Dec 31, 2010

Dollars and Cutting to Their Chase

Now is a good time to advance ideas to improve the administration of justice.

The following op-ed appeared in the Daily Journal on December 29, 2010. Reprinted with permission from the Daily Journal Corp. (2010)

By John H. Sullivan

Hopes of the nation’s plaintiffs’ bar soared when the 2008 election delivered a president and Congress they saw aligned with their jackpot justice agenda. Expectations were quickly rewarded when the president signed the so-called Lilly Ledbetter Fair Pay Act, loosening a tight federal statute of limitations for gender-based wage discrimination claims.

That was but one item on the plaintiffs’ bar wish list. The lawyers soon found authors for bills to generate more defendants in securities class actions, overturn a 2008 Supreme Court ruling limiting punitive damages, hobble federal preemption of state law tort claims, undercut a judge’s ability to use protective orders to preserve defendants’ legitimate confidential information, restrict the right to agree to arbitrate future disputes, change tax law to balloon their deductions for advancing client costs, and blatantly end-run the federal judicial rule process by eviscerating pleading standards that quell lawsuits presenting no plausible claim.

But so far none of these has been enacted. And now the 2010 elections have moved them out of easy reach.

First came the late-Sen. Ted Kennedy’s replacement by a Republican, making the filibuster again an available tool for blocking a pro-plaintiffs’ bar majority in the Senate. Then, last month, dozens of trial lawyer-friendly lawmakers lost re-election bids, and the plaintiffs’ bar now face an unfriendly majority in the House.

Before the congressional door was slammed shut on them, the plaintiffs’ bar did manage to keep medical malpractice reforms - even attempts to test them - out of the big federal health bill (blocking a savings that was neutrally estimated in the hundreds of millions of dollars). And they made inroads in safeguarding their state tort lawsuit portfolio despite increased federal consumer protection powers.

Opportunity for the plaintiffs’ bar now lies largely in rule changes they might extract from the executive branch. Of all the legislation they have pitched as vital “consumer protections” over the past two years, which now is at the top of their list to win from the president and his agencies?

None.

Yes, now the top item on the plaintiffs’ bar’s list is the one that would deliver them a $1.6 billion tax break with no “consumer” award whatsoever! So confident were the trial lawyers that the Treasury Department would grant the tax break administratively, that at their national convention last July a staff member over-optimistically predicted a new deduction rule would be enacted within 48 hours.

To those who have observed the plaintiffs’ bar over the years, this prioritizing does not come as a surprise.

In California, in 1987, the possibility of a follow-up initiative to Proposition 51, (establishing modified comparative fault to reduce unfair judgments against deep pocket defendants), brought what was then called the “tort war” factions together for some end-of-session negotiating.

At a late-night meeting at Frank Fat’s restaurant near the Capitol, business and health care representatives and trial lawyers settled on the “Napkin Deal.” In an agreement sketched out on a restaurant napkin, the defendant community made it tougher to win punitive damages, lessened defense lawyering-up in cases with insured defendants, reduced lawsuit exposure for tobacco and other known-risk products, and ensured that the Medical Injury Compensation Reform Act of 1976 would not be challenged for five years.

The top item on the trial lawyers’ bargaining list - and the one they got - was an increase in the contingency fee percentage share of client lawsuit awards and settlements in medical malpractice lawsuits!

Consumer groups were not happy with this choice. Harry Snyder, representing Consumers Union at the time, was quoted as saying “the bill was a sellout of consumers” and that in reality, the trial attorneys had turned out to be an enemy of consumers.

A decade before the Napkin Deal, the U.S. Supreme Court delivered a ruling that forever changed the practice of law in this country - most of all the practice of liability law by the plaintiffs’ bar. In June 1977, Bates v. Arizona opened the door to virtually unrestrained solicitation of clients via advertising on television, phone books, billboards, and the Internet.

The fraction of pre-_Bates_ lawyers becomes smaller each year. (If your State Bar number is below around 74800, you were sworn in to a world now gone.)

The plaintiffs’ bar’s federal lobbying over the past two years in the context of the four decades since Bates reveals the evolution of an aggressive, public battle for clients and cases (with fallout including the incarceration of some of the plaintiffs’ bar’s most successful and wealthy icons), and the financial bottom line as the driving force behind advocacy for more favorable laws and rules. Reviewing this, one would not be faulted for concluding that this area of practice boils down to dollars and cutting to their chase so endemic that it warrants its own Latin label.

Skepticism of this practice genre crops up in interesting ways. For example, on Dec. 31, 2007, ABC News Senior White House Correspondent Jake Tapper reported on his network’s Web site that in a campaign appearance in Newton, Iowa, candidate Barack Obama explained that “as a community organizer, civil rights attorney and public official, he has always been committed to bringing about change.” Tapper added, “That was always more important to him than just making money.”

“That’s why I didn’t become a trial lawyer,” said Obama.

The plaintiffs’ lawyers are discovering in Washington that while they have more cases and money than ever, political success does not flow from having more clients than friends.

Nevertheless, there is a path to broader, productive success. In California, the plaintiffs’ bar, defense lawyers, court administrators, and others worked together on a project this year that produced a new shorter trial option to benefit everyone. Now is a good time for our counterparts nationally to advance ideas to improve the administration of justice, with balanced ideas that can win the support of lawmakers no matter what their affiliation.

John H. Sullivan is president of the Civil Justice Association of California in Sacramento, a non-profit association representing businesses, professionals, and local governments. Visit www.cjac.org for more information.