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NYC lawsuit payouts: $560M in 2011

Point of Law, May 16, 2012

By Ted Frank


$560M, more than the budgets of many smaller cities, is a fairly shocking figure, since, at typical 33% to 40% personal-injury contingency rates, it means that it's a wealth transfer of about $30 per capita from every man, woman, and child in the 99% in New York City to the 1% who are trial lawyers. And the $560M figure doesn't include the litigation expenses of a 650-member Law Department (that's more than the number of lawyers in Dewey Leboeuf's New York office at its peak, though not all of those city lawyers are defending personal injury claims) or of non-legal workers whose jobs are interrupted responding to discovery.

But the focus of a NY Times story on the subject is the reporter's inconceivable shock that NYC defends itself in lawsuits instead of blindly writing multimillion $ checks. In particular, the story is critical of the city hiring a private investigator to double-check the claimed injuries of a plaintiff claiming (and eventually receiving) millions of dollars of damages from a tree accident: of course, surveillance of a personal injury plaintiff seeking a large sum for quality-of-life injuries is common, and can uncover fraudulent claims, though courts are inconsistent and relatively lackadaisical about punishing such fraudulent claims. But given how thoroughly wracked the status quo is with fraud, imagine how much a softer touch New York City taxpayers would be if it was known that they did not double-check for fraud? "If you build it, they will come," and that $560 million a year would quickly become $5.6 billion a year. The Times investigated "ten cases"; how were those picked? How many cases involving fraudulent claims that the City successfully beat back did the Times miss?

The Times does not question City taxpayers paying an unprecedented $350,000 to the estate of an elderly woman for what was, at most, a few seconds of pain and suffering (and was probably no pain and suffering at all, but we'll credit the jury's finding for the sympathetic grandmother against the deep pocket); it gives only lip service to the legitimate claim of the City's counsel, Michael Cardozo, that taxpayers are paying excessive amounts for injuries.

The Times story is part of a three-day series suggesting that the City should do more to prevent injuries from falling trees. Of course, creating excessive liability for damage caused by trees is a great way to incentivize a defendant into having fewer trees. Trial lawyers' proposed solutions sometimes involve pure social cost: this blogger argues for warning signs, though, of course, if every tree has a warning sign to avoid liability, citizens will simply ignore the millions of dollars spent on warning signs (and also ignore far more important warning signs). And trial lawyers will still argue that injured plaintiffs were inadequately warned, because, after all, the warnings didn't prevent the injury in hindsight.