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Florida Justice Reform Institute

Bill Would Allow More Surviving Family Members to Recover Damages in Medical Negligence Cases

November 27, 2023/in Florida Bar News

Florida Bar News

Nov 27, 2023 By Jim Ash

Florida House members are renewing a bipartisan effort to eliminate a Florida law that prevents some surviving family members from recovering damages for medical negligence.

Rep. Mike Beltran, R-Zephyrhills, and Rep. Johanna Lopez, D-Orlando, are co-sponsoring HB 129, otherwise known as the “Keith Davis Family Protection Act.”

Bletran Rep. Mike Beltran

Florida law is unique in that it limits the awarding of punitive damages to a surviving spouse or minor children when a person 25 or older dies from medical negligence.

Lopez Rep. Johanna Lopez

“This law excluding a class of persons from the protections the rest of us enjoy, finds no analogue in the other 49 states,” Beltran, a Harvard Law graduate, said in a statement.

“Our Floridians deserve to have the same rights as others across the nation,” Lopez said. “The bill will allow the parents and descendants to be renumerated in case of medical malpractice that results in the death of loved one.”

Navy veteran Keith Davis was 62 and single when he died three years ago in a Tampa hospital from a misdiagnosed blood clot. His 33-year-old daughter, Sabrina, formed a coalition that has pushed for reforms for the past three years.

Sabrina Davis and other critics derisively refer to the restrictions as Florida’s “fee kill” law. Beltran insists that it creates a perverse incentive for physicians.

“Patients harmed by malpractice can sue, whereas physicians who kill patients covered by the [free kill] law enjoy immunity from suit,” he said.

Conservative groups, including the Florida Justice Reform Institute, oppose the reforms. The restrictions were put in place in the 1990s to protect physicians from rising malpractice rates.

Opponents note that the Legislature recently enacted sweeping civil litigation reforms to rein in the “billboard attorneys” they blame for skyrocketing insurance rates.

Beltran insists the restrictions unfairly discriminate and are no longer necessary after lawmakers decades ago “curbed abuse of the malpractice laws.”

“The law makes scant sense, is antiquated, solves no problem, and creates unfairness.”

https://www.floridabar.org/the-florida-bar-news/bill-would-allow-more-surviving-family-members-to-recover-damages-in-medical-negligence-cases/ 

https://www.fljustice.org/wp-content/uploads/2024/11/fjri-news.jpg 800 800 RAD Tech https://www.fljustice.org/wp-content/uploads/2024/11/Florida-Justice-Reform-Institute.jpg RAD Tech2023-11-27 15:55:292024-12-05 13:20:55Bill Would Allow More Surviving Family Members to Recover Damages in Medical Negligence Cases
Florida Justice Reform Institute

Florida Lawmakers Move to Change State’s Wrongful Death ‘Free Kill’ Law

November 21, 2023/in The Epoch Times

The Epoch Times

Florida House Bill 129 would repeal the age and marital status requirements that decide which family members can sue for medical malpractice wrongful deaths.

Luke Sukhram (left), 8, and his mother Sabrina Davis (right) stand with a photo of her father, Keith Davis.

Luke Sukhram (left), 8, and his mother Sabrina Davis (right)stand with a photo
of her father, Keith Davis, in Gainesville,
Fla. on Nov. 1, 2021 after Mr. Davis
passed away in 2020 due
to medical negligence. (Courtesy Kiara Cline)

Jacob Burg
Patient advocates and state legislators are trying to change Florida’s Wrongful Death Law, which they argue harms two groups primarily—people over 25 with special needs and unmarried adults without minor children.

Commonly referred to as Florida’s “free kill law” by its opponents, state Statute 768.21 deals with damages allowed in cases of wrongful death. The law permits lawsuits for damages in situations of wrongful death, such as a car accident, gross negligence, or medical malpractice. The damages can be both “economic,” such as the deceased’s lost income, and “non-economic,” such as mental pain and suffering.

However, Florida’s Wrongful Death Law makes a key exception for cases of medical malpractice. While minor children or spouses of deceased adults can sue for damages with medical malpractice, adult children over 25 cannot for any reason. The same is true of parents of deceased children over 25.

Some of the law’s most passionate critics are relatives of medical malpractice victims.

Adults With Special Needs

Marcia Scheppler of Port St. Lucie lost her son Joseph “JoJo” Thompson when he was 29 and living in a group home. Mr. Thompson had severe autism and Down syndrome with a two-year-old’s mind.

On Sept. 6, 2019, Mr. Thompson had a fever and could not eat. They rushed him to Cleveland Clinic’s Tradition Hospital in Port St. Lucie. Mr. Thompson could not communicate verbally and was terrified, forcing Ms. Scheppler to ask for help.

She said her son required sedatives to admit him to a hospital in the past.

But this time, the hospital staff was unwilling to help. She said the charge nurse was not only refusing to sedate her son but also admittance.

“Are you saying that you could see my son is in distress? Are you saying that you would let him die out there on the pavement before you get him inside to treat him? And he said, ‘Yes, I have 27 beds and 55 patients already,'” Ms. Scheppler said.

Her son struggled to breathe and had uncontrollable muscle movements. Ms. Scheppler called his family physician, who told her to take him to St. Lucie Hospital.

There, Mr. Thompson’s blood was tested, revealing he was septic. Despite efforts from St. Lucie Hospital’s staff, Mr. Thompson died from sepsis on Sept. 27, 2019.

A doctor urged Ms. Scheppler to make an EMTALA complaint. The Emergency Medical Treatment and Active Labor Act compels all hospitals to administer care to anyone within 250 yards of the facility. Mr. Thompson was 10 feet away from the first hospital’s ER.

The Florida Department of Health (DOH) and Human Services Centers for Medicare and Medicaid Services (CMS) completed their EMTALA investigation on Dec. 9, 2019, reviewing parking lot videos, records, and hospital staff interviews, finding that “the facility failed to provide an appropriate medical screening examination and stabilizing treatment for [Mr. Thompson] on [Sept. 9, 2019].”

The report says that Mr. Thompson is seen pacing in the parking lot while holding his head.

Marcia Scheppler (L) and Joseph “JoJo” Thompson (R)
pose together prior to Mr. Thompson’s death in 2019.
(Courtesy of Marcia Scheppler)

Ultimately, this failure to provide care resulted in an “immediate threat” to Mr. Thompson’s health and safety, the report said.

The CMS report notified the state Office for Civil Rights, which has initiated its own pending investigation. 

She said that her son was adjudicated by a Florida judge to never engage in “complex relationships” like marriage because of his two-year-old mental capacity. 

Thus, his disability barred Mr. Thompson from ever having a spouse or children, making it impossible for him and people like him to receive the same medical malpractice protections as others. 

“There’s nothing I can do for JoJo now. But when you think about it, with people with intellectual and developmental disabilities anywhere, they are like the most vulnerable people,” Ms. Scheppler said.
While Florida law can compel noncustodial parents to pay a special needs child’s financial support for their whole life, protections against medical malpractice once the child reaches the age of 25 are absent.

“But the very least you can do is protect the JoJos. There are only like 67,000 of them in the state of Florida. Can we at least protect them because they cannot [get married or have children]? They have no chance. Every single one of them will age out of being protected,” she said.

The Keith Davis Story

Sabrina Davis of Gainesville said her father, Keith Davis, 62, was experiencing leg pain on Oct. 10, 2020, and could not get out of bed. 

In 2008, Mr. Davis had a 10-inch blood clot in his right leg and was prescribed blood thinners.

At HCA Florida Brandon Hospital in 2020, Mr. Davis was allegedly refused his blood thinner and a leg ultrasound to rule out another clot. 

Mr. Davis’s symptoms were consistent with his 2008 stay, but the hospital instead ordered physical therapy, Ms. Davis said. 

On Oct. 15, 2020, the hospital called Ms. Davis, saying her father was “code blue” with no pulse. He did not respond to resuscitation. 

The doctor called it cardiac arrest and refused to order an autopsy, Ms. Davis said. She paid for a private autopsy, which determined her father’s cause of death as a nine-inch blood clot in his leg.

Keith Davis

A photo of US Navy veteran Keith Davis is seen in Gainesville, Fla., on
Nov. 1, 2021. (Courtesy of Kiara Cline)

“And I was just in tears. I was crying. I was screaming. I was like, I knew it. My dad knew it. Like we knew it. We knew it. We begged them to check, and they never listened,” she said.

Attorneys all told her the same thing—unless your father was married or had children under 25, there was nothing they could do.

Ms. Davis filed a complaint with the Florida Agency for Health Care Administration (AHCA). They ruled the hospital was at fault for failing to follow protocol for blood clots, she said.

When she filed a complaint with the DOH, they ruled that her father’s physician fell below the standard of care and committed medical malpractice, the agency report said.

The DOH opted to fine the doctor $7,500 and administer continuing education classes on blood clots and their treatment, according to the DOH report signed on Jan. 14, 2022, by State Surgeon General Joseph Lapado.

Ms. Davis was still barred from filing a civil suit against the doctor for medical malpractice due to the Wrongful Death Law.

“This is the freedom of our country. We, per the Constitution, should have the right for equal access to the court and for a jury to decide, not because my dad was single and [had] no minor kids, his life matters less. No way,” Ms. Davis said.

The Legal Arguments

The President of the Florida Justice Reform Institute, William Large, supports the law. Before 1990, Florida’s rules for awarding damages in wrongful death cases were stricter, he said. Plaintiffs were not allowed to sue for “non-economic damages” or mental pain and suffering in cases of wrongful death, including medical malpractice.

FL House of Representatives

The Florida House of Representatives in Tallahassee, Fla. (Alex Wong/Newsmakers)

The Florida legislature changed this rule and allowed pain and suffering in wrongful death litigation. However, parents with children over 25 or adult children over 25 with unmarried parents could not sue for pain and suffering in cases of medical malpractice. A car accident was treated differently than a negligent hospital death.

Mr. Large worries changing the law would negatively impact the state’s medical system.

“Imagine all the cases now that are going to be able to be brought for people who died. Adult children 25 and older that could now be brought. That’s going to be a tremendous cost driver for our health care system,” he said.

While Mr. Large contrasted “economic” and “non-economic” damages with wrongful deaths, the law bars adult children or parents of adult children from making any kind of medical malpractice lawsuits. The law prohibits these plaintiffs from making any medical malpractice suit, even purely “economic.”

Mr. Large created two charts that compare “non-economic” damages across all 50 states, including Washington, DC. While many states block plaintiffs from pursuing pain and suffering damages in wrongful death cases, most allow economic damages.

For example, Iowa approves medical malpractice cases from parents or adult children to recover “actual loss of services” after a family member suffers from a wrongful death.

In Washington, DC, pain and suffering damages are not recoverable, but a next of kin can sue for financial losses due to their family member’s medical malpractice death.

Florida is not alone in restricting “non-economic” damages with medical malpractice lawsuits, but the charts do not indicate if other states block all plaintiffs from pursuing strictly economic damages with medical malpractice wrongful deaths.

Injury law attorney Michael Hersh said the Florida Supreme Court made a ruling that questions the constitutionality and pragmatic value of Florida’s wrongful death distinction over age and marital status.

Florida Supreme Court

The Florida Supreme Court building in Tallahassee, Fla., on Jan. 22, 2023. (Nanette Holt/the Epoch Times)

He said the state-imposed caps on medical malpractice suit damages in the early 2000s to combat the rise of litigation and prevent physicians from leaving the state.

In Estate of McCall v. United States (2014), “the Florida Supreme Court using data that was provided to it … had found that all of the various concerns … including premiums going too high, doctors leaving the state—that ultimately they weren’t valid. And despite the Florida Medical Malpractice Act being enacted, which imposed all sorts of limitations on a victim’s ability to recover, it didn’t reverse any,” Mr. Hersh said.

He added, “So they ultimately found that the justification for having medical malpractice cases being treated differently than every other type of plaintiff’s injury case, or wrongful death case. There was no real justification.”

Mr. Hersh believes this is evidence that Florida’s Wrongful Death Law violates the Constitution’s equal protection clause.

Mr. Large acknowledged the McCall verdict but said he is adamant Florida’s 2023 Supreme Court would reverse it.

He also criticizes the “free kill” name, calling it “slanderous” and arguing that medical facilities lack the time and resources to use a patient’s marital status and age of children in administering medical treatments.

Steve Parker, a personal injury attorney from Tampa, agrees for most patients, but for those who are in the hospital for weeks or months at a time, the reality could be complicated.

“I think in most cases, they’re not going to know if they’re allowed to do a ‘free kill.’ I mean, they’re not going to know, typically, in most cases, if somebody has a spouse, or somebody has minor children, some cases they will, because it’s a case where somebody’s in the hospital for two months. The same kind of thing—then under those types of circumstances—I can see it happening,” Mr. Parker said.

He also downplayed any negative economic impacts from changing the law.

“I don’t think you’re gonna have a landslide of claims. I mean, I get calls, maybe once a month, where they have no claim because there’s no spouse, and there’s no minor children, and a wrongful death, and [medical malpractice]. There’s not that many of them. So I don’t think it’s going to open up the floodgates to an unmanageable number of claims,” he said.

Rep Hinson

Sabrina Davis (R3) meets with state Rep. Yvonne Hinson (C) and others in Tallahassee, Fla. (Courtesy of Sabrina Davis)

State Rep. Mike Beltran (R) argued that medical malpractice claims are already difficult to bring forward in Florida.

“It’s extremely hard to bring medical malpractice claims on Florida … There are other areas of litigation where there may have been abuses or crises, or where lawsuits are contributing to excessive insurance premiums and so forth. But I don’t think medical malpractice is one of them,” he said.

Mr. Beltran added, “First of all, it’s a discrete area of law. And it’s a discrete subsection of the population because it’s not generally applicable, which is why it’s so unfair. It also means that the dollar amount, you’re not regulating all medical malpractice or all wrongful death, or you’re regulating such a narrow area,” he said.

Proposed Bills to Change the Law

Mr. Beltran is sponsoring HB-129, known as The Keith Davis Family Protection Act, with state Rep. Johanna López (D). It aims to repeal the age and marital requirements for making medical malpractice wrongful death suits.

State Rep. Spencer Roach (R) is sponsoring HB-77, which removes the provision blocking parents of adult children from recovering certain damages from medical malpractice suits. This bill would cover Ms. Scheppler and her late son, Mr. Thompson.

State Sen. Jonathan Martin’s (R) SB-310 is the Senate companion of HB-77, also allowing parents of adult children to pursue certain damages from medical malpractice wrongful death.

Lastly, state Sen. Clay Yarborough (R) is sponsoring SB-248, which would follow HB-129 in repealing the age and marital status requirements from 768.21. However, AHCA and the Florida DOH would stipulate the extent of damages.

The four bills are headed to the Florida legislature in January 2024.

Ms. Davis also worries about tourists traveling to Florida who are unaware of the law.

“There’s one gentleman whose mom flew to Florida from California to have elective surgery. Well, she died after the surgeon messed up. And his family couldn’t do anything because she was in the category. So this affects even visitors. Once you cross that line, if you’re single and [have] no minor kids, you are fair game,” she said.

https://www.theepochtimes.com/us/florida-lawmakers-move-to-change-states-wrongful-death-free-kill-law-5533864 

https://www.fljustice.org/wp-content/uploads/2024/11/fjri-news.jpg 800 800 RAD Tech https://www.fljustice.org/wp-content/uploads/2024/11/Florida-Justice-Reform-Institute.jpg RAD Tech2023-11-21 15:55:302024-12-11 17:46:46Florida Lawmakers Move to Change State’s Wrongful Death ‘Free Kill’ Law
Florida Justice Reform Institute

How Florida’s ‘unscrupulous’ auto glass shops fuel an insurance crisis

November 12, 2023/in Washington Post

Washington Post

A coterie of glass repair shops and lawyers has exploited legal loopholes in Florida to rake in millions of dollars in insurance payouts. Legislators are trying to end it.

Eli Tan Eli Nan

November 12, 2023 at 9:21 a.m. EST

Windshield (iStock/Getty Images)

They roam Florida parking lots and carwashes in search of cars with damaged windshields, often bearing gifts; gift cards, steak dinners and discounted hot tubs are the common ones.

Insurance companies call them “harvesters,” and their sales pitch to car owners is simple: Auto glass shops can offer free windshield replacements because it’s covered by comprehensive insurance. All they need is a signature.

But after the signature is collected and the repair is made, the glass shops send exorbitant bills to insurers, who often deny or pay out a lesser amount for the claim. Lawyers then sue the insurance company for payment and the cost of legal fees, often settling hundreds of lawsuits at a time for a hefty sum.

It’s all part of a network of out-of-state companies and lawyers that have carved out an entire industry based on these glass replacements — so costly to insurance companies that it has caused rates to skyrocket across the state, consumer advocates say.

The tactic is common only in Florida, where more than 46,000 auto glass lawsuits have been filed so far in 2023, according to data from the state’s Department of Financial Services.

Laws meant to protect consumers have fueled the trend, which has exploded over the past several years — only 591 such Florida lawsuits were filed in 2011. Advocate groups point to the burgeoning industry of “unscrupulous” auto glass shops and lawyers as a leading factor behind the state’s high insurance costs.

The lawsuits have been inflaming an already bleak auto insurance market in Florida — a state whose average auto insurance premium of $2,560 is the highest in the country. The issue of auto glass litigation has become so dire that legislators have passed two laws in the past year to try to slow it down.

While car insurance rates are rising faster than inflation nationally, Florida’s increases have been the most drastic — the average premium today is 88 percent more expensive than a decade ago, according to figures from industry data firm Insure. Insurers have blamed the costly premiums on hurricanes and a high percentage of uninsured drivers, but the companies seldom mention that they also are passing on the cost of auto glass litigation.

When Florida resident Francinete Borgstrom was approached last December in an Orlando parking lot by an auto glass salesman, the offer “didn’t sound any alarms,” she said. The salesman told her that Auto Glass America could replace her broken windshield without a deductible, so she signed the waiver with no questions asked.

Borgstrom said she didn’t realize that when she signed away her assignment of benefits — that is, authorized the glass repair company to assume her rights under her insurance policy to seek payment for the work — she also gave the shop the right to sue the insurer in her name if necessary. Auto Glass America did just that when the insurance company, AssuranceAmerica, refused to pay the bill of $1,461. That price is more than four times the average cost for that type of repair, based on figures cited in a lawsuit filed against the same repair shop by another insurance company, Allstate.

These glass shops primarily target older people, immigrants and nonnative English speakers, consumer advocates said and court records suggest. Borgstrom, who immigrated to the United States from Brazil, did not know a lawsuit had been filed in her name until she was contacted for this article.

A representative from Auto Glass America declined to comment on its business model but said the company no longer offers gifts in exchange for servicing. The other glass repair shops mentioned in this article did not respond to requests for comment.

“Not only will it most likely lead to a higher rate at their next renewal date, but it has the potential to generate a nonrenewal at the end of their current policy period,” said Mark Friedlander, director of communications for the Insurance Information Institute. “The average $30 repair could be a six-figure impact on an auto insurance company.”

 Graph

Gift cards and steak dinners
 
The auto glass shops contract harvesters to find customers, sometimes even going door-to-door, lawsuits by insurance companies allege. Along with a free glass replacement, the harvesters at times offer gifts to entice their targets, some as valuable as $200.

Once a glass company persuades a driver to agree to the replacement and sign away their assignment of benefits, the shop adds “unreasonable fees and tack-ons” to the insurance claim, said Michael Carlson, president of the Personal Insurance Federation of Florida, an industry trade group.

When the insurance companies pay out a lesser amount for the replacement or reject the claim entirely, the glass shops sue for the remainder of the bounty. Then come the lawyers.

Until the recent changes passed by state lawmakers, Florida had what are called “one-way attorney’s fees” — a requirement that the insurer has to cover the plaintiff’s reasonable legal fees if it loses or settles a claim. These litigation fees are “where the real gravy is,” said Capital City Consulting partner Ashley Kalifeh, who worked with Florida regulators to close loopholes in the state’s insurance laws.

These fees are concentrated in a small group: Just 20 lawyers file 96 percent of the glass lawsuits in Florida, according to data commissioned by the Florida Justice Reform Institute.

Attorneys who file the lawsuits argue they’re helping individuals battle a large, entrenched system.

“The idea was to balance out the scales of power between a multibillion-dollar insurance carrier and Mom and Joe,” said William England, an attorney for Chad Barr Law who specializes in auto glass litigation. “If it comes down to being abused, there’s always a few bad apples in any society.”

The initial lawsuit filings are typically just a few pages long and based on a template that can be filled in with the name of the insured driver and the date of repair, a streamlined process that helps auto glass lawyers quickly file thousands of cases with relative ease.

Lawyers will offer to settle bunches of lawsuits for a single sum, Carlson said. That’s cheaper for insurers than litigating each case individually, even if some are winnable, because the insurance companies can pass the costs of settlement to policyholders, according to Friedlander.

But insurance companies would rather not have to deal with the mass lawsuits at all. In a lawsuit filed by Allstate against Auto Glass America in 2019, the insurance giant called the practice a “greedy scheme to extract as much money as possible.” The combined cost of Auto Glass America’s claims and litigation against Allstate in 2017 and 2018 exceeded $600,000, according to the lawsuit. “The effect of AGA’s unlawful and inequitable conduct is substantial,” it added.

Jannet Mehmed, 76, had the glass replaced on her 2017 Toyota Camry by Orange Blossom Auto Glass after finding the company through an online search in August 2022. Mehmed’s State Farm agent later called her with bad news — she had been charged $1,812, well over market rate.

“Senior citizens are very trusting,” Mehmed said. “You give them the impression that you’re going to help them, and they’ll open their checkbooks.”

Some lawsuits by insurance companies allege that harvesters forged signatures of drivers who turned down their offers. Others allege that glass shops never made the repairs after collecting the signatures, but still filed claims.

Fixing the cracks
 
For years, the practice of filing auto glass lawsuits has existed within the legal boundaries thanks to one-way attorney’s fees and loose insurance regulations. When the lawsuits spiked in 2019, a coalition of insurance groups called for changes in the state’s laws through an initiative called Fix the Cracks.

The initiative, led by the Personal Insurance Federation of Florida and funded through trade associations by Allstate, Farmers Insurance, Progressive and State Farm, helped pass two laws intended to shut down Florida’s freewheeling auto glass industry and put an end to “windshield bullies,” according to its website.

The first measure, passed in December 2022, barred one-way attorney’s fees for insurance-related claims. The second, passed in May, prohibited the transfer of assignment of benefits for auto glass repairs, making it harder for glass-replacement companies to fix windshields without first contacting the insurance companies. The May law also makes it illegal for glass companies to offer free perks in exchange for services.

But auto glass lawsuits continue to roll in, court records show. The assignment-of-benefits law applies only to insurance policies renewed or reissued after May 26, 2023, Kalifeh said, leaving a six- to 12-month period for lawyers to file as many lawsuits as possible before all existing policies have been renewed — 46,059 lawsuits were filed from January to August, according to data commissioned by the Florida Justice Reform Institute.

Some of the plaintiffs’ lawyers argue that insurance companies still stand to profit from the changes in Florida’s laws. Imran Malik, a lawyer who filed over 7,000 glass lawsuits in 2022, said insurers have used the cost of litigation as a “convenient scapegoat” for raising rates but have yet to lower them since the new laws were passed.

“Even with all the changes that have occurred in the law, not one insurance company has reduced their rates at all,” Malik said.

The insurance companies, Malik added, have long had “cushy relationships” with larger glass shops such as Safelite, which smaller glass shops take business away from. Safelite did not directly answer emailed questions about its relationship with insurance companies.

“There’s not a lot of clean hands in this industry,” said Florida attorney Zachary Hicks, who has worked on auto glass litigation cases since 2019. “The problem is that plaintiff’s lawyers will abuse the system if you let them. Insurance companies will abuse the system if you let them. … Insurance companies got exactly what they wanted — they eliminated it all — and rates are still up.”

Hicks added that he himself was recently dropped by Geico for not carrying minimum liability car insurance, even though he pays for a Geico umbrella policy.

The total costs of claims made by glass shops and their litigation costs are unknown, but Kalifeh estimates them to be “easily in the tens of millions of dollars a year.”

England and Hicks believe, however, that the new laws will effectively end auto glass litigation as an industry once the grace period for filing lawsuits is over. When it does, it is unclear by how much insurers will reduce premiums. State Farm, Allstate and Progressive declined to comment on how the lawsuits affect individual rates.

https://www.washingtonpost.com/business/2023/11/12/auto-glass-florida-insurance/ 

https://www.fljustice.org/wp-content/uploads/2024/11/fjri-news.jpg 800 800 RAD Tech https://www.fljustice.org/wp-content/uploads/2024/11/Florida-Justice-Reform-Institute.jpg RAD Tech2023-11-12 15:55:282024-12-05 14:33:18How Florida’s ‘unscrupulous’ auto glass shops fuel an insurance crisis
Florida Justice Reform Institute

The Law Firm Disrupted: Still Looking for the Gold Rush

November 2, 2023/in Law.com

ALM Law.com

Gold nugget

Changes in Arizona have yet to cause a real shakeup, but there’s one type of law firm that sees promise in the possibilities unleashed by the 2021 reforms.

Dan Packel – November 02, 2023 at 06:12 PM

It’s been a while since we’ve dropped in on Arizona’s deregulated market for legal services, and there’s a reason for that.

Over the past several years, I’ve periodically explored the possibilities opened up by the Arizona Supreme Court’s move at the start of 2021 to eliminate prohibitions against non-lawyer ownership of law firms.

And while later that year, I quoted an Arizona law firm leader likening what was happening in his state to the California gold rush of 1849, one expert in a recent forum was emphatic.  “There’s isn’t the gold rush that one might have expected,” said Boston University School of Law professor Maya Steinitz at a webinar on the economics of law firm ownership hosted last month by the Law & Economics Center’s Civil Justice Academy at the Goerge Mason University Antonin Scalia Law School.

As of the beginning of July, just over 50 legal-related entities have been licensed as alternative business structures.  In the mix are a few names that might be broadly recognizable to those who pay attention to new modes of legal service delivery: Axiom, Legal Zoom (through its LZ Legal Services LLC unit), and Elevate. There are some less familiar names doing novel things. But what’s standing in the way of some more brand-name licensees?

For Arthur Burger, who teaches professional responsibility at GMU law school, there’s a constitutional impediment, highlighted in two ethics opinions from the American Bar Association’s Standing Committee on Ethics and Professional Responsibility.

“If a single state bar were to permit non-lawyer ownership…that would not immunize lawyers in multi-jurisdictional firms and lawyers that are members of other state bars, which do have a prohibition—in rule 5.4—from participating in a law firm that has non-lawyer ownership,” he said.

That’s just one part of the reason why risk-adverse Big Law is steering clear.  No one is interested in courting disciplinary action for being on the bleeding edge.  But general conservatism in approach is part of the story too.  Who needs to share record profits with an additional set of hands? And yet, given the increasing professionalization of the C-suite in so many firms, maybe there’s a case for it.  Wouldn’t firms serious about installing business-savvy top brass—individuals who don’t necessarily have a J.D.—be intrigued about the fresh prospects for recruitment? “Stick around, and we can give you an equity share.”

For now, that seems more like a thought experiment than anything else.

But according to William Large, president of tort reform group Florida Justice Reform Institute and a participant in the GMU forum, there is one group of firms that are taking the prospects of a broader regulatory change seriously. 

“There’s a lot of very big, lucrative personal injury firms in Florida that are extraordinarily profitable.  And they can only sell their shares to other Florida lawyers.  Potentially that firm would be much more valuable to other investors,” he speculated. 

Florida’s own regulatory reform process came up short in late 2021.  But scroll down the list of those Arizona licensees and Large is onto something.  Names like National Mass Tort & Class Action Law Firm PLLC and Bad Drug Law Firm PLLC don’t leave much to the imagination.  The incentives might only apply to a limited set of players – not enough for a gold rush – but non-lawyer ownership clearly makes sense for some.

https://www.law.com/2023/11/02/the-law-firm-disrupted-still-looking-for-the-gold-rush/  

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