August 31, 1987
Although it has only eight lawyers, the Overland Park law firm of Shamberg Johnson Bergman & Goldman has had an impact well beyond its numbers.
The firm, which specializes in personal injury and product liability litigation, has tried eight cases this year -- as many as any firm in the metropolitan area, according to legal observers -- and won six. Two of the cases resulted in verdicts of more than $1 million and the others resulted in verdicts totaling more than $460,000.
The pint-sized firm can also lay claim to having obtained the largest damage award ever in Kansas, $15 million; winning a total of seven cases in which damages have equaled or exceeded $1 million; and having played major roles in cases on the cutting edge of tort law -- the rules governing injury claims.
Perhaps even more significant, the firm has been instrumental in rewriting the two-state region's tort laws, sometimes in ways it never intended. As a result, it has found itself in the thick of the ongoing controversy about the nation's liability crisis and whether the so-called "tort explosion" is to blame.
The firm can number among its successes several cases that helped overturn or modify long-standing tort doctrines. At the same time, its success has helped beget tougher laws limiting the amount of damages plaintiffs can recover in tort cases.
The firm's senior partner, John Shamberg, brought one of the first cases in Kansas successfully challenging the immunity of public hospitals from suit under the doctrine of sovereign immunity -- the long-entrenched rule that precludes suits against the government or its agents.
And in the then-fledgling field of products liability, the firm was a key player in bringing about the removal from supermarket shelves of Liquid Plum'r, a drain solvent that left scores of children who had drunk it permanently disabled.
In the wake of the skywalks collapse in 1981 at Kansas City's Hyatt Regency Hotel, Shamberg Johnson, together with some of the area's most renowned personal injury lawyers --Max Foust, Lantz Welch and Patrick McLarney were some of the others -- helped to fashion a settlement now regarded as a model approach to mass disaster litigation, resolving hundreds of claims within two years of the accident.
Paradoxically, the firm may be said to be a victim of its own success.
Shamberg Johnson, like other firms specializing in personal injury work on behalf of plaintiffs, is less than beloved by doctors and other medical professionals. And the insurance industry holds firms like Shamberg Johnson responsible for the much-ballyhooed liability crisis, asserting that skyrocketing jury verdicts have forced property and casualty insurers to hike premiums and in some cases cancel insurance altogether.
State legislatures have responded accordingly. Kansas lawmakers last year placed a $1 million cap on damages in medical malpractice cases, including a $250,000 cap on so-called non-economic damages such as pain and suffering (The plaintiff can seek up to $2 million more if he can prove the first million is not sufficient to cover current and future medical expenses). Similarly, Missouri last year capped non-economic damages at $350,000 and placed other restrictions on punitive damage awards.
All of this irritates the lawyers at Shamberg Johnson, who want to see the laws overturned. They maintain that the statistics trotted out by the insurance company are trumped up.
"The numbers have been pretty well demonstrated as fallacious," says David Morris, who joined the firm two years ago after 11 years with Shook Hardy & Bacon, probably the foremost insurance and products liability defense firm in Kansas City. "The average jury verdict has simply stayed with the growth in the population and with inflation."
Indeed, the evidence suggests that the "tort explosion" is large built on misperceptions. A study published by the National Center for State Courts says tort filings were up only 10 percent in the six-year period ending in 1984 -- just 2 percentage points higher than population growth in the 14 states that track such statistics.
Moreover, the statistics most frequently cited by the insurance industry fail to take into account cases in which the plaintiff lost or in which the verdict was reduced or overturned on appeal.
Data collected by the administrative arm of the Kansas Supreme Court last year -- which omit cases that were settled before trial and cases in which the defendant prevailed -- show that in 1986 there were just six medical malpractice jury verdicts in all of Kansas and that the verdicts averaged $55,214 each.
In all, there were 172 tort cases in Kansas last year resulting in jury awards; in more than half, the verdicts were less than $10,000. The median damage award was $8,500 and 75 percent of the verdicts were for $31,543 or less.
A few large awards skewed the overall average upward to $66,000, but even that figure is scarcely of "crisis" proportions.
In any event, despite Shamberg Johnson's contributions to those figures, or maybe because of them, defense lawyers praise the firm for its competence and integrity (although several vigorously asserted that the liability crisis is real and that the proliferation of tort suits is the main culprit).
"They have a very good reputation in the legal community," says Michael Waldeck, a partner with Niewald Waldeck Norris and Brown, a prominent insurance defense firm that represented the Hyatt Regency in the skywalks litigation. "We've always found them to be hard-nosed but fair."
Patrick McLarney of Shook Hardy & Bacon, a firm that usually represents defendants but found itself allied with Shamberg Johnson in the Hyatt cases, says the key to the firm's success it its thoroughness.
"They're just extremely well prepared and as a result, they get large verdicts or settle for large amounts."
For John Shamberg, the firm's patriarch and guiding light, preparation can sometimes assume near fetish proportions. "He's so meticulous he used to drive me crazy," said Charles Schnider, Shamberg's partner for 20 years before he left three years ago and joined Spencer Fane Britt & Browne in a disagreement over the firm's direction. (About half the firm wanted to concentrate on tort law exclusively; Schnider and others wanted the firm to be a general practice firm.)
"If you had a case worth $5,000 or so at most, ordinarily you'd investigate without taking depositions and such. Well, John wanted to take the deposition of every single person who might have heard anything. All of that naturally ran up expenses. I didn't see the reason for it. But listen, the success of his system has been proven."
"Let me put it this way: Our work is careful," says Shamberg, a dapper-looking bachelor who, along with partners Lynn Johnson and Victor Bergman, was named one of the best lawyers in America in a book by the same name. The three were among six Kansas lawyers named in the category of personal injury litigation.
Since almost all of Shamberg Johnson's cases are taken on a contingency fee basis (meaning the firm gets paid only if it prevails), the economics of the practice dictate that it prepare cases thoroughly. The firm does take on cases in which it does not expect to reap large damage awards, but because its expenses in preparing a case run so high (expenses that it may initially have to cover out of pocket), big-ticket cases are more often the rule.
"Keep in mind that our fee is zero if someone comes in for a consultation and we decide not to take on the case," says Bergman. "Or we may put in a considerable amount of time and then decide not to take it on. Or we may take a case and lose it."
Initial outlays on a case can run into the thousands of dollars. Expert witnesses alone may cost as much as $300 an hour. Add travel expenses, deposition costs and the expenses associated with preparing exhibits (Shamberg Johnson is a great believer in visual aids, sometimes spending thousands of dollars on charts and models alone), and expenses before trial can range from $20,000 to $50,000.
For that reason alone, the firm has to be selective in the cases it takes on. Weak cases and suits brought for their harassment value are not its style.
Beyond that, the firm's lawyers are simply not interested in nuisance suits that might undermine their commitment to the rights of injured plaintiffs. There are, as they see it, too many unredressed wrongs to bother with wrongly dressed rights.
"We don't apologize, as some in the medical community would like us to do, for this reason: We're committed to handling meritorious cases," says Lynn Johnson. "People don't come in to see us to get a lot of money. They come in because they're in anguish over a loss and because they don't understand what happened."
Adds Bergman: "Very few people come to us with the attitude that they have the inalienable right to be compensated for some perceived wrong. They're just looking for an explanation ... People need to know why something turned out wrong."
Something turned out very wrong in the case of Brent Olsen, a child born at Humana Hospital after his mother experienced a normal pregnancy.
At the hospital, the obstetrician gave the mother a pain-killing drug that was later determined to be inappropriate. About 15 minutes later, the fetus's heart rate dropped from 130 to 90 beats per minute.
The doctor was down the hall drinking coffee. Inexplicably, the nurse on duty wheeled the mother to the delivery room but turned off the fetal monitor. Twenty-five minutes later, the obstetrician came into the delivery room and, recognizing the fetus was in distress, delivered the baby by forceps.
At the trial, the doctor would testify that he ordered the nurse to call the baby's pediatrician and an anesthesiologist. Neither was done.
The result was that Brent Olsen was born with severe brain damage and lost the use of his limbs. His life expectancy, however, is normal.
Shamberg Johnson, instead of suing just the hospital and the obstetrician, decided to sue Humana's parent company. The somewhat novel theory was that as a for-profit chain, the parent was responsible for the quality of care at all its hospitals.
"I found out in deposing the nurse that she didn't know the first thing about fetal heart monitoring," says Bergman, who tried the case. "So we asked, Who put her in that position? We wound up suing Humana Corp. of Kentucky as well as the hospital's holding company (Humana of Kansas). And we got a ruling piercing the corporate veil...
"The jury found gross and reckless disregard on the part of the administration that put this nurse in that situation and then failed to retrain her after the fact."
The verdict, $15 mission ($6.2 million in compensatory damages and $8.8 million in punitive damages), stands as the largest jury verdict ever in Kansas and the only medical malpractice case in which a Kansas jury has awarded punitive damages. The verdict triggered an outcry for legislative reform, which led to the passage of Kansas' medical malpractice legislation last year.
Johnson points to the case as precisely the kind of situation in which limiting damages is not only an inappropriate response but one that, contrary to the law's intent, is apt to lead to more malpractice cases.
"One of the most important features of tort law is not only compensation but deterrence. This was a case where we tried to do that."
In fact, it was what happened after Brent Olsen's birth that convinces the lawyers at Shamberg Johnson that the law passed in its wake is a misguided one.
"I deposed the unit manager for labor and delivery and I asked her what inquiries had been made about the case," says Bergman. "Her response was to look at the chart to see if she could remember the case!
"A conscious decision had been made, we think, not to ask any questions because it was such a clear-cut case of negligence...
"My opinion is that before we take away important constitutional rights, whoever wants to take them away should have a very heavy burden of proving that some purpose will be achieved."
Kansas City Business Journal
Vol. 5, Number 50
By Dan Margolies
