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Picking a Winner: How to Identify Great Contingency Cases

By Stephanie Francis Ward

July 2, 2012, 1:30 pm CDT

Podcast Transcript:

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Stephanie Francis Ward: If you do plaintiff work, sometime in your life that million-dollar case will come in your door. But how do you know it’s the one?

I’m Stephanie Francis Ward and that’s what we’re discussing today at the ABA Journal podcast. Joining me are Paul Kiesel, a partner of the Los Angeles plaintiff firm Kiesel, Boucher & Larson, and Kerry Wisser, a Partner with the plaintiff firm Weinstein & Wisser in West Hartford, Conn.

Gentlemen, the first question I have is for both of you. What is the best way to determine if a defendant has any assets?

Paul Kiesel: Well, Stephanie. It’s Paul Kiesel here. I’ll say this. When I’m looking at taking a case, and almost all the time, it’s a contingency fee case, meaning if there’s not a recovery at the end of the day there’s not gonna be a recovery for the client or a fee to the firm.

I am rarely looking at the assets of a company or an individual to determine whether or not I’m gonna take that case, because 99 percent of the time you’re hoping that there’s going to be insurance coverage available. If you’re looking at someone’s individual assets there is great risk in taking a contingency fee case or assets are what you’re looking for compensation. What are your thoughts, Kerry?

Kerry Wisser: Yeah. I do more commercial work, and from the commercial side there are often circumstances in which you’re not dealing with insurance. So under those circumstances you do have to be very cognizant about the collectability of the case. I often advise clients that a judgment’s only a piece of paper. If it’s uncollectable, it’s uncollectable. And if you have a client or if you have a defendant that’s teetering, they can file bankruptcy.

So under those circumstances, for those folks that use Lexis there is the opportunity to offer products that can identify commercial real estate and residential real estate ownership. They can identify ownership of vehicles. They can identify prior addresses. They can give a lien history, a tax payment history. Some of that can give you some basic information as to whether or not you’re dealing with what I deem to be a deadbeat or someone that is viable or a company that’s viable.

At least in my state you also have the opportunity to start an action before a lawsuit. It’s known as an Application for a Prejudgment Remedy. And if you can establish probable cause that you can prevail–and that’s a very limited standard–you then can get a disclosure of assets. And that’s a great tool to utilize.

You establish before the court probable cause that a judgment will be rendered for a certain amount of money, whether it’s a liquidated claim or an unliquidated claim, and commensurate with that the court will give you this disclosure of assets. And that requires the defendant to provide, either in writing or through a deposition, information relevant to all the assets they have up to the amount of the prejudgment remedy as the court would grant. So that’s another tool.

Paul Kiesel: That’s a great answer.

Stephanie Francis Ward: Paul, do they have a law like that in California?

Paul Kiesel: There isn’t. In fact in California you technically cannot get prejudgment assets information about a defendant. You have to establish or underline a claim before you’re ever going to get any asset information. The exception might be where punitive damages are involved and you can apply to the court to get access to that sort of asset information in a public sense, but other you’ve got to prove your underlying claim before you’re ever gonna get access to asset information.

Stephanie Francis Ward: Paul, I want to go back to something that you said about hoping the defendant has the insurance coverage. As we both know though, sometimes it’s like hope is not quite enough. How do you maybe push that hope over until you think they have good insurance coverage? How do you find that out?

Paul Kiesel: Thanks, Stephanie. The fact is there are a couple of things you need to know about insurance. The first is obviously if it’s a motor vehicle collision, most of the time the police department on their report will include the name and oftentimes the policy number of the insurance company. All that tells you though is that the individual has insurance, which means they’re complying with the law. What it doesn’t tell you is what the limits are of that coverage.

In California–and this is just woefully inadequate–the insurance coverage is $15-30,000, meaning $15,000 is the minimum per person and $30,000 is the… or I should say the maximum of per group of individuals involved.

And so that 15/30 is the minimum threshold. It’s been that way for over 25 years. And so having a minimum limits policy, if you have any sort of injury at all, is tantamount really to have no insurance at all. Having that said, if you know the insurance company you can call up the adjuster and see if the adjuster is willing to share with you the policy information, how much the coverages are, as the first step of your analysis.

The back of the envelope, Stephanie, is you look at the vehicle they’re driving and make some reasoned approximations with that vehicle and the coverage that they’re likely to have. But you are somewhat shooting in the dark without the filing of a lawsuit. They are not required to disclose in California the limits of the policies, and that at times causes litigation to be instigated merely to find out what the policy limits are.

Stephanie Francis Ward: And you said that’s the first step. What would the next step be? I’m assuming you that you might want… I mean, if possible you’d want to look for other companies or something with damages, right?

Paul Kiesel: Well, certainly you’re gonna be looking at every potential party who’s responsible for a particular loss. If we take a big case–we look at the Metrolink train collision case of some years ago out in Chatsworth where 24 people died. Clearly you’ve got Metrolink, but they had limited damages of $200,000,000.

And so you’re looking at other potential defendants. Was there a problem with the signal? Was there a defect with the construction of the railcars that caused additional injuries? So you’re looking at potentially all other relevant parties who might bear some financial responsibility, without question.

Stephanie Francis Ward: A question for both of you. In terms of evaluating the defendant and his or her ability to pay, are there some red flags that plaintiff lawyers commonly miss?

Kerry Wisser: Well, actually, I just wanted to add a bit to what Paul was just indicating. Connecticut has a $20,000… $20,000/$40,000. So it’s not much great than the 15/30 that California offers. And I find that most of the surrounding states in the northeast are very similar in terms of they are small thresholds.

And the back of the envelope’s not only the car they’re driving but maybe even the address that they live in. That’s very helpful also. But what is unique again to Connecticut versus California is just recently, in the past year or two, Connecticut did pass a law that requires an insurance company to disclose its coverages upon a written request, and they have 30 days to do so or they could be subject to a bad faith claim.

And given the fact that California seems to be the most progressive state in our union I’m surprised that they don’t have a similar law, because it would appear to me that why do you want to have to start a lawsuit and burden the judicial system when in fact a simple letter and a simple response would be there?

When you have the circumstances of the coverage as it relates to the individual that caused the accident–we call that the tortfeasor–you also want to ask your own client in regard to their what’s known as underinsured motorist coverage. Because if the individual that causes the incident has $20,000 in coverage but your client has $300,000 in coverage, again referencing Connecticut law you can collect the $20,000 against the individual that caused the accident, exhausting that policy, and then bring a lawsuit against your own client’s insurance company for the remaining value of their coverage, assuming that the injuries as substantial enough.

And, again, Connecticut offers the ability to enhance that even further. You can buy something called conversion coverage, so you can collect all of what the tortfeasor has without a subtraction against the $300,000 policy, and there’s double conversion coverage so that there’s the opportunity not only to look at the individual that caused the accident but the coverage from your own client themselves.

Paul Kiesel: And you call California progressive. I ought to be living in Connecticut and working in Connecticut! Stephanie, the red flag I’m looking for at the outset of one of these cases is–and you raised this is some of the earlier questions that you posed–looking at your client and what the expectations are of the client, the initial meeting and determining both the injuries that your client has and what your client’s expectations are going to be.

Really at the outset your biggest red flag, the thing you have to be most cautious of, is your initial meeting with the client, what your client’s expectations are, and managing them, I think, are one of the larger challenges that a plaintiff lawyer faces today.

Kerry Wisser: And I absolutely agree with that, because I think that Paul and I can both tell you that over the years there have been folks that have come into our respective offices, advise of the nature of the accident, the mechanics of the accident, and at least giving you a brief outline of the nature of their injuries, and then they have unrealistic expectations. The person says, “Well, my next-door neighbor had an injury like this and collected a million dollars.”

And I said, “Well, then you ought to find the lawyer who represented your next-door neighbor because that’s you ought to go see.” When the case clearly… unless something enhances in terms of the injuries or something’s found that has not yet been found by the physicians, the nature of the injury could be fifty to hundred and they’re talking to you about a million dollars.

Paul Kiesel: And what I want to caution your listeners about is this: do not feel compelled when the client pushes you to ever come up with a number that somehow approximates the value of your client’s claim. If a client comes to you and says, “I’ve been to a lawyer, who’s already told me my case is worth x,” you need to explain very carefully that that is likely not a well-founded number that’s being put out there.

And, as Kerry just said, if the client says, “An attorney told me my case was worth x,” then you have to very politely tell the client to go hire out there, because you cannot be put in the position, regardless of how badly you want the case, to have the client control the ultimate outcome at the early stage of the litigation.

Stephanie Francis Ward: Is that one way to cut it off at the beginning?

Paul Kiesel: I manage client expectations from the very beginning. I make it very clear to them. A wonderful lawyer, actually from Michigan, I heard probably 25 years ago explained to a client, when the client asked that question: “What’s my case worth?” What the attorney said is, “Your case is a puzzle.” And until you put all the pieces together you really are not in a position to give an informed analysis of your recovery.

And until that last piece of the puzzle is put in place you really don’t have a complete picture. And that’s oftentimes what I use to describe for clients how it is that I’m really… not that I’m not a fantastic lawyer, because I think I am, it’s that I really can’t go out on a limb and provide valuation until I have all the elements together to complete the puzzle.

Kerry Wisser: And often I’m more practical with the clients. I indicate first of all that I don’t have a crystal ball. I indicate that any lawyer that can advise a client the value of their case at the onset is a lawyer that they actually should run from. And then I indicate that in most personal injury cases, whether or not it’s soft tissue or some sort of injury that requires surgery, you need one year post either accident in nonsurgical cases, or one year post-surgery in most instances, to reach the level of maximum medical improvement.

And until you reach MMI–Maximum Medical Improvement–you can’t get an assessment from a qualified physician as to the permanent anatomical changes or permanent injuries that that individual’s going to suffer from. It’s only at that point that you can look at your special damages, what’s been incurred for medical bills, and then your noneconomic damages that relates to the pain and suffering both past and future, and the permanency, that you can then begin to evaluate the client.

And I will advise clients that insurance companies use technology and software–one of them’s called Colossus and there are many others–in which they factor in the age, the gender, the type of injury, the geographic location where the case is pending, and they put all of that information into Colossus or some of these other software programs and say, okay, we have a 33-year-old male that suffered five percent permanent or partial disability to his neck as a result of a whiplash injury and has suffered $10,000 in medical bills to date, plus a certain amount in terms of lost wages.

They put that all into the computer and gives them a range of the value of those cases. And I explain to the clients that that doesn’t happen until, as Paul says, you have every piece to the puzzle.

Stephanie Francis Ward: Okay. Kerry, what do you think about taking on a client who’s had a couple of different lawyers?

Kerry Wisser: A couple of different lawyers…

Stephanie Francis Ward: For the same matter.

Kerry Wisser: Okay. Well, I can tell you that in my 26 years doing this I’ve never been fired by a client; so if a client has fired a couple of different lawyers, ordinarily I want to know who those lawyers were. If they were lawyers that I know and generally respect, then my antenna’s gonna go up. And then I’m gonna ask the client what represented the breakdown.

And ordinarily if it’s a claim of lack of communication or a lack of hand-holding or something of that nature, then I’ll make a phone call, with the permission of the client, to that other lawyer and see what perspective that lawyer gives. But I would certainly think hard and fast about…

I mean, if it’s one lawyer I can understand that, but if there have been multiple lawyers that someone has walked away from, I’d be concerned as to the reasons why, especially if they’re lawyers that I know and respect.

Paul Kiesel: And I have almost a harder and fast rule. I consider–consider–taking a case from an attorney if the circumstances were appropriate. You made a bad choice you didn’t realize it when you retained that attorney, that’s fine. If it’s more than Lawyer Number One, I don’t care how good the case is, I run away from it. It’s not worth the effort of taking that case. I would say what kills you is not the cases that you pass on, it’s the case that you made the mistake in taking in the first place.

Stephanie Francis Ward: And was this a lesson you learned personally? How did you reach that decision?

Paul Kiesel: Well, actually…

Kerry Wisser: He’s smiling!

Paul Kiesel: If you could see my smile… Yes, I learned that lesson personally on a case. It was a case you could barely not take. It was the third lawyer–who will remain nameless… The client was walking away from a $7 million offer. Came to me, I took the case. I ultimately reached an $11 million resolution only to be sued for legal malpractice, having gotten more money than had ever been achieved in a similar case in the country. And ultimately it was dismissed but not… after years of agony. And my antenna went up at the beginning and I learned I’ll never go there again.

Stephanie Francis Ward: Okay. Paul, I’m curious. Have there been times in your career where a case came in and you thought it looked really good and then it just went south?

Paul Kiesel: More times than I could count. We don’t have enough time!

Stephanie Francis Ward: Could you tell us in a nutshell what did you learn from those experiences?

Paul Kiesel: Well, I think you have to always recognize that our job is to do due diligence. That due diligence involves your diligence with the client; it involves the underlying incident itself…

An example, Stephanie, is a case I took in where the liability appeared absolute; the damages were horrific; but when the client came in to me, he was a convicted felon and never admitted… I never knew of his felonies. And it wasn’t until we were about 90 days away from the trial that the client acknowledged that he was a convicted felon.

And that, in part, was my failing to adequately do my own internal investigation with the client and some other factors that led me not to realize what was happening. But that’s where you need to be very careful in all of your cases to really do your due diligence and not be blinded by the severity of the injuries or the apparent simplicity of the liability. You really need to in each and every case, big or small, you need to really do an analysis and follow through.

Kerry Wisser: Do you know, that can occur, unfortunately, even in circumstances in which a lawyer has done the due diligence and which things occur within the client’s life during the case that can substantially affect what happens.

I had a medical malpractice case in regard to a 16-year-old boy. The case was a sound case; the damages were substantial. And because he was 16, it was brought, again under Connecticut law, through what’s known as a guardian and best friend, which ordinarily is a parent. So the parent is the one that has the ultimate control of the case.

Well, during the pendency of the case the young man grew to be 18 and now he was the age of majority. Had a falling out with his parents, said, “I need a new retainer agreement with you,” I was obliged to enter into that new retainer agreement when he turned 18, and then he fell into substance abuse issues.

So here we had a substantial case of great value–good liability–and by the time the case was to be tried I had a guy that was stuck in rehab and one who just said, “I just want anything for the case.”

Now, in order to exercise my fiduciary obligations to the client, we wouldn’t just take anything. The case was still very valuable, but it had lost some value by virtue of the nature of the client himself. And I got an appointment of a guardian through our probate court to make sure that he was making a determination that he would understand that he was doing.

But that case certainly had a settlement value that was much less as a result of what the client had done to himself through the pendency of the case.

Stephanie Francis Ward: You both mentioned the due diligence aspects. Can you give me a sense, briefly, of what that means? Are you doing Lexis searches on people who come in? Are you asking them on the intake form if they’re felons? What does your due diligence involve?

Paul Kiesel: Well, for me, most importantly it’s on the class actions that we do a number of. And the class representative needs to be adequate and needs to be basically approved by the court. So I let every one of the potential class representatives know that I’m gonna be doing a full background investigation into them. I get the social security number, I have a private investigator, and we do a full background search on them to find any skeletons in the closet. That’s my due diligence, not just for the handling of the case but the entire class itself. So I do that.

Stephanie Francis Ward: Is that also a way for you to make sure that your guy is not lying to you?

Paul Kiesel: Well, I assume the best with all my clients that they’re being honest with me.

Stephanie Francis Ward: Sure.

Paul Kiesel: But it certainly lets the client know that in my due diligence you better be forthright with me at the outset because I’m gonna find it–if it’s there I’m gonna find it–and hopefully that creates what you always want to have, that honest, open dialog with your clients from start to finish.

Kerry Wisser: And I would recommend for a younger practitioner that you may not be able to afford a private investigator, obviously, for each and every one of your clients. But with the advent of Google and all the other search engines now, it’s amazing what information you can find out. And now I’m also asking clients if they’re willing to allow me some accessibility to their Facebook, because you can learn a lot about clients under those circumstances also.

And as Paul indicated, one of the things that I say to clients, especially if we’re dealing with information that’s critical such as “do you have a criminal background, a criminal history, that we need to know about?” I say, “You ought to consider me as your lawyer equivalent as you would consider your doctor. It’s not in your best interests to hide anything from your doctor because then the doctor can’t diagnose and treat you.

“In the same instance you don’t want to hide anything from your lawyer because should that information come out under some circumstances in which the lawyer’s not prepared to deal with it and address it, and in a surprise circumstance, that’s only gonna adversely affect your case.”

And I think the clients do understand that then; that there is nothing that you can hide from me; better that I know it and we can deal with it, or let me explain to you how it’s going to affect the case, then for me to find that out with your expectation of “well, hopefully, no one will ever know.”

Paul Kiesel: And let me just follow up with that. The case I mentioned earlier where the client was a convicted felon… When I disclosed the information to the defendants–because I had to do that because originally there was no indication that there was any criminal history–and the defendants essentially pulled their offer off the table and we went to trial.

I used his felony and his acknowledgement of it as an asset to my case; knowing that information, not using it as an impeachment to him. I told the jury about his felony. I admitted his felony. And I said the jury knows it. He’s paid his time, he’s done the crime, and he has a right, the jury understood, to live in a free and peaceful manner and his injury had nothing to do with that incident; and so knowing that information, I was able to turn his liability into a significant asset on the case.

Stephanie Francis Ward: So perhaps that’s some other advice for lawyers. When you find something like that in your case, it’s a surprise, own it and figure out how you can use it so the other side doesn’t use it against you.

Paul Kiesel: That’s right.

Kerry Wisser: Exactly. And you’re always looking to… especially in an examination. If you know there’s something adverse you’re always looking to take the sting out of it first. Because if you bring it out you’re bringing it out in the circumstances of “look at the full, fair disclosure that we’re providing to you, Mr. and Mrs. Jury,” as opposed to when the defendants bring it out it’s “look what we’re bringing out that they didn’t tell you. What else is it that they might not have told you?”

Stephanie Francis Ward: Okay. Let’s shift gears a bit here. Do either of you think that in some circumstances it’s a good idea to have the plaintiff pay for costs in their case so they have some skin in the game and perhaps the case is more important to them?

Paul Kiesel: I’ll say this from a personal injuries perspective. It is unusual for the client to pay for the costs of the litigation, in part because oftentimes you don’t have the financial wherewithal to do that. They’re down and out. If they’ve had a job they’ve lost it. And so I don’t… There’s skin in the game literally, Stephanie, is skin in the game. It’s different when it comes to commercial and I’d like to hear Kerry on that.

Kerry Wisser: Well, again I agree with Paul on the personal injuries side of it. I think that one of the things that we as lawyers… and effectively we do get paid those costs back once there’s a settlement or a judgment, so it’s not as if the client is paying us–at least in my circumstance–a fee and not also then being responsible for the costs.

But in most personal injury cases I do find that it is overly burdensome to ask the client to take on any of that responsibility because usually when someone is injured they haven’t been able to work or their life has been substantially changed and it’s just not something that I want to do from an ethical or a professional point of view.

In a commercial circumstance, though, my retainer agreements ordinarily do indicate that I will bill for costs on a monthly basis. And it’s just because those are generally hourly fees and that’s just part of the expenses of the litigation. And what becomes very, very important in commercial litigation is that the clients recognize the economic benefits of litigation.

There are many instances where clients come in and I will say, “You have a claim, but given what my hourly rate is and what the costs are gonna be for experts in this case, you have recognize that at the end of the day I might be enriched more than you are. Is this something you really want to do?

Because I want you at the end of the day to walk out of my office feeling as if a service has been provided to you and not that I took on a case just so that I can enrich myself and give something small to you at the end of the day.”

Paul Kiesel: And just expanding on that from a commercial perspective. When we take on a commercial case we will never at our firm take on a commercial case unless the client is advancing a hundred percent of the costs and is doing it on a partial hourly. Doing a commercial case on a pure contingency fee basis, even if the client is covering costs, I don’t think invests the client significantly enough so the attorneys or the forms to take the risk of that litigation. How about you, Kerry?

Kerry Wisser: I have done it in the past and I’ve done it quite successfully, but that’s usually when you’re dealing with a small start-up business. So I consider it the mom and pop shop that’s actually being taken advantage of a much larger commercial entity. And under those circumstances just like we as lawyers in personal injury cases say, “Yes, we’ll represent that individual against the insurance company.” Because ideally that’s who you’re really defending the case against. I feel that same connection many times and I will do that.

Nevertheless, in most instances though you’re dealing with commercial cases on either an hourly or a hybrid sort of circumstance with an hourly plus some sort of contingency.

Stephanie Francis Ward: Alright. Gentlemen, that’s everything I have for you today. Did either of you want to add anything else?

Kerry Wisser: Stephanie, I think you’ve covered it nicely.

Paul Kiesel: I think you did also and I thank you for this opportunity.

Stephanie Francis Ward: Thank you. Take care.

This ABA Journal podcast was brought to you by WestlawNext, the most advanced technology combined with market-leading content and West’s history of trusted editorial excellence. Helping legal professionals save time is what they’ve been doing for over 125 years. Learn more at WestlawNext.com.

What are some signs of a great contingency case? Or what are the signs of a real stinker—one that’s already sucked up a bunch of your time and money? ABA Journal Podcast moderator Stephanie Francis Ward and seasoned litigators discuss spotting the winners and coping when cases take a turn for the worse.