A modest proposal for the new Congress: end welfare for lawyers

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What to do with all that money?  I have an answer.

There’s a reason they call it being “filthy rich.”  The money is… well… dirty, or at least it is not very clean.

How much is “all that money”?  The U.S. Chamber of Commerce reported last July on the results of a study that found that the tort liability in 2008 for small businesses alone was $105.4 billion.  Serious money… from the only segment of the economy that is a real job-creator… and serious money for the plaintiffs’ bar, which pocketed one-third – or more – of that $105.4 billion.

“Image is everything” – Andre Agassi for Canon Cameras.

The plaintiffs’ bar, that sanctimonious, preachy, self-important class of exploiter-entrepreneurs, would have you believe they are in it “for the people,” “to stand up for the little guy,” “to set an example,” and — most self-righteously — “for justice.”  Right.  No mention of ambulance-chasing — the image they try to bury as they indiscriminately hack their way through a jungle of defendants with presumptive deep pockets.

The well-heeled American Trial Lawyers Association — flush with their winnings from their favorably tilted legal roulette table and domineering in some liberal quid-pro-quo political circles – had a public-relations problem.  If this was West Side Story, they would definitely be the Sharks.  It is not the defense bar that gives lawyers the low reputation the profession endures – and deserves – in the eyes of the public.  It is the plaintiffs’ bar.  ATLA recognized this ambulance-chaser image problem. Their answer?  Change their name:  The American Association for Justice.  Not the American Association for Contingency Fees and Expenses.  Not The American Association for Settlement Leverage.  Not the American Association for High-Yield Intimidating Class Actions.  The American Association for Justice.  Isn’t that sweet?  Anybody here against justice, raise your hand? (Packaging – reminds me of when Sugar Pops cereal became Corn Pops and Kentucky Fried Chicken became KFC.)

The plaintiffs’ bar and its allies in this Congress pushed for a $1.6 billion tax deduction for trial lawyers who take contingency-fee cases.  Poor babies.  They brazenly worked their allies — in this current troubled economy — for the U.S. Government to subsidize with taxpayer money (and/or borrowed Chinese money to be paid by future American generations) their quest for increasingly high-risk, high-yield marginal lawsuits.  What a country.

And so we have a $54 million lawsuit for a pair of drycleaner-misplaced slacks, and a $2.86 million jury award for a spilled 49-cent cup of coffee (McDonald’s had to defend against seven hundred burn lawsuits in ten years… and now we all have the privilege of drinking lukewarm coffee).

“I never saw a lawyer yet who would admit he was making money” – Mary Roberts Rinehart.

The plaintiffs’ bar just wants “justice.”

But justice comes with a price tag.  The 33%… 40%… 50%… plus expenses… whatever the local jurisdiction will permit as the “cap” on contingency fees.  They say they do it “for justice.”  They do it for the money.  They know that.  We know that.  You know that.  The rest is a charade.

A very costly charade.  In asbestos litigation alone, the plaintiffs’ bar has pocketed more than $40 billion (and bankrupted 80 companies in the process).  More than $40 billion out of the more than $70 billion in direct losses (more than 57 percent went to the lawyers).  Again, serious money… and serious questions about the validity for the tens of thousands of claims that overwhelmed both the court system and the target defendants.

I scream, you scream, we all scream for… mesothelioma (and silicosis)

How do we know that most of these asbestos claims were invalid?  Even as the incidence of new cases of serious lung cancers for asbestos (mesothelioma) remained constant at two-to-four thousand annually, asbestos court claims skyrocketed to nearly 100,000 per year – many of which involved sham victims, recruited by slick mass marketing, “supported” by fabricated medical evidence, packaged together in a tidal wave of class actions that swamped both the defendants and the courts.  Lost so often in the rush to riches by sham plaintiffs are the genuinely injured claimants and their rights.

Moreover, as asbestos manufacturers were litigated out of existence, and these wells of litigation windfall profits dried up, the plaintiffs’ bar turned its guns on asbestos users — any hospital, school district, government agency, and/or employer with asbestos in the ceiling or walls of a building and deep enough pockets for a payoff.  They used the same bullying tactics, the same questionable mass-produced diagnoses, the same legions of wide-eyed “victims” recruited by late-night television ads promising “ju$tice.”

Chief Judge Dennis Jacobs of the U.S. Court of Appeals for the Second Circuit in New York condemned such litigation schemes, declaring that justices in asbestos litigation frequently process massive caseloads “without regard to whether the claims themselves are based on fraud, corrupt experts, perjury, or other things” that should “be deplored and persecuted by the legal profession.”

U.S. District Court Judge Janis Graham Jack of Texas agrees.  He found massive fraud in the asbestos-litigation “industry”:  thousands seeking damages for silica exposure, more than 60 percent of whom had already recovered damages for the same lung injuries purportedly caused by asbestos.

This is called asbestos-silica “double-dipping.” It always – by definition – involves the same “victim,” and virtually always involves the same plaintiffs’ lawyer, united together as zealous allies in litigation fraud.  It is reminiscent of the celebrated/denigrated practice of individuals boarding buses after the buses have been involved in an accident so as to share in the spoils of sham litigation.

What’s My Line? Dr. Roy Harron, enter and sign in please.

Dr. Roy Harron would likely stump the panel if the What’s My Line? show were still aired on television.

Why?  Because Harron flies under the radar, and is highly accomplished and experienced at deception and dishonesty.

Harron is a liar and a cheat, and – if we are to believe his self-defense at Congressional hearings and to state medical licensing board investigators – a person manipulated by unscrupulous plaintiffs’ lawyers. He is the poster boy for fabricated medical evidence, and an integral part of the process that ignores true victims in favor of fake ones… but he is only one of many.

“Dr.” Harron fraudulently diagnosed tens of thousands of plaintiffs as having mesothelioma and silicosis. For this, Harron had his licenses to practice medicine revoked in New York, California, Texas, Florida, North Carolina, Mississippi, and New Mexico.

He testified that he “capitulated” to attorney demands that he falsify his asbestos- and silica-related diagnoses.  He “capitulated” a lot – 51,048 times he diagnosed individuals with asbestos-related illnesses alone. For this, he became very wealthy – as did many of the individuals he intentionally misdiagnosed. But most wealthy were the plaintiffs’ lawyers who fraudulently represented these “victims.”

“A lawyer with his briefcase can steal more than a hundred men with guns” – Mario Puzo in The Godfather.

But who are they stealing from? Ultimately, it is from each of us.  We all pay.  We especially pay for the nuisance and fraudulent lawsuits which are rampant. Higher health care costs… higher insurance costs… higher deductibles and co-payments… higher homeowners’ insurance rates…higher auto insurance rates… the pass-throughs for higher malpractice insurance rates… devaluation of our investments – stocks, mutual finds, pension funds, IRAs, and 401(k)s… devaluation of our profit-sharing plans… higher tax liabilities… and jobs that could have been created, but are not (that $105.4 billion in 2008 tort liability for small business alone that was referenced above).  And we pay because we get less product and less service in both the private and the public sectors because the money is going to the lawyers and to their lottery-winner clients.

Clearly, these abuses by plaintiffs’ lawyers and their clients take money – a lot of money – out of your pocket.  This is not some esoteric, policy-wonk, abstract Washington issue involving number-crunchers with super-sized calculators. This is about money that is being stolen from virtually every family in America.

Some of these plaintiffs are deserving.  Some of them are very deserving.  There are bad people in this world, and sometimes good people do bad things.  But most of these lawsuits are not about them – they are about legal extortion.

“Here the fell attorney prowls for prey” – Dr. Samuel Johnson in The Great Cham of Literature.

As a freshman at Georgetown Law many years ago, I worked – for two weeks – for a sole-practitioner plaintiffs’ lawyer in the District of Columbia.  Juries in the District of Columbia are widely acknowledged to be pro-plaintiff.  All of his clients alleged injuries that were transportation-related.  They all alleged that they had wrenched their necks and/or hurt their backs from cabs, buses, or the Metro subway “stopping short.”  All the same injuries.  All the same defendants.  His clients were basically all on referrals – and many were family relatives.  He would schedule three trials for the same day, even the same time, in different courts in the Washington Metropolitan Area.  He had no intention of going to court.  He would settle every one of these lawsuits, and then drive in his new black Mercedes to the bank to make deposits.

“Give me money, a lot of money, that’s what I want” – The Beatles, Money, Capitol Records

The rewards for representing the downtrodden?

John Edwards, ATLA’s former champion and public persona, a self-proclaimed “man of the people,” built a 28,200 square-foot residence on 102 acres in North Carolina (just one of the properties he bought for “family and friends”).

John O’Quinn, the Houston billionaire plaintiffs’ lawyer who personally bankrupted Dow Corning on the breast-implant issue, and won other billion-dollar verdicts on, among other issues, diet pills, in closing-argument style, recently bellowed, “This is a country of the corporations, by the corporations, and for the rich goddamned corporations.  A corporation can be a criminal – an absolute criminal – and nobody can do a goddamned thing about it.”  Imagine.  So much for billion-dollar, corporation-bankrupting verdicts.  I guess that constitutes doing nothing “about it.”

Peter Angelos went from modest success to fabulous wealth through asbestos litigation.  The very same lawsuit, filings, briefs, allegations, and expert witnesses again and again against various cities, counties, school districts, and hospitals in Maryland.  Over and over again.  Do a “universal” on the computer and change “City of Baltimore” to “Anne Arundel County.”  The result?  Angelos was well on his way to becoming a billionaire and bought – and destroyed – the Baltimore Orioles (he jettisoned Jon Miller!), and Maryland has fewer hospital beds, fewer doctors, more crowded schools, fewer Special Ed programs, and less public services.  So Angelos could ensure “justice” – and line his pockets in solid gold.

“A Simple Desultory Philippic” a ‘60s song by Simon and Garfunkel.

Here’s a new twist to “A Simple Desultory Philippic”:  Don’t let them keep it.

Oh not the greedy, misbehaving, need-to-be-taught-a-lesson employers, governments, school districts, and hospitals and doctors — we know they’re evil and undeserving.  We’ll still stick it to them.

But let’s take some of it from the John Edwardses, the John O’Quinns, and the Peter Angeloses too. Time for a new Congress — and a new Congressional approach, one less inclined to reward the “filthy” rich.

We know most of these plaintiffs’-bar-filed cases are undeserving.  We know this from the run-away asbestos-silica fraud schemes discussed above.  But we also know this, for example, in the employment area (where I practice law), because employers win the vast majority of the time, and win easily.

A 17.2 percent employee win-rate.

According to a study by the National Workrights Institute, headed by ex-ACLU lawyer Lew Maltby, 60 percent of employee complaints are disposed of on motions (typically, Motions to Dismiss and Motions for Summary Judgment), with employers prevailing 98 percent of the time.  They’re slam-dunks.  Judges across the country do not think these cases even merit going forward for further consideration, fact-finding, and resolution of questions of law.

Furthermore, the employer win-percentage is 57 percent on those employee (or job applicant) claims which do survive a court rejection on motions.

Thus, winning 43 percent of the 40 percent that are not dismissed translates into a 17.2 percent employee win-rate.  Some of this can be explained by bad plaintiffs’ lawyers, or by good defense lawyers, but when lawyers prevail 83 percent of the time, an overwhelming majority, the real explanation lies elsewhere: the merit of most of these claims is just not that good.  Yes, there are a lot of frivolous, undeserving, and/or marginal claims filed by lottery-mentality plaintiffs’ lawyers and their clients.

“Only the beginning, only just the start” – Chicago, Beginnings, by Robert Lamm.

A new Congress commences in January.  It has a mandate to do at least some things differently.  These are – or should be – cost-conscious times in a struggling economy (and one in which $5 trillion was added to the national debt in the last four years while Nancy Pelosi was Speaker of the House).

One simple — and attractive — answer is reform of our judicial system.  The American public is strongly in favor of tort reform, and while the allies in Congress of the plaintiffs’ bar, and its enormous political-contribution machinery (“for justice”), have heretofore stymied all attempts at tort reform at the federal level, numerous states have enacted positive tort-reform measures piecemeal.  It is a start… and the times they are a-changing.  One possible, and previously unconsidered, aspect of tort reform would be the shift in who receives punitive damages — a shift to where they can do more good and, frankly, are more deserved.

If you want a “test drive,” start with a pilot program for five years for employment litigation. That is where — as we saw from the statistics above — we know with great certainty the marginal and frivolous lawsuits are ubiquitous.

Punitive damages are designed to punish the defendant, not compensate the plaintiff.  Therefore, punitive damage awards would be better deposited in a government judiciary fund, administered by senior federal judges appointed by the U.S. Supreme Court, with oversight by — and annual reporting requirements to — both the Court and the Senate and House Judiciary Committees.  From this fund, the monies would be allocated to enhance our judicial process and — where needed — expand it. It could be used to refurbish courthouses, raise judicial pay, hire more clerks and court personnel, provide more legal training, and help reduce the case backlog (which the plaintiffs’ bar propagates).  Thus, there would be relief to our overcrowded and significantly backlogged judicial system, and at least partial relief of this financial burden for the taxpayer. Redirecting punitive damages to where they are needed — and deserved — represents a worthy goal for the 112th Congress.

Moreover, since lawyers are themselves officers of the court, they should not receive contingency fees on non-compensatory damages, but rather a fixed-fee based on the rates paid to court-appointed defense counsel.

Simple, fair, and appropriate. Judicial reform that still punishes the guilty just as hard, but rewards our society more broadly – and in a more worthy manner.

After all, the plaintiffs would still be compensated for their losses, made whole by “compensatory damages” – that’s their purpose.  They get compensated, and the bad-actor defendants still get punished just as much on top of that by the assessment of punitive damages.  Thus, there is no difference in this regard – it has the same deterrent effect, the same monetary consequences for the losing party, the same message sent-and-received by both the defendant and like-situated parties – don’t do this again or else.  They would still feel the sting of the lash, hurt where it may hurt most – in the pocketbook.

But now the system would work in another direction, to “do good” on the other side of the equation:  Redirect the punitive damages where they are needed and can do the most good, and reform, enhance, make more accessible, and make more accessible in a timely way the judicial system for all Americans. Is this not justice?

It is more than justice, it is common sense.  Not good for the filthy rich… but very good for all the rest of us.

Mark A. de Bernardo is the executive director for the Institute for a Drug-Free Workplace. He is also a partner in the Washington, D.C. region office of Jackson Lewis, a national management-side employment law firm with more than 650 lawyers who exclusively advise and defend employers.