Saturday, April 13, 2013

Why Do Personal Injury Lawyers Have Bad Suits and TV Ads?

The title of this blog entry reflects a stereotype of personal injury lawyers in the USA: They have late-night TV ads for their services (“Get what you deserve!”), they wear ill-fitting suits, and their status is a few steps below that of lawyers in specialties like criminal law and the various kinds of corporate law. Personal injury law is in fact important: it helps individuals recover damages from accidents that are not covered by insurance, or when insurance firms resist paying out. It also helps individuals recover damages resulting from product defects. Personal injury law is one reason why firms will check whether the toys they manufacture are nontoxic and cannot lead to choking, before putting them in a store for you to buy for your child. 

Having said that, there is some truth to the stereotype. Personal injury law is a low-status specialization, just a few notches higher than family law, the lowest-status of all legal specializations. And they are guilty of bad TV ads and suits.

Lawyers are status-conscious, so the low status of personal injury law, and indeed any personal (rather than corporate) area of law, cuts into recruitment for that specialization. Personal injury law is especially blighted because some high-status law corporate firms that do have family law practices on the side do not have personal injury practices. Why is that?  An article by Damon Phillips, Catherine Turco and Ezra Zuckerman in American Journal of Sociology has an explanation that also tells us a lot about markets in general.
Phillips, Turco, and Zuckerman noted that there were many explanations that did not make sense. Status alone was not an explanation, because these firms entered the lowest specialization of family law, but personal injury law was higher. Nor was it a worry that personal injury law somehow would involve them into low-ethics practices (it does not, in general) or that they lacked capabilities for it. Instead, their interviews with corporate clients of top law firms and lawyers delivered a simple and strong message. Their corporate clients viewed participation in personal injury as treason. Personal injury law means that the firm has crossed over to the other side, and is now willing to sue corporations on behalf of individuals. For the general council of a corporation, that is worrying enough that they stated their willingness to dropping their law firm just for adding a personal injury practice. Corporations demand loyalty from their law firms and are willing to shop around to get it.

Clearly this means that we cannot expect that a personal injury will get the best possible legal representation. That will be found on the other side of the courtroom, defending the corporation. More broadly, firms can make demands of loyalty from other firms that shape their business and organization. These in turn shape markets. For example, in markets with battling giants, like automobile companies, suppliers have to choose sides if the giants demand loyalty. When lobbyist firms and industry associations need research to justify their views, they will go to research providers that do not work with the other side. Loyalty demands have potentially far-reaching consequences.
OK, we are at the end of this blog entry. Are you still wondering whether the “bad suits” in the title was an intended pun? Yes, it was. Thank you for noticing.