Firmly established owner of time-honored New York City contingent-fee practice provides guidance on how to thwart inevitable, unpredictable cash flows.
Our Deputy General Counsel, Kelly Anthony, Esq., recently sat down with Martin for a one-on-one interview on how he became the owner of Edelman & Edelman, P.C., how to deal with cash flow challenges, the biggest success his firm has had, if it is hard to practice law in New York City and more. Read what he had to say...
In 1982, Martin Edelman joined his father as a partner at Edelman & Edelman, P.C., a plaintiffs’ civil litigation practice headquartered in New York City. After his father retired in 1994, Edelman continued his father’s legacy by achieving millions of dollars for clients in product liability, construction and other complex personal injury actions, as well as by diligently representing victims in wrongful conviction cases. The firm’s success was punctuated this year when it attained the largest settlement for any single individual in the State of New York.
How did you become an owner of Edelman & Edelman?
My father’s firm, in its current incarnation, was founded in 1975. I worked there while I was going to law school and then joined in April 1978. I became a partner in 1982, and continued to be a partner with my father until 1994 when he retired.
What do you enjoy most about owning a law firm?
The right to tinker and tamper with the process at all levels.
What has been your biggest challenge as an owner from the time that you became a partner until now?
The economics of the business. They are extremely challenging. First of all, on the plaintiffs’ personal injury side, you need to be heavily capitalized because you are acting as a bank and advancing disbursements to prosecute these cases. In any significant injury case, the range of disbursements that are spent over the life of the case are somewhere in excess of $100,000, sometimes going up to $200,000, and even $300,000, depending upon the complexity. When you are dealing with in excess of 100 cases at any one time, which I am, the amount of money that needs to be advanced is extraordinary. Even if you get it back when you settle cases, the cash flow requirements are horrific.
How did you deal with the cash flow challenges?
Counsel Financial. In 2003, I was very active in, at that time which was called, the American Trial Lawyers’ Association. I had just finished my relationship with a couple of banks because they were very uncomfortable with dealing with a personal injury firm. They did not appreciate or understand, or want to understand, that cases are our capital. Since cases are not seen as legitimate collateral by the banks they would only advance us a small portion of the monies needed to run my firm. So, Counsel Financial was really the only resource available to people like myself, and they made it possible to continue the practice at a high level. When I say a “high level,” I mean where you are not skimping on the cases.
So, I’d like to tip my hat to Joe DiNardo and Megan Payne and the other people at Counsel Financial because they believed in me over the last 13 years.
In general, what do you believe has lead to your firm’s success?
We are known in the industry for having the best experts. I am constantly seeking national experts on practically every case that are leaders in their field—not just in litigation, in the field they are testifying in. So, I will seek out people that have never testified before and convince them that they should get involved in a case that will be presented to a jury.
Also, we spend enormous amounts of money in cases that we believe in, and that was made possible through Counsel Financial.
Additionally, we have developed a reputation of being able to reach large verdicts at trial, so once we did that, we have been able to combine both our prior litigation track record along with exquisite preparation and spectacular experts to achieve recoveries that have far exceeded prior recoveries either by verdict or by settlement, and that is directly attributable to the type of credit line and the confidence that Counsel Financial has shown me over the years.
What has been the biggest success your firm has experienced?
It was a $35 million settlement we won this year in a construction accident case with catastrophic injury to a 27-year-old. It had a number of twists and turns in terms of the complexity of the case—in establishing liability and damages—and we were successful in meeting all the challenges and putting ourselves in a position where the insurance companies decided that this case was unique and special to the point they had to negotiate in a territory that they have never previously been in.
Is it hard to have a practice in New York City?
Well, New York poses particular challenges. The first challenge is that our court systems are not capable of keeping up with the volume. So the average case, a complex case, will take four years of litigation and that creates a tremendous pressure on cash flow because the interest rates will mount up quickly when you are dealing with a four-year mark of a life of a case.
The second problem in New York is that the appellate courts generally do not let certain verdicts stand even if they are supported by the evidence because, from a public policy point of view, they do not want to push the envelope. So, that poses a real challenge in terms of negotiating settlements because the insurance industry can rely upon the appellate courts in pulling their coals out of the fire. In other parts of the country, the juries decisions are respected at a much higher level and rarely are tampered with. In New York, the appellate courts tamper with practically every jury verdict that is in the high-level range.
The third problem is the extraordinary costs of living in New York City. The salaries have to be at a level that make it possible for the attorneys and the support staff to be able to live in this remarkably expensive city. Thus, talent costs a lot more in New York then it would in a lot of other areas of the country, perhaps with the exception of Los Angeles or Chicago.
How did you get started doing civil rights work?
I was approached to look at a wrongful conviction case. I teamed up with Paul Callan, a person who had some experience in the area, and we preceded to look at wrongful conviction on the merits.
What appealed to you about those cases?
Wrongful conviction cases are gut-wrenching pieces of litigation and they are extremely complex. The law, both against exoneration and with recovery and money, with regard to wrongful conviction, is still quite difficult and challenging. Wrongful conviction cases are more of a labor of love than they are a profit-center. Eventually, when the system recognizes its failures to run the criminal justice system and the system to protect peoples’ civil rights also starts to operate in a more just and fair manner, wrongful conviction cases will likely be more economically attractive. But right now, they are extremely difficult and extremely labor intensive. But, quite, quite rewarding emotionally and from a professional point of view. There is nothing like getting a person out of jail that had 20+ years of incarceration, but was innocent. There is just no feeling like that. It is an exhilaration that I have never experienced in my professional career.
Do you have a background in business?
I have no business background—most trial lawyers do not. Some trial lawyers are lucky enough to find partners that have business acumen. I never did, and so my experience has come from trial and error.
Where do you see your firm in the next five years?
I see us expanding our wrongful conviction business. I think that you are going to see an acceleration in the recognition that many people who have been convicted of major crimes are truly the innocent—that the criminal justice system has failed in a spectacular way. This has not been fully appreciated and we are going to see many more revelations that will lead to a revolution on how our criminal justice system operates.
The second thing I think we are going to see is a slow down of our construction cases. There will be more of an attention to detail in construction projects with regard to safety because of the extraordinary costs in being unsafe in construction sites, which we are already starting to see.
I think the third trend is the increasing use of mediation as an alternative—not a trial by jury—to resolving cases because there is a recognition that the court systems are overwhelmed and underfunded, and I don’t see on the horizon proper funding of the court system because it is not a politically attractive outcome for many governors of many states. The threat of a jury trial will always be there and be a key factor in getting the insurance industry to settle cases, but that mediations are taking on, truly, the job of getting cases resolved outside the court system. Mediations have been very successful for me because of the extraordinary preparation I have put in the case and that informs the insurance companies as to the value of the case earlier on then getting reporting from the back row of a court room.
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