Attorneys defending private contractors are stuck with many challenges. So too are their carriers. But both also have ample opportunities. Otherwise, contractors face numerous challenges — including the failures of their carriers and their attorneys:
Some contracts hold the contractor responsible for errors and omissions made solely by the lead agency or broker.
In “hold-the-bag” states (regarding the apportionment of damages), the party sued pays for the errors and omissions of those not sued — as long as the party sued contributed a tiny sliver of negligence. This problem is more acute in hold-the-bag states where a motorist was largely or almost solely at fault (again, since most carry only trivial coverage).
The True Costs of Penny-Pinching
The examples above represent serious problems for contractors, as their carriers are even cheaper and less far-sighted than plaintiffs’ counsel. Carriers regularly pay their attorneys late. They sometimes don’t pay them completely, or occasionally not at all. They often do not allow them to engage experts, or if they do, only at the last minute. They grant the expert a shoestring budget. And they encourage their counsel to try to not even pay them.
These practices have predictable consequences. Defendants’ attorneys usually end up with chaff: Local yokels, parrots or shills. Some experts will not even work on the defense side of a case. (I do – but I require payment-in-advance for every dollop of work – which discourages many defendants’ attorneys and/or their carriers from engaging me.) I will not even accept payment from a carrier. This dynamic often leads to carriers tendering hefty settlements, where they might have won the case (or settled for cashews) with a reasonable effort. And all plaintiffs’ counsel know that carriers almost always settle. So both the contractors and their carriers drown, as they are forced to accept the blame for countless errors and omissions made by parties above the contractors.
There are, of course, exceptions. All carriers know they face a lawsuit the nanosecond they learn their client was involved in a serious incident. Occasionally they instruct their attorneys to engage an expert immediately – if only to assess the damages. Those with eyesight generally play better poker. Foresight trumps hindsight (or no sight) every time. A wise carrier whose counsel engages a real expert early can usually learn which parties are genuinely at fault. This knowledge helps the carriers and their counsel evaluate both the case and the plaintiff’s attorney(s) handling of it. And it can identify the defenses available (if the carrier is willing to pay for their execution). But contractors are rarely lucky enough to have such carriers. In choosing one, it is a huge mistake to not explore the commitment each prospective carrier will employ to defend them.
The cheap and lazy plaintiffs’ counsel are easy to spot. Many plaintiffs’ attorneys and firms are known to accept a pittance of a settlement as long as they receive it before they have to engage in any serious work. (Such firms’ complaints are written largely by paralegals; plaintiffs’ counsel simply edit them.) They simply lie to their clients about weaknesses in their case, and why they should accept the handful of magic beans offered by the defendant. Such attorneys effectively make money “on volume.” Carriers have few problems with such attorneys.
Where multiple parties are potential codefendants, plaintiffs’ attorneys will rarely file against the “big fish.” So where they do not make money “on volume,” they focus all their efforts on the contractor. This dynamic suggests that examining the roles and responsibilities of the “big fish,” and their contributions to an incident, is prudent. Unfortunately, few carriers elect this strategy, even though it usually pays off (other than in “hold-the-bag” states where plaintiffs’ attorneys have not filed against these codefendants).
It is easy to understand why so many contractors’ carriers simply “pony up.” But when they do, and fail to explore the genuine fault of an incident, they blame their clients (i.e., contractors). The contractors then risk paying higher premiums or losing their coverage altogether.
Power and Logic
If contractors (or any other defendants) expected actual justice, carriers would have little to say about how lawsuits are handled. Experts would engage attorneys, and attorneys would be forced to take their advice. Of course, such things will never happen. Instead, experts are rarely asked about litigation strategy – even while many are far-better qualified to design it, in their fields of expertise, than are the generalist lawyers who control and pay them (or do not).
In sharp contrast, contractors have no choice about even the attorneys assigned to defend them. And they have little choice about which experts (if any) their attorneys will engage – although shrewd contractors occasionally recommend some. Otherwise, contractors have no input into how these experts will be employed, how much work they will do, when they will be engaged, or which parties they are asked to examine for the cause of an incident.
This approach rarely leads to success or justice. Most carriers care about “the bottom line,” not the long-term interests of their clients. But far more so than carriers, many lead agencies and brokers care nothing about their contractors, since these victims have indemnified them. And because so many plaintiffs’ attorneys and firms are cheap and lazy, and do not file against the “big fish,” a contractor’s carrier will also pay for whatever errors and omissions these lead agencies and brokers committed.
Leaving Money on the Table
As noted, contractors’ carriers are often held “holding the bag” because plaintiffs’ counsel have no interest in chasing the big fish. Otherwise, the enormous amounts of money so many plaintiffs’ attorneys and firms regularly leave on the table is particularly frustrating to their experts – especially those who know how things work. (Someone who does is not a real expert.) But it is equally frustrating to a defendant’s expert when his or her counsel fails to explore the failures of the parties in control – again, particularly as most plaintiffs’ attorneys or firms fail to even file against them, saddling contractors with all the blame. This dynamic is not true in those “hold the bag” states like New York and Nevada, where a single defendant is held responsible for all the damages if it is only tangentially at fault. For this reason, plaintiffs’ attorneys in such states rarely bother to file against any of the big fish. Justice may come to an incident victim. But contractors, and particularly their carriers, are also victims. At least these carriers deserve it. Their clients do not.
A related dynamic is the fact that, in these “hold-the-bag” states, the defendant’s carrier and counsel often work harder and spend more money. Stuck holding the bag, they have to. So in these states, experts have a better opportunity to do a thorough job. They have another edge in these states: Plaintiffs’ attorneys and firms are often the worst: They get the whole bag of money by filing only against the small fish whose drivers make the most obvious mistakes. For the best transportation experts, and those carriers wise enough to approve of, or insist on, their engagement, these advantages pay off. As noted above, roughly half of all incidents stem from vehicles running behind schedule, and the safety compromises that drivers must make to try to catch up. (See safetycompromises.com.). Again, as noted, contractors rarely make the schedules in fixed route service or schoolbus service – although they usually do so in paratransit service. Of course, public agencies or their brokers are always in charge of them.
Leaving Money on the Table
Other than in the few “hold-the-bag” states, there are usually good reasons for carriers and their attorneys to work hard to defend contractors where plaintiffs’ attorneys ignore the big fish or their experts do not know enough about what matters they control. In most states, damages are apportioned according to fault. And in many, many incidents – particularly in those half of all incidents where the vehicles ran behind schedule – lead agencies are mostly at fault. In those modes where brokers are involved, they may be entirely at fault.
The most curious failures of plaintiffs’ attorneys and firms involve wheelchair tipovers – scenarios which comprise more than a fifth of my 650 cases. (See wheelchairtipovers.com.) Two structures illustrate this folly:
Dynamics and Responsibilities
One interesting dynamic is that lead or funding agency “top brass” are usually hired or appointed by elected officials, who typically dominate their Board of Directors. This relationship can spell trouble for a contractor when the plaintiff’s counsel fails to explore the roles which other parties play in the incident. This third party may be indemnified by the contractor, and if its negligence is not exposed, it will avoid the risk of paying any damages. However, if that “third party” is deeply embarrassed, it will often place pressure on its contractor to settle – if it wants any hope of having its contract renewed. But the contractor’s carrier cares exponentially more about a settlement or damage pay-out than its contractor’s future. So some fascinating discussions may occur behind the scenes.
This handful of dynamics is already complex. Their nuances can be dizzying. But no scenario works out well for the contractor. And most do not work out well for the carrier. But with the power to jettison the contractor and go out to bid, and with the contractor indemnifying the lead agency, most scenarios work out well for the lead agency. The exception, again, is the embarrassment factor. But this factor only emerges if the plaintiff’s or contractor’s counsel explores the lead agency’s role in the incident.
The consequences can be very different for a contractor when it’s lead agency sloughed off its responsibilities onto a broker. When a lead agency is embarrassed in open court because of its broker’s failures, that broker may not have its contract rubber-stamped for the next several decades. As brokers steal or waste most of their funding, they are not about to risk their golden goose (forget about the eggs) by going to trial. And particularly as the lead agency official who engaged it is going to be humiliated at trial, even if the broker is indemnified by the contractor on or near whose vehicle the incident occurred, the broker may toss a lot of money into the damage pot – because its entire existence in that service area (and possibly others) may be at stake. Of course, for this to happen, the carrier must authorize its counsel to “work the case” – since, once again, the typically cheap and lazy plaintiff’s counsel or firm often will not file against a broker. So the contractor’s carrier must know to rope the broker in. And its attorney’s expert better know a great deal about how all the pieces fit together – and particularly how brokers operate (or, more accurately, how they fail to).
Chats Behind the Curtain
If the contractor’s carrier, attorney and expert do their jobs, brokerage dynamics can be fascinating. These dynamics illustrate two important rules of thumb:
This last statement leads to what I call “the magic question” – a dynamic I try tirelessly to explain to my counsel on either side of a case involving a broker: One merely needs to depose the CEO of the lead agency that engaged the broker. Within minutes after that deposition concludes, that CEO is on the phone with the broker’s top official. Here is what he or she will say:
“Listen carefully. I just spent the worst afternoon of my professional career being picked apart in a deposition because of your company’s failures. I am not going to repeat these things in open court.” The “magic question” then follows: “Tell me what is not clear about what I just said?”
This question is “code” for: “I don’t care what it takes, but your company either settles this case, or we – and lots of my friends in surrounding states – will be engaging another broker next year.” Upon hearing the “magic question,” that broker is settling the case. The plaintiff’s counsel, the contractor’s counsel and the carrier need to know this. But few plaintiffs’ counsel care, for the many reasons noted above (making money “by volume,” indemnity, holding-the-bag states, etc.) So to contain the damages, the burden falls on the contractor’s carrier. And if the carrier’s attorney and his or her expert fail to trigger the “magic question,” the carrier will pay for this failure. To some extent, so too will the contractor.
Unfortunately, the expert who understands all this has no contact with the carrier, and must explain it to an attorney who usually has trouble holding still – much less one who has the patience to listen to an explanation of such complexity, who will then have to explain it to his or her carrier to get permission to spend the money this effort will likely take, who is allergic to hard work, whose firm likes to spend as little money on a case as possible, and who lives by asinine clichés like, “I believe in the KISS principle: “Keep it simple, stupid.” There is a reason stupid people are often referred to as “simple.” Truth be known, with a week or two to absorb these dynamics in a trial, few jurors have trouble grasping them. Unlike the majority of attorneys, they have no trouble holding still for days at a time – even for the $7/day or whatever they are paid for jury duty. To a jury, these dynamics are not boring at all. They are spellbinding.
Lightheaded and Enlightened
In the Land of Reason, every attorney would follow this approach. But public transportation does not operate in this Land. Nor do most attorneys. They operate in some other Land. (I will spare the reader my description of it.)
Reading all this, one would think that attorneys are dreadfully stupid, cheap or lazy. But so too are carriers unwilling to undertake and fund the effort to learn where the genuine blame belongs. But not all are. Those who are not stupid, cheap or lazy do well, and often save their companies millions of dollars dealing with the worst of incidents. The contractor who has such a carrier is fortunate.
Contractors usually benefit when those with most of the fault get most of the blame. Not completely, of course: Their lead agencies or brokers may retaliate by tossing them out of the service area – even while their own contracts, and many states’ laws, forbid such retaliation. And through the wonders of indemnification, their carriers are often forced to pay for the lead agencies’ and brokers’ failures. Indemnification is an ugly fact of life. But carriers do not blame their clients for it. So at least the contractor remains insured – although, again, it risks retaliation by the lead agency or broker for exercising the gall to defend itself – although lead agency attorneys realize that this aggressiveness is the carrier’s decision. But lead agency officials may still “take it out on the contractor.” At the same time, going out to bid for a contractor is an administrative chore. And many contractors are “wired in place” through their contributions to the reelection campaigns of various elected officials (usually city council members).
Operating in Sane Environments, Avoiding the Insipid Ones
With an enlightened carrier or a dunce — a contractor can minimize its risks and losses by being careful about those services on which it bids, and by doing the homework needed to make prudent choices about them. The last few installments in this series will provide contractors with the tools to accomplish these things. But staying out of trouble also helps the contractors’ attorneys succeed in defending them. It clearly makes their carriers happy (a big win makes them giddy). As I have argued in the pages of National Bus Trader for more than two decades now, safety pays off. What usually does not pay off is walking into an unsafe operating environment.
Sometimes, lead agencies get away with mayhem, and contractors get fed up with it. In my second lawsuit against former school bus and paratransit mega-giant Atlantic Express and its lead agency, I found that the lead agency was solely at fault for the incident, and committed dozens of errors and omissions. Yet self-insured Atlantic Express had been forced to sign an operating contract holding that lead agency harmless for errors and omissions made solely by the lead agency. Shortly after that lawsuit, Atlantic Express walked out of its huge paratransit contract in the middle of it. As a business matter, it was cheaper to lose the profits than to continue handing out big settlements for incidents not its fault. Besides, the broker was creaming off most of the revenue anyway.
Far more easily, a contractor’s carrier and attorneys should handle these situations. As even the sharpest reader likely noted, this is some pretty complex stuff. But the point is unmistakable. There are plenty of opportunities for carriers and their attorneys to defend contractors. They involve lots of work, good experts and, sometimes, a moderate wad of money. But the payoffs are undeniable.
Our legal system was designed and intended to exact justice – and not just for incident victims. It was designed and intended to hold those genuinely responsible for carnage accountable. All too often, carriers and attorneys fail to do this – as do the damage allocation formulas in many states. Unless the incident is of trivial value, or the playing field not level, it almost always pays for the carrier to find the parties most responsible and identify their failings.
Finally, carriers do not understand the nuances of their client’s operations. And they almost never understand dynamics such as those outlined above (and in other installments in this series). So they can often use some prodding. After a serious incident, a savvy contractor’s spokesperson – even if only an owner-operator — might begin his or her discussion with the carrier this way: “You know, I have plenty of friends in this business. So this conversation is about how much repeat business you can expect.” If the carrier’s representative asks for clarification, the contractor might add, “This incident was largely not my company’s fault. So I want to know whether or not you are planning to make the commitment to defend us properly. Tell me what is not clear about what I just said.”
– – – – – – – – – –
1 They also do in the zany NEMT world – see Part 3 of this series in the June issue of National Bus
Trader: The Whistleblower’s Song [see https://transalt.com/article/defending-contractors-part-3-
the-whistleblowers-song/. But the environment in which they operate is so distorted that the provision
of safe, efficient and reliable service is usually impossible.