An interesting paper was published in July 2017 by the Center for Law and Social Science. It is a statistical analysis of aspects of litigation in New York. It is focused upon data found in "closing statements" prepared and filed by attorneys who receive contingent fees there. These statements have been required for decades, and they provide details about settlements, fees, costs and more. This particular study focused on a "preliminary analysis of these data for the period 2004-2013."
These "closing statements" are reportedly required in most contingency fee cases, and are filed with a state court clerk. They report generally on "settlement, judgment, or abandonment by the client." This includes the "amount of any settlement or judgment, the amount paid to the lawyer, and an itemization of the lawyer’s expenses." The information from the "closing statements" seems to perhaps bear some "content" similarity to the attorney fee data sheets that have been part of Florida workers' compensation for many years.
Summarizing their conclusions, the Center authors found:
Settlement rates in New York state courts are very high (84%).
Very few cases are resolved by dispositive motions.
Litigated cases and settled cases have almost exactly the same average recovery.
Median litigation expenses, other than attorney’s fees, are 3% of gross recovery.
Claims are disproportionately from poor neighborhoods.
Attorneys’ fees are almost always one third of net recovery, which is the maximum allowed by law.
The "overwhelming majority of closing statements" are for state court cases, primarily involving New York's court of general jurisdiction, the "New York Supreme Court." However, some involve litigation in other courts, including Federal, county, probate, and small claims. Some might therefore argue that this data set is insufficiently specific to support broad conclusions. Others might see that data diversity as a strength, perhaps minimizing the impact of any outliers.
Several points about the study were intriguing. One is the data analysis method. There is a process in which certain data from the "closing statements" is manually input to a database. Clearly, analyzing electronic data is likely to be less time-intensive than document review. However, the authors also examined the original statements, but using some modern tools. The forms were scanned to the PDF format, and then rendered to "optical character recognition," or "OCR." This allowed the authors to retrieve data from those forms using computer programs rather than human eyes. OCR is the format used by the OJCC to make appellate records similarly "searchable."
As I read the report this week, I reflected on a recent presentation at the CompLaude Gala. That presenter described the coming evolution of artificial intelligence (AI), and the methodology that computer programs will use to identify and retrieve relevant and pertinent data from large data sets. The prediction is that programs will (already are in some instances) analyze very large populations of raw data from documents and forms, and focus humans on trends, historical outcomes and future predictions. The media is full of AI predictions and prognostications, but the analysis of the "statements" for this paper seems to illustrate how it could impact the data analysis industry, and workers' compensation.
The paper authors note that the analyzed "statements" demonstrated a variety of outcomes, including instances in which the plaintiff recovered. But, there are also "many cases" from which "the plaintiff recovered nothing." These included instances in which the "the plaintiff abandoned the case," or where "the plaintiff pursued the case to trial and lost." Those cases demonstrated "no fee and no reimbursement of expenses."
The Center analysts conclude that "about 84% of all cases settled, 13% were abandoned, and less than 2% went to trial or were otherwise adjudicated." This contradicts a "conventional wisdom that 95% of cases settle." Despite the study contradicting that figure, the analysts note that this "conventional wisdom (95%) seems to be remarkably persistent," albeit unsupported.
The Center analysts conclude that "about 84% of all cases settled, 13% were abandoned, and less than 2% went to trial or were otherwise adjudicated." This contradicts a "conventional wisdom that 95% of cases settle." Despite the study contradicting that figure, the analysts note that this "conventional wisdom (95%) seems to be remarkably persistent," albeit unsupported.
The article acknowledges that this study's theme is not unique. Others have studied the rate at which cases settle, but have reached somewhat different conclusions. The Eisenberg and Lanvers study examined two federal courts and concluded "settlement rates in tort cases were 63.8% and 87.2%." The Center analysts contend these "overstate the settlement rate" because the parameters do not "accurately distinguish between settled and abandoned cases," but note that the Eisenberg range includes its 84% conclusion.
An interesting factor might be the limitation of this data set. One might question whether the research in this study focuses upon a subset of "cases." The Center acknowledged that "almost half" of cases in which a "closing statement" was filed did not result in the filing of lawsuit. Those cases were nonetheless reported because the payment of a contingent attorney fee required reporting. But, notably, the authors concede that a population of claims settle before a plaintiff ever hires counsel. Those cases would not involve fees, and thus would not result in a "closing statement." Possibly, the inclusion of those cases settled without an attorney might increase the empirical 84% closer to the 95% "conventional wisdom?"
It is also interesting that the authors characterized "most recoveries" evidenced in the "closing statements" as "relatively small." In fact, their research concluded that "75% of settlements are $37,500 or less." Perhaps more surprising, "75% of adjudicated cases result in judgments of $6000 or less." In addition, the study concluded "over 70% of (adjudicated) cases result in no recovery at all." Those statistics may evidence the efficiency of settlement generally and perhaps the pervasive influence of alternative dispute resolution (mediation, conciliation, etc.). Perhaps the best cases, from either perspective, result in settlement?
The Center for Law and Social Science report is an interesting read. The conclusions and analysis are worthy of consideration. The methodology of this analysis is perhaps a harbinger of the future. The process of employing OCR to identify and harvest data from large collections of documents is certainly not new, but efforts such as this seem to be illustrating both the power of such tools and the growing acceptance of their efforts and results. How might such tools be engaged in workers' compensation analysis?