Donald W. Carlson; Professional Malpractice and Insurance Law; Carlson, Calladine & Peterson; San Francisco
For Don Carlson, changes in the economy have resulted not so much in practice shifts as in practice diversification. After years as a pure defense litigator, Carlson, a partner in the San Francisco office of 13-lawyer Carlson, Calladine & Peterson, has added plaintiffs cases to his repertoire.
For most of his career Carlson defended insurance companies and attorneys in bad faith and professional liability suits. Recently, however, insurance companies have become intensely cost-conscious, setting up stringent billing guidelines and hiring outside auditors to review attorney bills. The industry has also been consolidating, resulting in less work for insurance litigators. "There's a lot of pressure from insurance companies to keep attorney rates down," Carlson explains. "It's why a number of insurance-based law firms have gone out of business."
So Carlson and his partners decided to seek a blend of work. They've kept what he calls A+ insurance company clients-those who pay fairly and promptly-and added plaintiffs work into the mix. That includes subrogation claims (in which an insurance company, after paying a claim, becomes a plaintiff seeking to recover from the party actually at fault) as well as plaintiffs-side legal malpractice cases.
Diversifying has been profitable for Carlson, who is paid a contingency fee for all plaintiffs cases. The firm has settled several plaintiffs cases for millions of dollars apiece, and such suits now compose 40 percent of the firm's docket.
"We haven't turned our back on our A+ insurance company clients-they remain the foundation of our hourly work. It's what keeps us going," Carlson says. "But taking certain plaintiffs will effectively result in a better hourly rate than straight defense work."
Working both sides of the table obviously raises some potential conflict-of-interest issues. Although he takes care to decline cases in which his firm would have a direct conflict or have to adopt an inconsistent position, Carlson admits that merely advocating for plaintiffs can raise some trust issues for his defense clients-especially insurance companies, which Carlson says "are generally sensitive to their panel counsel changing sides."
"We expect that some insurance companies will not like our growing plaintiffs practice," Carlson admits. But because those clients' financial restrictions led Carlson to seek other practice areas in the first place, he does not perceive their possible dissatisfaction as having much effect on his overall business. "Our legal malpractice defense clients are sophisticated enough not to be concerned about our handling meritorious plaintiff malpractice cases against unrelated lawyers ... and our commercial plaintiffs practice is not an issue since the defendant rarely has insurance."
In fact, in a way, doing both plaintiffs and defense work strengthens the firm's credibility. "The defense work has made me a better plaintiffs lawyer, and the plaintiffs work has made me a better defense lawyer," Carlson says. "Plus, it's more fun wearing different hats."
Leslie A. Gordon is a freelance writer and editor in San Francisco.