TCS Daily


Trial Lawyers: Democrats' Other Money Machine

By James Copland - February 10, 2010 12:00 AM

Public-sector unions aren't the only machine used by Democrats to recycle tax dollars for campaign funds. Trial lawyers also use government's monopoly on the use of force to tax the public, profit handsomely, and recycle a portion of the funds to their political enablers.

Because the taxes lawyers collect aren't withheld from our paychecks, or added directly onto the prices of the goods and services we buy, they may not be obvious to the average citizen. But make no mistake: The "tort tax" we pay to lawyers is a hefty tab, directly consuming some 2 percent of gross domestic product, with tertiary costs -- such as defensive medicine that adds to our health care bills and foregone investment that would produce economic growth -- that are multiples higher still.

Of course, as with our regular taxes, we do get something from the tort tax. Litigation does compensate some genuinely injured victims; but only very slowly, with half the money going to lawyers in the process.

And lawsuits do discourage some dangerous behaviors, but what we get is far less than what we pay: Our tort tax is double that in Germany and three times that in Britain or France, and we're hardly safer as a result.

Indeed, American litigation is so unpredictable and expensive that it discourages a lot of good behaviors, too, from conducting innovative research to delivering babies to affixing diving boards to community swimming pools.

Eighty-three percent of Americans tell pollsters that "the legal system makes it too easy to assert invalid claims," so lawyers have to funnel lots of money to politicians to keep the tort tax high. In the last decade, lawyers and their political action committees gave $780 million to federal politicians and $725 million to their state-level counterparts, overwhelmingly to members of the Democratic Party.

Senate Majority Leader Harry Reid, D-Nev., gets more than twice as much campaign cash from lawyers as from any other industry or profession; four of his top seven donors are out-of-state plaintiffs' law firms that traffic in asbestos or toxic tort litigation. Senate Majority Whip Dick Durbin, D-Ill., collects more than three times as much from lawyers as from any other group, and plaintiffs' firms are his top two and seven of his top 20 contributors.

Such access has paid off handsomely, with recent legislation enabling more employment lawsuits (the Lilly Ledbetter Fair Pay Act of 2009), more state-attorney-general-backed consumer lawsuits (the Consumer Product Safety Improvement Act of 2008), and more "whistleblower" lawsuits filed by private lawyers against companies doing federal government business (the Fraud Enforcement and Recovery Act of 2009).

And the lawyers are hardly done. Their current agenda includes dramatically limiting consumer arbitration agreements, expanding securities litigation, changing procedural rules to facilitate legal "fishing expeditions," and even cutting the plaintiffs' bar a targeted $1.6 billion tax break.

Such efforts frustrate otherwise positive legal trends. Since the Manhattan Institute's initial 2003 report on the lawsuit industry -- we call them "Trial Lawyers Inc." -- the rate of growth in litigation has slowed, because of state and federal tort reforms and judicial exposure of fraudulent asbestos claims. With the clock ticking as the November 2010 elections approach, and political winds frustrating their more prominent goals, don't be surprised to see the Democrats quietly slipping goodies to their besieged but still-generous political benefactors.


This article first appeared in the Washington Examiner.

James R. Copland is the director of the Center for Legal Policy at the Manhattan Institute and the author of a new report, released yesterday, "Trial Lawyers, Inc.: K Street-A Report on the Litigation Lobby 2010." The report is available at www.triallawyersinc.com

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