Average Winner of a Suit Gets 71%, Study Finds

Victorious plaintiffs actually get paid an average of 71 cents for each dollar juries determine they are entitled to, according to a study released today by the RAND Corp.’s Institute for Civil Justice.

The researchers found that the bigger the verdict, the greater the chance it would be reduced as a result of post-trial motions, appeals or negotiation.

One-third of jury verdicts of $1 million or more were reduced, and 40% of verdicts of more than $10 million were cut. But only 10% of awards up to $100,000 and 20% of those between $100,000 and $1 million were reduced.

The bigger the verdict, the greater the amount of reduction as well, the study showed. In verdicts of $10 million or more, an average of 57% of the amount was actually paid. Sixty-eight per cent of damages between $1 million and $10 million were paid, but 82% of amounts awarded between $100,000 and $1 million and 93% of those under $100,000 actually got paid.

The Santa Monica-based “think tank” undertook the project in response to legislative efforts around the country to place caps or limits on verdicts or attorney fees.

The California Legislature so far this year has largely rebuffed efforts to overhaul the state’s liability laws. But backers of the 1986 “deep-pockets” initiative, which limited “pain and suffering” damages in some cases by apportioning cost according to each defendant’s liability, are circulating an initiative proposal to restrict attorney fees and to limit punitive damages.

A previous dearth of documentation about what happened to verdicts after the trial, the researchers said, encouraged polarized assertions that no verdicts are changed or that all large verdicts are struck down.

20% Reduced

“This study shows that neither of these extreme positions is justified,” RAND researchers Michael G. Shanley and Mark A. Peterson noted in their report.

About 20% of all verdicts are reduced, they discovered, and the average amount paid to victorious plaintiffs is only 71% of the original jury award.

“Most criticism of large jury awards,” they wrote, “has ignored the fact that the current liability system already has mechanisms for reducing excessive awards.”

In verdicts that included punitive damages (usually the bulk of multimillion-dollar awards), the researchers found that only 57% of the amount was actually paid regardless of the size of the total. In cases involving only compensatory damages, the pay-out for all cases was a far higher 82%.

In cases involving “deep-pockets” or wealthy defendants such as businesses, hospitals or government entities, the average portion of verdicts paid was 77%. When defendants were individuals, verdicts were reduced to an average 58% of the original verdict, partly because of collection problems.

“Clearly, these patterns of post-trial activities and their effects on jury awards need to be considered by policy-makers debating restrictions on awards,” Gustave H. Shubert, director of the RAND institute, said in a foreword to the 76-page report.

Of the cases in which verdicts were reduced, the study showed, the vast majority--62%--were cut in settlement negotiations between the parties who wanted to avoid the cost of a second trial or appeal.

Another 23% of the lower awards were decided by courts--either on motions from defense attorneys to the trial judge to reduce the amount or by appellate justices.

The remainder of the lower awards occurred because of collection problems--when defendants had too little insurance and assets to pay the total verdict.

Courts usually handled the largest verdicts and made the biggest slashes, researchers found. The courts cut cases averaging $800,000 to 46% of that total, while negotiating lawyers settled for 67% of verdicts averaging $500,000. Collection problems usually meant plaintiffs collected less than one-third of the jury’s verdict, but those involved smaller cases averaging $150,000.

The study was based on questionnaires mailed to attorneys for plaintiffs and defendants in 880 randomly selected cases tried in 1982-84 in two metropolitan areas (Chicago and the San Francisco Bay Area) and one non-urban area (14 California counties from Butte to Santa Barbara). Los Angeles, Orange County or any other Southern California court jurisdiction was not involved in the study.

RAND spokesmen said the sample areas were chosen because they collectively represent all courts in the country, and figures gleaned from them could be projected as applying throughout the nation.

The sample included all civil cases for monetary damages--personal injury, business and contract disputes, and “intentional tort” or assault, discrimination and libel or slander.

In such civil cases, a plaintiff traditionally agrees to pay his attorney a portion (customarily one-third or more) of the final award, called a contingency fee. Researchers did not subtract attorney fees from the final pay-outs, meaning that only two-thirds or less of the total would actually go into the plaintiff’s pocket.

Proportion of Trial Awards Paid

Percent of Average award Size of award jury award paid $1,000- $23,000 93% $99,000 $100,000- $314,000 82% $999,000 $1,000,000- $2,673,000 68% $10,000,000+ $27,220,000 57% Average of $161,000 71% all cases*

*Including defense verdicts Source: RAND Institute for Civil Justice.