"WE LIVE ON THE EDGE OF EXTINCTION ALL THE TIME:" ENTREPRENEURS, INNOVATION AND THE PLAINTIFFS’ BAR IN THE WAKE OF TORT REFORM
| Pages | 149-180 |
| Date | 08 November 2001 |
| DOI | https://doi.org/10.1108/S1521-6136(2001)0000003010 |
| Published date | 08 November 2001 |
| Author | Stephen Daniels,Joanne Martin |
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“WE LIVE ON THE EDGE OF
EXTINCTION ALL THE TIME:”
ENTREPRENEURS, INNOVATION AND
THE PLAINTIFFS’ BAR IN THE WAKE
OF TORT REFORM
Stephen Daniels and Joanne Martin
ABSTRACT
Plaintiffs’ lawyers work in inherently unstable markets. To remain in
business, they must find ways of successfully adapting to a dynamic
marketplace. Most do not. Borrowing the concepts of entrepreneur and
innovation from the literature on business and marketing, we explore the
precarious nature of plaintiffs’ markets and the ways in which at least
some lawyers try to adapt. This examination is based on 96 in-depth
interviews with Texas plaintiffs’ lawyers and a large-scale survey of Texas
plaintiffs’ lawyers. Our findings describe new markets being developed by
entrepreneurial lawyers and the creation of new practice models designed
to enhance a lawyer’s ability to maintain a steady flow of clients. These
entrepreneurs and their innovations are important because they are the
key to the future of the plaintiffs’ bar and the future of civil litigation.
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Legal Professions: Work, Structure and Organization, pages 149–180.
Copyright © 2001 by Elsevier Science Ltd.
All rights of reproduction in any form reserved.
ISBN: 0-7623-0800-1
INTRODUCTION
“It is nearly impossible to find an industry that is not engaged in continuous
or periodic innovation and reorientation due to the dynamic nature of most
markets” (Hurley & Hult, 1998, p. 42). To prosper – or more basically, to
survive – businesses must find ways of adapting to the continual changes in
their markets. This observation applies to service-based industries as well,
including those involving professionals like lawyers. Our interest is in
plaintiffs’ lawyers and how they respond to the dynamic nature of the markets
in which they practice. More specifically, it is in Texas plaintiffs’ lawyers and
the entrepreneurs (or innovators) among them. These are the lawyers who do
more than just react to a changing market. They “create something new, some-
thing different; they change or transmute values” (Drucker, 1985, p. 27).
Plaintiffs’ lawyers work in inherently unstable markets that are shaped, we
believe, by five main factors. The first two are the most important. They are
the relevant legal rules that define procedures and causes of action, and the
geographic areas in which lawyers practice. These areas generate the claims on
which their practices are built. In addition, their work is shaped by the
one-shot nature of their client base; by the contingency fee system on which
they rely almost exclusively; and by the increasing amount of competition for
business. Legal rules and the surrounding socio-economic environment are never
static, and even small changes can affect plaintiffs’ lawyers’ practices in
significant ways. If nothing else, the contingency fee system and the “one-shot”
nature of the client base make this type of law practice an especially precarious
enterprise. As one Texas plaintiffs’ lawyer told us, “we live on the edge of
extinction all the time.”
The lawyers who survive and prosper will chart the future of the plaintiffs’ bar.
Prominent among them are the entrepreneurs, the lawyers who find new
opportunities for their services in dynamic markets. Because plaintiffs’ lawyers
function as gatekeepers for the civil justice system (see Jacob, 1995, pp. 123,
128–133; Kritzer, 1997), their responses to changing markets may have a broader
impact. They provide meaningful access for injured people to the remedies the law
allows. If they cannot remain profitable, they will leave the plaintiffs’ law market
for more promising ones, thereby affecting the geography of civil litigation.
Equally as important are things they do – the innovations tried – to stay profitable
within this dynamic practice area. This too can affect the geography of civil
litigation itself, given that innovation involves “an idea, practice, or object that is
perceived as new by an individual or another unit of adoption. An innovation
presents an individual or an organization with a new alternative or alternatives,
with new means of solving problems” (Rogers, 1995, p. xvii).
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150 STEPHEN DANIELS AND JOANNE MARTIN
Borrowing the interrelated concepts of entrepreneurship and innovation from
the business and marketing literature, we will explore how some plaintiffs’
lawyers deal with the precariousness of their market in the wake of tort reform.
We say some lawyers because most plaintiffs’ lawyers are not entrepreneurs
and innovation plays little if any role in their practices. A minority, however,
can be seen as entrepreneurs because of the role of innovation in their practices.
They are interesting and important because they are trying something new or
different, and their experiences can provide insight into the dynamic nature of
the plaintiffs’ bar, its future, and the future of civil litigation.
This essay is divided into three main parts. The next section is a discussion
of entrepreneurial activity and innovation, and of how we use these two concepts
in our exploration. Most important is the difference in the way we will be using
“entrepreneur” compared to the way it is typically used in discussing lawyers,
especially plaintiffs’ lawyers. The second part presents an overview of the nature
of plaintiffs’ practice and why it is so precarious. It focuses on Texas and on
the effects of tort reform. Our data come from 96 in-depth interviews with
Texas plaintiffs’ lawyers.1This description of plaintiffs’ practice will frame the
third section’s discussion of the entrepreneurial activities that interest us. Rather
than focus on some specific list of possible or likely innovations, we focus on
the entrepreneurs themselves because of their willingness to take risks and
experiment, and because of their sense that they have identified some new
opportunity or advantage in the market’s dynamics. Whether their particular
innovations will be successful in the long-run remains to be seen, but it is the
conscious experimentation and risk-taking that is important.
LEGAL ENTREPRENEURS AND INNOVATION
One of the first things we learned in asking plaintiffs’ lawyers about their
practices is just how precarious those practices are. The lawyers talked about
how the market for their services is constantly changing. Especially troubling,
in their view, have been changes brought about by tort reform and the aggressive
public relations campaigns waged by the pro-reform interest groups, and we
have discussed this in detail elsewhere (see Daniels & Martin, 2001). Many of
the lawyers with whom we spoke characterize their current situation as one of
a constant struggle for survival, and there is wide-spread pessimism about their
prospects for the future. Our earlier work described the ways in which many
Texas plaintiffs’ lawyers have reacted to the changes they see occurring in their
markets.2For the most part, their reactions are defensive – geared only to
immediate survival. For them, it is a matter of “hunkering down” and hoping
for the best. Still, there are some plaintiffs’ lawyers who have not succumbed
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We Live on the Edge of Extinction all of the Time 151
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