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Why Finance?: Blog Post #3

Key Considerations Before Entering Mass Torts

Posted by Joseph Kasouf, Esq. | General Counsel on 15, Oct 2018
Joseph Kasouf, Esq. | General Counsel

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You may be considering expanding your practice into mass torts. Before you do, it’s essential to have a solid grasp of the mass tort process and consider which mass tort business model will best suit your firm.

Here’s a simple guide to both.

Which Business Model is Right for My Firm?

As legal auditor at Counsel Financial, I’ve found 3 core business models that work best for firms wanting to handle mass tort litigation—(1) full service model, (2) marketing and advertising model, or (3) some combination thereof.

To determine which business model is right for you, ask:

  • Do I want my firm to incur the full, long-term costs of acquiring, screening and fully litigating hundreds, perhaps even thousands of claims?
  • Should I acquire the clients on my own, then co-counsel with a more experienced mass tort partner who can bear most, if not all, of the additional costs associated with the litigation?
  • Is the best arrangement for me one where my firm can maintain an active role, but not necessarily be in a leadership position?

With each model there are certain financial and operational constraints that can impact your budgetary needs, but all can be successful if you carefully plan ahead.

What Types of Mass Torts Should My Firm Handle?

The most important element of developing a thriving mass tort practice is determining which type of mass tort your firm should participate in. Like single event cases, not all are viable, but with mass torts you’re investing a more significant sum over a longer period of time in the hope of a larger return.

Tip #1—Take a close look at the science and experts that currently support the claim. Has the litigation survived Daubert/Frye? Have there been specific causation rulings? Have there been any bellwether trials?

Many firms rely on their peers for selecting which litigations to take part in, but taking the time to investigate the claims yourself, in as much detail as you would your other cases, will increase the likelihood of your firm doing well in this arena.

Tip #2—Before you go out and try to get clients for a particular litigation, prepare a budget. You need to know the “per-plaintiff cost” to sign up a case, so you don’t accidentally end up spending too much at the outset.

For example, a newer tort may be relatively inexpensive for you to acquire clients. However, as the litigation develops, the costs associated with marketing and advertising for clients often increases exponentially as the pool of plaintiffs with viable claims shrinks.

Tip #3—Project how much you believe the case will settle for and what your fees will be. Stay conservative with your estimates, so you don’t end up over-spending.

For instance, if you can obtain 10 cases at $500 per case with a $25,000 per case value, the costs may be easily justifiable. If the same 10 cases cost $2,000 per case, you’ll need to weigh whether you want to move forward.

How Do I Obtain Clients?

In order to obtain cases, you’ll need a marketing campaign. Ask yourself: Who are my potential clients? What is the age, race, religion, gender, income, education, etc.? Where do they live? How do they obtain information (i.e. TV, radio, internet)?

Once you identify these components, you can begin to plan your campaign.

Most firms market for clients nationwide, by way of TV ads or other key media formats—all of which can be expensive. You might turn to a marketing or advertising agency for help in developing your campaign and subsequent media buy to fit your budget.

Another avenue for you to consider is a partnership with co-counsel who are involved in the tort and have an established national presence with the ability to market on a large scale. This method may afford you the opportunity to enter several mass torts at once, diversifying your initial investment.

What Do I Need for Operations?

Once you start signing up clients, you need to assess how to handle the intake and evaluation of their cases. Do you have the firm infrastructure to undertake this process?

Some firms choose to keep client intake in-house. This can be expensive and time-consuming. A “Plaintiff Fact Sheet,” or PFS, can be used to determine who fits the initial case criteria, especially when you’re receiving a high volume of leads.

How do you determine whether a case is a good fit? Most often other firms who are firmly ensconced in the litigation have already set forth what constitutes a client with a viable claim. Or, you may employ a marketing firm to take care of this step for you, although there will certainly be a significant cost associated with doing so.

If you opt to keep your cases in-house, here are some of the expenses you can expect to incur:

  • personnel to process the PFS and also a team to monitor for “quality control”—you don’t want to eliminate or maintain the wrong clients.
  • medical records retrieval and product identification—for example, in talcum powder litigation the cost for full evaluation of the tissue sample to prove talc is the cause of a plaintiff’s ovarian cancer can be staggering.

What Ethical Issues May Arise with a Mass Tort Practice?

The reality in mass torts is that most attorneys never personally meet all of their clients. With national marketing and a team of personnel working through the PFS, you, as the attorney, are many times not directly involved. Nevertheless, you’re still responsible to your clients.

You should always advise your clients of any potential conflicts that may arise when your firm is representing hundreds to thousands of individuals. In addition, make sure you have procedures established for keeping them continually apprised of the status of their cases throughout the litigation and its aftermath.

Entering mass torts can be a very exciting and profitable opportunity for you or your firm, provided that you understand what lies ahead. Taking time to consider the points above, will allow you to make a decision that works for you and your firm.

Categories: Why Finance?

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