Ford lost seven $20 million verdicts in 2005

This, according to a Bloomberg News count. Bloomberg dutifully quotes a law professor who argues that this means that Ford should change its litigation strategy of refusing to settle before trial. Is there any other profession where the professor of a subject is so regularly wrong about the practice of the subject?

Taking the cases to trial is cost-effective because Ford wins 70 percent to 80 percent of them, said spokeswoman Kathleen Vokes.

“We know from 13 years of experience that being ready, willing and able to defend our products and people, even in ‘judicial hellholes,’ is the most effective way to control litigation costs,” Vokes said. “The rare big verdict that is upheld on appeal is more than offset by all of the other cases that we win or settle on favorable terms.”

(Margaret Cronin Fisk, Bloomberg News, Feb. 16). The lede of the story, claiming that the strategy “cost” Ford $255 million, is inaccurate on multiple levels: first, it doesn’t count settlement costs for cases it did settle or its legal expenses; second, a verdict isn’t necessarily upheld by an appellate court, and thus may not represent an actual cost to Ford; third, the proper baseline is how much an alternative strategy would cost Ford. There are tens of thousands of automobile deaths and hundreds of thousands of auto injuries every year, and a large fraction of them, just by random chance, involve Ford vehicles. If Ford offered blank checks to everyone who sued it, how many more lawsuits would Ford face? The fact is that other auto manufacturers engage in the same strategy, and Ford just had especially bad luck in the lottery litigation game in 2005.

We covered four of the seven cases: Nov. 21; Nov. 17; May 29 and links therein; Mar. 21. And I owe readers a post about a fifth case, Jablonski, which I thought I had posted about, but didn’t. (The Munoz case (Jan. 26) was a 2006 case.) It says something about the commonness of a $20 million verdict that none of these five cases made national headlines, and that we missed the other two entirely, in my case because they slipped through my Google News filter.

2 Comments

  • I think that the idea that Ford should settle because it is not cost effective to fight litigation is absurd. That is one of the causes of our present situation. How many insurance companies have settled lawsuits because they feel that it is cheaper to settle than to fight? In my opinion the only thing that this accomplishes is to make it cost effective for the lawyers who file the lawsuits.

  • I mostly agree – there are “nuisance” claims that aren’t worth messing with simply because the value sought is so low. Basically, if it’s going to cost you less to pay the claim than to have your lawyer even LOOK at it (what’s the hourly charge from a corporate lawyer these days?), it’s probably better just to throw the money at it – there’s not enough money on the receiving end to make a big deal out of it, and it keeps lawyers (on both sides) from taking a cut.

    But that’s about the only time, and even then, I would put together a system that tracked the receiving address of those checks, just to be sure that there weren’t a whole lot of people receiving them at the same address…