matter of increasing productivity, and Law21 has a thorough post on the many new approaches for measuring lawyer productivity. On the whole, the legal industry is furiously searching for ways to provide better value to the client through new billing and compensation models -- they're even exploring a novel approach to training new hires.

Of course, I never miss an opportunity to criticize corporate law firm culture or the billable hour, but it sure looks like the big firms are trying to change. As noted by this insightful piece about the news and scientific publishing industries, it is extraordinarily hard even for a smart, adaptive, and willing organization to radically change and survive disruptions.

As also reported today, a number of corporate firms around here in Philadelphia are reducing associate and partner salaries; as I've discussed before, given the BigLaw business model, cutting salaries is a dangerous and desperate move. BigLaw is worried and trying to change.

Thus, I'm going to blame businesses for their unhappiness. Moreover, if you're still unhappy with BigLaw, stop using it. Are you defending a national antitrust case? Multi-district mass torts litigation? Are you acquiring a billion-dollar public company and taking it private?

No?

Perhaps you don't need a whole team of lawyers working day and night. Think about it.

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Drug and Device Law points us to an article in Saturday's Wall Street Journal:

Ashcroft v. Iqbal, released in May, will make it harder to bring a lawsuit without specific factual evidence, raising the threshold for moving a case into expensive litigation and possibly saving companies millions of dollars in legal fees. The case was overshadowed by other business rulings on consumer lawsuits, environmental and employment law and other matters in a term set to end Monday, but legal experts said it may be the most important.

"It's the case that will be cited more than any other by a factor of 100," said Tom Goldstein, partner at Akin Gump Strauss Hauer & Feld LLP and founder of the Scotusblog Web site. He called the ruling "an unexpected gift for the business community."

In the case, a Pakistani named Javaid Iqbal sued government officials over his detainment after Sept. 11, 2001. The Supreme Court ruled that Mr. Iqbal didn't have sufficient factual evidence to proceed with his discrimination claims.

"While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations," Justice Anthony Kennedy wrote in the 5-4 opinion. He cited the 2007 decision in Bell Atlantic Corp. v. Twombly, an antitrust case that outlined what plaintiffs must assert to make it through initial court proceedings.

As a result of the Iqbal ruling, businesses may find it easier to fend off lawsuits by persuading courts to dismiss complaints early in litigation.

I disagree. Maybe a handful of cases at the fringes with no factual allegations will be dismissed (most of these cases were already dismissed even prior to Twombly), but that's it. Iqbal's casual reference to pleading standards does not change the narrow focus of the actual opinion, which relates to the very specific issue of how "qualified immunity" applies to high-ranking officials in suits against the federal government for deprivations of constitutional rights.

Tom Goldstein is right that the Ashcroft v. Iqbal opinion will be cited all of the time by defendants' motions to dismiss, and will be cited by court opinions evaluating motions to dismiss, but that doesn't mean defendants will get much mileage out of it.

Rather than argue the details why, let me show you what will probably become my standard draft response to such motions:

Defendant's heavy reliance on Iqbal is misplaced. Iqbal was a Bivens action brought by a Pakistani national who alleged ethnically and racially discriminatory treatment in the post-September 11, 2001, period by numerous federal officials while he was detained for charges of defrauding the United States with regard to identification documents, charges to which he plead guilty, prompting his deportation. Iqbal, 556 U.S. ___; Slip op. 1. There was no dispute that the facts alleged by Iqbal stated a Bivens claim against all individuals directly and indirectly involved in his treatment. Id.

The narrow question in Iqbal was whether Bivens liability -- which indisputably does not extend to supervisors through respondeat superior (see Monell) -- attached where the complaint alleged "a supervisor’s mere knowledge of his subordinate’s discriminatory purpose." Slip op., 13. The Supreme Court reiterated that Bivens creates a unique, disfavored and limited cause of action disconnected from normal tort doctrines and reaffirmed that, "[a]bsent vicarious liability, each Government official, his or her title notwithstanding, is only liable for his or her own misconduct." Id.

Such a Bivens-specific holding bears no relationship to the business lawsuit sub judice. Importantly, though, and contra defendant's arguments, the Supreme Court reiterated in Iqbal that "a court must accept as true all of the allegations contained in a complaint" and that a plaintiff need only "state[] a plausible claim for relief [to] survive[] a motion to dismiss." Slip op. 14-15. Plaintiff has clearly done that here; defendants' heavy reliance on an irrelevant Bivens opinion reveals the lack of any support in existing case law for their request to throw plaintiff out of court entirely. The Supreme Court has always instructed, and continues to instruct, District Courts to assume the facts in the complaint to be true, to make reasonable inferences on behalf of plaintiff's allegations, and to deny dismissal where plaintiff has a "plausible" claim.

Finally, again contra defendants, Iqbal was specifically remanded to the Circuit Court to consider whether the plaintiff there should be permitted to amend his complaint to cure the deficiencies. Such is consistent with this Circuit's precedent, in which leave to amend is to be freely granted prior to dismissal unless such amendment is clearly futile or inequitable.

So there you go. Iqbal soundly rejects Bivens liability for high-ranking government officials merely potentially aware of misdeeds much further down the chain of command (and it reiterates the appealability of an order on qualified immunity), but that's it.

The sky has not fallen on business plaintiffs.

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The American Constitution Society's blog reports:

The Supreme Court ruled today that Arizona public school officials violated the constitutional rights of a teenage girl when they searched her for prescription-strength ibuprofen.

"The issue here is whether a 13-year-old student's Fourth Amendment right was violated when she was subjected to a search of her bra and underpants by school officials acting on reasonable suspicion that she had brought forbidden prescription and over-the-counter drugs to school," Justice David Souter wrote for the 8-1 majority in Safford Unified School District v. Redding. "Because there were no reasons to suspect the drugs presented a danger or were concealed in her underwear, we hold that the search did violate the Constitution ...." The justices, however, overturned a federal appeals court decision that found the school official who performed the search could be held personally liable.

Here's the background, from The Blog of the Legal Times:

The case involved Savana Redding, then 13, who attended a public school with a zero tolerance policy toward possession of all drugs. Acting on reports that the girl had prescription-strength ibuprofen pills, an assistant principal ordered the search to be conducted by the school nurse. She was told to strip to her underwear and pull out her bra and underpants to show that she was not hiding individual pills. None were found. Her mother sued the school district claiming a Fourth Amendment violation, and last year an en banc ruling by the U.S. Court of Appeals for the 9th Circuit found that the search was unconstitutional and the assistant principal was not immune from liability.

I wrote recently about "qualified immunity" in the California Proposition 8 lawsuit, the doctrine which establishes that government agents are not liable for constitutional violations unless the right they allegedly violated was "clearly established" at the time it was allegedly violated. The Supreme Court held today that student's right not to be strip-searched without cause was not previously clearly established, but is now clearly established.

Jonathan Turley highlights Justice Souter writing for the Court (in what is likely his last opinion), showing that he truly understood the core privacy issues:

Savana’s subjective expectation of privacy against such a search is inherent in her account of it as embarrassing, frightening, and humiliating. The reasonableness of her expectation (required by the Fourth Amendment standard) is indicated by the consistent experiences of other young people similarly searched, whose adolescent vulnerability intensifies the patent intrusiveness of the exposure. ... The common reaction of these adolescents simply registers the obviously different meaning of a search exposing the body from the experience of nakedness or near undress in other school circumstances.

Changing for gym is getting ready for play; exposing for a search is responding to an accusation reserved for suspected wrongdoers and fairly understood as so degrading that a number of communities have decided that strip searches in schools are never reasonable and have banned them no matter what the facts may be ...

SCOTUSBlog's quick update (I'm sure they'll write more later) takes issue with the vague nature of the new rule:

The ruling in Safford United School District v. Redding (08-479) made clear that, while the Court seriously frowns on strip searches of students, those have not been forbidden totally; it depends, in other words.

The other constitutional rule — searches of public school students’ backpacks, notebooks, other belongings, outer clothing, and pockets are generally allowed if they are based on “reasonable suspicion” — remains as it has for a quarter-century, but with a small amount of refinement, the exact scope of which is not quite clear.

We're guaranteed to see more such Fourth Amendment school lawsuits in the future, particularly in light of the removal of qualified immunity for future defendants. Hopefully, we'll also see better behavior by school administrators.

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When the going gets weird, the weird turn pro.

Here's how it starts:

Nancy Kanter, Esquire ("Kanter") referred a case to Alan B. Epstein, Esquire ("Epstein"). The case involved a claim by a child in the foster system who was abused by her prospective adoptive foster parents (the "Tara M. case"). Kanter had served as a guardian ad litem for the child. When Kanter referred the case to Epstein, he agreed to pay her a referral fee. However, this agreement was not reduced to writing. Subsequently, Epstein joined the firm of Spector Gadon and Rosen, P.C. ("SGR") while he was handling the Tara M. case. Eventually, the Tara M. case was settled for $ 4,310,000. From that amount, Epstein realized attorney's fees of $ 1,293,000. Kanter claimed that she was entitled to a referral fee of $ 431,000. However, Epstein and SGR refused to pay Kanter a referral fee.

Kanter v. Epstein, 2004 PA Super 470, 866 A.2d 394, 395–96 (Pa. Super. Ct. 2004).

Kanter sued and won $215,500 at trial, exactly half what she claimed. The jury then considered, and declined, punitive damages.

Then things got ugly:

On August 16, 2002, counsel for SGR informed the court that she would be taking a pre-paid vacation and requested that the briefing schedule be adjusted to accommodate her vacation. ... Following on-the-record discussions, the trial court summarized the agreement of all parties that the Rule 227.4 deadline [the time at which judgment can be entered and appeals taken] would be extended until March 14, 2003. ...

Despite the fact that they had executed a written agreement and had agreed on the record to extend the Rule 227.4 deadline until March 14, 2003, the Defendants filed a praecipe to enter judgment on January 8, 2003, and judgment was entered that same day.

Why did defendants' counsel jump the gun on their own extension? Who knows. Either way, after filing the judgment, defendants filed two appeals.

Bad idea. The Superior Court later knocked out these first two appeals because:

Accordingly, the judgment entered on January 9, 2003 was improvidently entered as a result of the Defendants' breach of their agreement to extend the Rule 227.4 deadline. As a result, Defendants' appeal of the trial court's December 30, 2002 contempt Order was interlocutory and not appealable at the time that the Defendants filed their appeals at 186 and 187 EDA 2003. Accordingly, the appeals filed at Nos. 186 and 187 EDA 2003 are quashed.

Back at the trial court, after the premature appeal things got uglier:

The trial court ultimately issued an Order dated March 10, 2003, in which the trial court denied the Defendants' post-trial Motions and granted Kanter's post-trial Motion, in part. Essentially, the trial court granted: (1) Kanter's request for additur, increasing the award to $ 431,000; (2) pre-and post-judgment interest; (3) Kanter's request for punitive damages; and (4) Kanter's Motion for sanctions.

Let me fill in the amounts. Interest bumped the compensatory award to $461,429, then punitive damages added another $ 645,000, and then sanctions (for attorney's fees) topped it off with another $124,219.86, bringing Kanter's total to $1,230,648.86, about $60,000 less than the total fee collected by Epstein in the first place.

Defendants appealed that, too.

In the Pennsylvania Superior Court, things got even uglier:

In this case, the trial court ordered the Defendants to file concise statements of the issues to be raised on appeal. However, the Rule 1925(b) Statements filed by the Defendants were anything but concise. SGR's fifteen-page Rule 1925(b) Statement included fifty-five issues that it purportedly sought to raise on appeal and also incorporated by reference the forty-nine issues raised by Epstein in his Rule 1925(b) Statement. Likewise, Epstein filed a fifteen-page Rule 1925(b) Statement that raised the forty- nine issues, and also incorporated by reference the fifty-five issues raised by SGR. 7 In total, the Defendants identified 104 issues in their Rule 1925(b) Statements. Furthermore, we note that many of the issues identified by each of the Defendants also included multiple sub-issues.

Kanter v. Epstein, 2004 PA Super 470, 866 A.2d 394, 400–401 (Pa. Super. Ct. 2004).

The Superior Court dismissed that appeal as well, leaving defendants with nothing. The Pennsylvania Supreme Court and United States Supreme Court both denied certiorari.

So defendants sued their appellate lawyers.

There's an old saying that legal malpractice cases are hard to win because they require the plaintiff prove a "case within the case;" i.e., the plaintiff have to prove they would have won the original case in order to prove the malpractice case.

How do you do that for a bungled appeal? Do you try to convince a jury of non-lawyers what an appellate court would have done with 104 distinct legal issues?

My preferred quote for describing legal malpractice cases is, when the going gets weird, the weird turn pro.

As the Court of Common Pleas for Philadelphia County held last winter:

Whereas, the Kanter action appeal was quashed by the Superior Court of Pennsylvania without reaching a decision on the merits of the appeal;

Whereas, this action is based on the contention the Kanter action appeal was quashed due to the alleged malpractice by defendant, Saul Ewing;

Whereas, the existence of actual loss sustained by plaintiffs to the malpractice by defendant depends on the outcome of the “case within the case” and whether plaintiffs would have received appellate relief and the extent of appellate relief in the Kanter action if plaintiffs’ appeal had not been quashed by the Superior Court;

Whereas, the parties agree that the “case within the case” presents questions of law for the Court to decide and not a jury trial issue;

Whereas, the parties agree to bifurcate the proceedings to present the “case within the case” to the court for decision prior to a trial (if necessary) on the remaining issues for plaintiffs’ malpractice claim and defendant’s counterclaim. …

It is hereby ordered that … the “case within the case” is bifurcated from the other issues in this action and the Court will decide whether and the extent to which plaintiffs would have received appellate relief if their appeals had not been quashed in the Kanter Action … Following the Court’s decision of the “case within the case,” the court will entertain a request for immediate appeal of the decision of the “case within the case” if the decision is not a final order and no party shall oppose the request of another party to immediately appeal the court’s decision of the “case within the case” even if not a final order to resolve the “case within the case” prior to trial of other issues.

Good idea! Three weeks ago, the trial court issued its full order for the inevitable appeal:

A reading of the Trial Judge's Opinion, dated February 26, 2004, reflects his disappointment with the persistently adversarial, over-zealous, and non-cooperative posturing among all trial counsel for more than two years under his jurisdiction, and in his courtroom. As a result, this distinguished jurist may have inadvertently ordered overlapping financial sanctions for punitive damages, additur, Contempt and attorneys fees. An objective review brings a different result. With that in mind, the Superior Court most probably would be constrained to reverse. ...

This Reviewing Court believes that the Superior Court would be unable to find support in this record for the sua sponte alternative. Delaying tactics during trial, including objections and side bar conferences are annoying, but not the sort of wanton or reckless conduct that meet the criteria for a punitive damage award. ...

Ms. Kanter's request for additur was premised on her belief that the triers of fact were required to award her the full amount of her claim. The Superior Court would have reviewed the record and determined that the triers of fact are free to believe all or part or none of the testimony. ...

The Trial Court ordered attorneys fees and contempt as sanctions "relating to punitive damages only" (emphasis in original), however, for all the reasons set forth above finding that conversion and punitive damages should not have been part of this case, the Superior Court would not have remanded the record to the Trial Court for a hearing.

Epstein v. Saul Ewing, LLP, 2009 Phila. Ct. Com. Pl. LEXIS 83 (Pa. C.P. 2009).

And so back they go to the Superior Court, to rule on what it would have done had it considered the original appeal.

The weird have definitely gone pro.

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The WSJ Law Blog finds easter eggs for consumers of financial products buried in the proposed financial regulation overhaul:

The [not-yet-created Consumer Fraud Protection Agency] should be directed to gather information and study mandatory arbitration clauses in consumer financial services and products contracts to determine to what extent, and in what contexts, they promote fair adjudication and effective redress. If the CFPA determines that mandatory arbitration fails to achieve these goals, it should be required to establish conditions for fair arbitration, or, if necessary, to ban mandatory arbitration clauses in particular contexts, such as mortgage loans.

...

Although arbitration may be a reasonable option for many consumers to accept after a dispute arises, mandating a particular venue and up-front method of adjudicating disputes – and eliminating access to courts – may unjustifiably undermine investor interests. We recommend legislation that would give the SEC clear authority to prohibit mandatory arbitration clauses in broker-dealer and investment advisory accounts with retail customers.

Business Insider worries about the unintended consequences:

That seems a clear way of increasing the costs of broker-dealer and investment advisory costs, which may mean that smaller customers find that brokerages are even less likely to deal with them than before. As usual, there seems to be very little thought given to how brokers will react to having the increased risk of litigation imposed upon them.

What's more, there are serious questions about whether it makes sense to burden the court system with additional litigation that a ban on mandatory arbitration will sure spur. In effect, a part of the costs of disputes between brokers and their customers are being transferred to the taxpayer who will pay the costs for the extra-burden on courts. It's far from clear why this shift in cost from the parties to the agreement to taxpayers is warranted. We can squint our eyes and see this as something of a bailout of customers who wind up unhappy with their broker.

Last I checked, "wind[ing] up unhappy with [your] broker" wasn't worth a dime in a court of law, at an arbitration, or anywhere else. The investors aren't "unhappy" because their broker didn't get them a cheese wheel for Christmas, they're "unhappy" because their broker breached their contractual and fiduciary duties and lost a ton of the investor's money. It takes an awful lot of "squinting" to see a months-or-years-long expensive lawsuit to get back the money that someone else lost as a "bailout."

Most "mandatory arbitration clauses in consumer financial services and products contracts" force the disputes be heard in FINRA's Dispute Resolution process. As The National Law Journal reported at the end of March,

FINRA — the Financial Industry Regulatory Authority — oversees nearly 5,000 brokerage firms, 173,000 branch offices and 659,000 registered securities representatives. It describes its chief role as protecting investors by maintaining the fairness of the U.S. capital markets. ...

"We don't have official projections for 2009, but if the trend continues, we're probably looking at a high that will match what we saw in '03 and '04," said FINRA spokesman Brendan Intindola.

Arbitration cases filed in 2003 and 2004 — the largest number in 14 years — almost reached the 9,000 mark and were driven by the bursting of the dot-com bubble and the subsequent decline in the equity markets. In 2007, slightly more than 3,000 cases were filed, and in 2008, nearly 5,000.

Lawyers who represent customers and industry members generally believe that FINRA will be able to manage the dramatic increase in its arbitration workload, but they are divided on whether its arbitration panels — charged with industry bias in the past — now provide a level playing field to those using the process.

"The general perception is it is very tilted," said one practitioner who asked for anonymity. "Even if only one-third of the panel is from industry, that's the person with alleged expertise and who has disproportionate sway on the panels."

Broker/Dealer arbitrations are common, but banning them wouldn't open the floodgates: financial products consumers file under 10,000 claims filed nationwide. Keep in mind that essentially every dispute you have with your broker/dealer is forced into FINRA arbitration, including no-brainer claims like the return of a promissory note, so these numbers may be inflated to some degree. It's hard to say what percent of these filings claim substantial losses due to malfeasance.

More importantly, though glossed over by Business Insider, full-fledged civil litigation in open court is not fun for anyone involved. Even within confidential arbitration, just last month FINRA quietly withdrew a proposal that would have permitted more extensive discovery into the financial records of investors bringing claims against their financial advisers, in light of numerous complaints that such a change would subject investors to a "financial colonoscopy." Moving these types of cases into the civil court system would permit defendant banks and investment advisers to dig very deeply into the personal and financial histories of investors bringing suit, far deeper than they would be permitted to do in an arbitration.

For most of the individual claims, I am not too concerned about the arbitration process, as it provides wealthy investors (who make up most of the filings) a simple, relatively convenient and very private way in which to seek redress for their losses, and they will be adequately represented by paid counsel throughout the process. The problems for everyone else, however, are twofold:

• It's not clear whether a group of injured inventors may pursue a class action against a broker-dealer, investment bank or investment adviser. FINRA's Code says it is not applicable to class actions, and an increasing number of courts have held in other contexts that bans of class actions are illegal, but the law here is not as clear as it should be.
   
• The selection process for these arbitrators is not transparent. @phila_lawyer is right that FINRA seems to prefer arbitrators familiar with the financial industry; that's not necessarily evidence of bias, but it's nonetheless problematic, since it exposes the process to 'capture' by the industry and, as noted above, such 'insiders' often hold undue sway on panels.

As such, it's certainly worth a look into the issue, which is all the Obama plan proposes.

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After four days of trial, and a few hours of deliberations, the AP reports:

A federal jury ruled Thursday that Jammie Thomas-Rasset willfully violated the copyrights on 24 songs, and awarded recording companies $1.92 million, or $80,000 per song.

Thomas-Rasset's second trial actually turned out worse for her. When a different federal jury heard her case in 2007, it hit Thomas-Rasset with a $222,000 judgment.

Under our absurd (and possibly unconstitutional) copyright laws, the award per violation can range from $750 to $150,000, and the jury here roughly split the difference at $80,000 per song, about the same amount as a Manhatten jury will give you for losing the end of your pinky. The jury must have felt these particular duplicate copies of the songs were very dear to the poor record companies.

Why would twelve ordinary citizens do that?

A vigorous defense from Kiwi Camara and Joe Sibley was not enough to sway the jury, which had only to find that a preponderance of the evidence pointed to Thomas-Rasset. The evidence clearly pointed to her machine, even correctly identifying the MAC address of both her cable modem and her computer's Ethernet port. When combined with the facts about her hard drive replacement (and her failure to disclose those facts to the investigators), her "tereastarr" username, and the new theories that she offered yesterday for the first time in more than three years, jurors clearly remained unconvinced by her protestations of innocence.

Camara suspects that the jury thought Thomas-Rasset was a liar and were "angry about it," thus leading to the $80,000 per-song damages.

And there you go. Camara has it right; pity he couldn't get his client to stop lying at trial.

For comparison, not too long ago a jury awarded just $1 million in pain and suffering to this man:

After 63 days in the hospital (57 of them in a coma), 11 surgeries and 65 more days in a rehabilitation hospital, Robert Doviak was left totally and permanently blind, with a sense of touch that was seriously compromised, partial loss of hearing and no sense of smell or taste. Additionally, he had substantial orthopedic injuries including fractures of his left femur, several cervical vertebrae, both zygomatic arches and other bones in and about his face and eyes, his left hand and his right wrist.

The difference?

[D]uring summation, Doviak's attorney asked the jury to award Doviak $60,000,000 for pain and suffering, an amount Doviak's new attorneys say is preposterous and evidence of awful advocacy and which defense counsel says revealed the greed that served as the foundation of plaintiff's case[.]

Credibility matters. Who you are, what you do, and what you say matters. Don't treat the jury like they're stupid; don't try to get anything by them, and don't ask them to do or to believe something ridiculous. It will never work. If your case has a problem, concede it, deal with it, and move on.

And above all, never lie to the jury.

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At The Legal Intelligencer:

Moving beyond all the talk of alternative fee arrangements, Saul Ewing has put its fixed-fee programs in writing -- on its Web site at least.

 The firm launched this week its "cost certainty commitment" with two different programs in which either a fixed fee or a cost per-attorney, per-day will be used on specific types of matters the firm identified as lending themselves to such arrangements. ...

To start, Saul Ewing is offering a fixed, daily blended rate per attorney for due diligence work for investors, companies looking for capital and venture capital or private equity firms looking to have their portfolios evaluated.

The second program offers a fixed fee for representation at administrative hearings before the Pennsylvania Insurance Department. There are two packages under this plan, with the second having a higher cost to include some post-hearing work.

Antzis said the arrangements could be offered for certain types of labor and employment, intellectual property and litigation matters as well. ...

Law firms have been offering fixed fees for things like patent filings and the drafting of wills for years, Antzis said. But the firm's first significant foray beyond those areas came this year before the "cost containment commitment" had even been thought up.

Saul Ewing stole away work for a large grocery chain from a larger, national firm. Antzis said the chain brought its business to Saul Ewing because the firm agreed to a fixed cost for handling all of the chain's single-plaintiff employment discrimination claims in the region.

In other industries, they call this "meeting customer demand."

It has long been ridiculous to bill by the tenth of the hour for representation across hundreds of substantially similar matters which all follow the same procedures and all apply roughly the same law, like insurance regulator hearings. Large corporate law firms have inexplicably been able to resist billing and pricing reform for decades, but no longer, as revealed by that last quoted paragraph above.

Modern mid-size and large businesses are kept profitable in part by compartmentalizing costs and making them consistent over time. Just like how few businesses these days accept the risk of self-insurance or vertical integration, fewer and fewer will tolerate endless swings in legal costs they barely understand and can barely audit for performance.

The challenge for firms, then, is no longer figuring out the precise amount by which they can increase their hourly rate each year without driving off the client, but rather figuring out how to meet their clients' demand for bills that are regular and predictable.

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The National Law Journal fills us in on the whopping $4.1 billion wrongful termination arbitration award against an employer that fired an executive without cause, which was recently upheld by a trial court:

NLJ: How did this award get so big?

MY: It got this way because the defendant, the employer, first of all, apparently had terminated a high-level employee without cause. He [the ousted executive] then sued, and the defendant, who at that time had a lawyer, moved to compel arbitration.

At that point, the defendant made some mistakes. It appears the defendant neglected to, or decided not to, participate in discovery and withheld financial information not only asked for in discovery requests but ordered by the arbitrator.

...

And what happened next is really the telling part: The [retired] judge set the hearing for the arbitration, and the defendant wrote a letter to the arbitrator saying, "I'm not going to show up." When there wasn't any information forthcoming from the defendant, what the arbitrator did was look at what information was available about the financial situation of the company and applied adverse inferences against the defendant, essentially filling in the gaps in the story presuming it would come out in favor of the plaintiff. That was really where the numbers started to scale.

...

NLJ: What was special about this executive compensation agreement?

MY: This agreement said that the employee was going to be paid a commission structure of 5 percent of gross sales. What was significant about this one is that the agreement provided that if he is terminated without cause he is entitled to receive his commissions on an ongoing and permanent basis. ...

One big factor was trying to figure out what those gross sales were going to be. Because the defendant didn't provide any financial information, the arbitrator and plaintiffs didn't have a lot to go with in trying to predict where the company was going to go. They looked at a letter the defendant sent to shareholders talking about revenue in one month being $535,000 and then talking about the expected growth rates of 20 percent or 10 percent per month. It's not a realistic rate [that] the company really would grow 10 percent per month in perpetuity, but because the defendant didn't come forward with any evidence, because they didn't provide anything in discovery, these adverse inferences were then applied and the arbitrator essentially assumed that those figures were going to be correct. If you have a commission structure based on those kinds of growth numbers, you get up to the $1 billion pretty quickly. The punitive damage award was brought in at essentially triple the commission award.

And there you go. It seems like the defendant was destined to lose anyway, otherwise he or his lawyers would have been able to mount a defense initially.

The part that's odd is how he didn't seem to grasp the severe ramifications of the employment agreement, the same one he had used to entice the employee to work there in the first place. I can see the defendant not expecting a $4.1 billion award, but he had to expect a serious walloping from 5% of gross sales forever.

I'm betting the defendant could have reduced that award by far more than 90% if he had fought it. So we'll say that 99.99% of success is showing up.

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