TCS Daily

Is the Tide Turning on Torts?

By Michael Brandon McClellan - March 16, 2004 12:00 AM

"Law is but a means, justice is the end." Such is the bold inscription on the Georgetown University Law Center library, and the idea to which American tort law subscribes. At least that is the theory I was taught in my first year of law school. Unfortunately, the reality of the predatorial plaintiff's bar has made a mockery of this ideal. But after years of abuse, the democratic tide may finally be turning against them.

While fashioning themselves as the Platonic guardians of the "little man," righting the alleged wrongs wrought by big business and wealthy doctors, trial lawyers are struggling to halt a growing animosity amongst the very average Americans they claim to protect. Popular media and opinion-shapers are addressing wide-spread abuses, constituents want change, and perhaps most importantly, legislatures are responding.

Infamous stories of class action "mass tort" attorneys wreaking havoc on struggling businesses, gaining massive financial windfalls for themselves, and leaving insignificant leftovers for the injured members of their class have taken a toll on the American psyche. Confirmed tales of outstanding doctors quitting their practices or retiring early in the face of increasingly expensive liability insurance and a ceaseless litigation threat have similarly caught national attention. The societal costs of such trends are obvious and have spurred a powerful reaction.

In recent years, the tort system and the trial lawyers who exploit it have suffered a series of highly visible assaults -- ranging from President Bush's most recent State of the Union address to mass-circulation magazines to best selling novels. Last December, a compelling cover story in Newsweek chronicled a wide array of tort abuses raging across the country, in which not only doctors, but Little League coaches, teachers, and even ministers are taking defensive measures to protect themselves from a seemingly ever-expanding liability system. John Grisham's latest blockbuster, King of Torts, presents a similar message, effectively caricaturing the ruthless greed and predatory solicitation practices of the "mass tort" trial lawyers.

But beyond sensational novels and sweeping Newsweek articles, the growing movement has depth as well. Equally important to turning the tide on torts are the overdue efforts of preyed-upon professionals and businesses, challenging the political hegemony of the plaintiff's bar. The US Chamber of Commerce and the American Tort Reform Association are now fully engaged in the nation-wide legislative battle to statutorily limit the structural incentives encouraging the litigation deluge. Similarly the American Medical Association has made reforming the medical liability system its number one legislative priority. Such organizations and others have accumulated powerful empirical data to support the reform cause.

The macroscopic evidence for reform is damning -- revealing massive costs and gross inefficiency. The overall costs of the tort system are rising dramatically, and given the expenses of legal representation and contingency fees, the majority of the money is not going to remedy plaintiffs' injuries. While US tort costs have risen a staggering 125% over the last decade, the system returns less than 25 cents on the dollar to compensate plaintiffs' economic loss. At 2.2% of GDP, the US tort system is the most costly of any in the industrialized world.

Anecdotally, this trend in tort law was wonderfully illustrated by well-known legal reform advocate Philip K. Howard at a recent meeting of the Federalist Society. He recalled that during his law school days in the early 1970s, a one million dollar jury verdict was so extraordinary that it made the front page of the Miami Herald. Today, a $100 million verdict barely makes the tenth page. "This is not due to inflation," he said.

Given such trends, it is unsurprising that in a 2003 Gallup Poll, 72% of Americans favored capping non-economic damages in medical liability cases.

So popular opinion-makers are speaking out, beleaguered professional and business groups are organizing, and the public is responding, but such does not necessarily equate to reform. Cynics invoke the political clout of trial lawyers as an impenetrable roadblock to meaningful reform. Trial lawyers are indeed among the most generous contributors to the Democratic Party, and the second leading candidate for the Party's Presidential nomination hails from among their ranks. Yet growing evidence indicates that the edifice is beginning to crack.

In 2003 alone, 28 state legislatures enacted tort reform measures. Granted, the extent of reform vacillated widely from state to state, ranging from a singular jury service reform in Arizona, to comprehensive protective measures regarding immunities, settlements, punitive damages, and medical liability in Texas and Colorado. Yet on the whole, such wide spread legislative reaction to tort abuse indicates a meaningful democratic shift on a national scale.

Most of these reforms focus on disincentivizing the "jury jackpot" system that has encouraged much of the growth in litigation. Measures such as capping punitive damages, placing limits on unpredictable awards for pain and suffering, and limiting the percentage attorneys can claim in contingency fees will do much to restrict the financial incentive to sue -- for plaintiffs, but even more importantly for their attorneys.

While reforms are unquestionably necessary to reverse, or at a very minimum, contain the growing lawsuit culture in America, it is important that the reaction not veer too far in the opposite direction. For example, a legislatively-imposed absolute cap on medical liability (including economic damages) at say $1 million could have catastrophic effects, leaving an uninsured paralytic with insufficient funds to cover his medical costs. Such a regime would be a disservice to the pursuit of justice.

In spite of the growing list of gross manipulations made by ominously creative trial lawyers, reformers must not lose sight of the fact that businesses and professionals do occasionally act negligently, and innocent people are seriously hurt by their actions. Reforms must seek to restore balance to the malfunctioning system, without unjustly protecting the negligent or denying legal remedies to the truly injured. Such balance in the law may be difficult to attain, but such is necessary if justice is to be the end.

The author is making his first appearance in TCS.


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