I do not know if it is the area I live or this is America today with the economy and all? But on network TV and along the any highway I see billboards for personal injury lawyers announcements dominating advertising landscape. Not a few mind you, but ever 1/4 mile, there are a cluster billboards from St. Augustine to Jacksonville.  On local TV, my wife and I can by heart recite the names of a dozen personal injury attorneys suing insurance companies for things from ‘medical errors’ to ‘auto accidents’.

Accident attorney billboard

Are there no other business that want to advertise then legal services?


Now I am not opposed to lawyers as much as I used to be, all lawyers are not bad. Further, having working for a few insurance companies I am not to enthusiastic about Tort reform either. It is not that insurance companies are so rich, it is that when someone is injured, almost no money can replace a physical loss. I mean come on what will $20,000 do for you if you have back problems for all the days of your life.

So my critique is not against lawyers, nor against insurance companies who want to contain costs and keep your premiums affordable, which I understand.

The first thing I would do is hang all the lawyers – Shakespeare

I am just asking the questions – here are some of my theories:

  • Lawyers have disposable income  -Are accident lawyers the most profitable game in town based on advertising in the area or at least have the most disposable income to throw around?
  • Service economy – Is the domination of personal injury law advertising the ultimate symptom of we are all pressing each others pants in a service economy?
  • ROI for law suits are high – Or does it mean the profit margin is the highest and they can afford the expense luxury billboards?
  • A cost of business – For lawyers, a service they have to invest in marketing to maintain a pipeline of clients?
  • Target market – Or does it mean that the target market for personal injury claims are people in their cars or sitting at home watching TV?

I am not sure, but coming back to the USA after about ten years abroad, this is one thing I noticed, lawyer announcements everywhere, even business cards left at fast food restaurants. Again maybe it is the area I live in now.  From Boston to Europe to St. Augustine.

  • My strongest theory is, the personal injury law suit business has a high Return on Investment but also need to invest to get any return. Their investment is marketing, rather than intellectual capital or time on a case.

A typical  law firm has green lawyers from law school and legal secretaries or para legal doing all the leg work while they collect fees. These fees are paid by the insurance company as a percentage of the settlement, typically 1/3. I imagine both the insurance company and the lawyers avoid court, all know each other and would rather settle for a modest claim out of court. It is all part of the game they play.

So objectively speaking with little work put forth, just knowing a little bit of legal procedure with a few hours of collecting data and organizing a case file the law firm can net a reasonable amount of money for the amount of billable hours and time invested.

They typically have quick screening phone hotlines to determine, not if your case is valid but if it is profitable. They also weed out or control needy, time or energy draining clients and just focus on simple cases with medically documented injuries insurance companies will pay on.

Can you image getting 10,000 dollars on a stock in a short time?

To support theory is the number of super stores of a more sensual nature billboards I see on the highway also. I do taxes on the side and talked to a former owner of one of those stores and he said it has one of the highest market ups of any business on their products. It is not a necessary good like bread but he was selling value added luxury items so to speak.

So companies with money can afford advertising and marketing. Companies that are trying to grow and expand.

The problem personal injury lawyers have is getting a steady pipeline of new clients. Clients that have medically documented injuries and walk though their front door. This is one of the reasons people do not like personal injury lawyers, it is they are making money off of someone else’s injury. But I guess they are a necessity and that  is another conversation.

So as long as they have a pipeline of new clients personal injury attorneys make a lot of money. In contrast, if you are selling facial tissue in Boston, there will always be a market as long as it is cold there. All companies have to do is create product differentiation and the customer will buy. But personal injury lawyers need to actively seek out new clients. It has a little big different supply and demand dynamic as well as margins on products and service sold.

However, I also think it is a symptom of the economy. If there were more business, say a value added, productive creative businesses then they would be advertising if the marginal benefit exceeds the marginal cost of adverting. But they are not. So clearly something is wrong not only with the economy, but the whole legal medical profession cost structure. This is because health is a priceless commonly that is difficult to ration.

If anyone else has any insight about if this is, the place I live, the US economy, or just the nature of the lawyering business?