Author Archive

A Climate of Greed Never Changes

Among the nightmare scenarios of global warming, there’s one only now coming into view – and it’s definitely manmade: As predictable as the rising seas, we can expect a flood of class-action lawsuits trying to cash in on the issue.

Climate change promises to be “a lucrative new field” for the tort bar reports the Newark Star-Ledger. A Rutgers law professor predicts that global warming will make for “one of the biggest legal practices in the next 20 years.” (The Star-Ledger, 7/8/07)

The opinion is shared by the president of the World Resources Institute: “Companies that generate significant carbon emissions,” he warns, “face the threat of lawsuits similar to those common in the tobacco, pharmaceutical and asbestos industries.” (The Toronto Star, 4/29/07)

And if you thought asbestos and tobacco litigation were profitable, try to imagine all the “mass tort” cases that global warming will inspire. Energy companies, coal mines, any firm at all that generates carbon dioxide – these industries and many more can expect to find themselves accused of causing climate change.

Some law firms already have “climate-change groups” studying the possibilities. Another hint of things to come was a class action suit was filed on behalf of Mississippi residents against oil and coal companies after Hurricane Katrina – arguing that company emissions caused the climate change that caused the hurricane. (Star-Ledger, 7/8/07).

In Alaska, the Inuits claim that their island is sinking because of global warming. The aggrieved islanders haven’t decided who to sue yet – but they’ve got a Houston trial lawyer working on it. (Star-Ledger, 7/8/07)

All of which proves nothing at all about the actual causes or dangers of global warming. It’s just more evidence of a climate of greed and opportunism in the trial bar. And that’s one climate that never changes.

Steve Hantler

How The Litigation Lottery Kills Shareholder Value

Any event that wiped out $684 billion in shareholder wealth would be described by economists as disastrous. Congress would immediately order hearings, dragging the offending parties before the TV cameras and rushing to offer legislation to rectify the problem.

Yet $684 billion is the amount shareholders lose every year as a result of America’s out-of-control legal system – a figure released in a study by the Pacific Research Institute (PRI).

PRI’s Dr. Lawrence McQuillan examined prior economic “event studies” and determined that the median loss of market value due to a lawsuit was $3.86 million (in 2006 dollars). He then estimated that approximately 177,000 tort cases are filed against publicly traded companies in a given year – generating a yearly loss of $684 billion in shareholder wealth.

With the lawsuit industry booming, that might actually be a conservative estimate. Recent blockbuster cases – such as the litigation threat following Merck’s decision to pull Vioxx – wiped out $25 billion in shareholder value in a single day.

Of course, trial lawyers want us to think that only CEOs and Wall Street tycoons feel the heat from litigation-induced stock plunges. But the most recent figures from the Investment Company Institute tell us that nearly 55 million Americans own mutual funds – 60 percent of which earn less than $100,000 per year. Today, over 50 percent of Americans own stock, compared to just 17 percent in 1980.

The democratization of the equity markets over the past 25 years has extended stock ownership well onto Main Street – from families saving for their children’s education in popular 529 plans to middle class workers socking away retirement funds in their IRAs and 401Ks. Maybe Congress should order hearings after all – and make personal injury lawyers answer for abusing our legal system to pick the pockets of America’s investor class.

Steve Hantler

Something is Rotten in the State of Delaware

Why have some of the trial bar’s heaviest hitters in asbestos litigation infested Delaware – firms like including Simmons Cooper, Baron and Budd, and the Lanier law firm?

Why did the American Tort Reform Association (ATRA) place Delaware – which has always had a business-friendly reputation – on its “watch list” in the 2005 and 2006 editions of its “Judicial Hellholes” report?

One thing’s for sure – the trial bar’s legal talent isn’t circling Delaware because they love the state’s beautiful beaches.

The problem arises from a series of Delaware Supreme Court decisions that gave trial lawyers the green light to file hundreds of toxic tort cases. Out-of-state law firms are now busy turning Delaware into Ground Zero of the asbestos-litigation morass, but the overwhelming majority of plaintiffs have no connection to Delaware whatsoever. Approximately 80% of the plaintiffs in asbestos cases have never set foot in Delaware.

The numbers are startling. According to ATRA, in the year following May 2004 only 61 asbestos claims were filed in Delaware. But over the next 16 months, 272 asbestos cases were filed – a 345% increase. That number has now increased to 525 asbestos cases filed since May 1, 2005.

Due to this flood of lawsuits, the Delaware Superior Court has scheduled trials in as many as 85 cases to begin on a single day. The Court has also ordered defendants to try multiple cases in multiple courtrooms at the same time.

There are other warning signs. Delaware allows joint and several liability and has no limits on punitive damages. And newly-elected Attorney General Beau Biden is a former plaintiff’s asbestos lawyer.

Other states – such as Texas and Mississippi – have countered the flood of out-of-state lawsuits by enacting venue reforms – a measure that could help prevent the trial bar from turning Delaware into a “judicial hellhole.”

Steve Hantler

Who Wins From Lawsuit Abuse? Hint: It’s Not You or Me.

Some in the news media and elsewhere would have us believe that recent legal reforms have made it a tough time to be a plaintiff’s attorney.

Sounds good, but nobody told that to the trial bar.

The fact is, tort costs in the U.S. jumped 46% in just the pasts five years. As noted in this space yesterday, a new study by the Pacific Research Institute reports that the total direct and indirect costs of lawsuits are a staggering $865 billion (for context, the U.S. spends only about $108 billion a year fighting the war in Iraq).

And one need look no further than a few headlines of late to see our lawsuit happy culture is alive and well. Everyone knows about the $54 million “pantsuit” — that is but one of countless, lesser known meritless suits happening on any given day. Consider:

· “Injured Kid’s Mom Sues ‘Slide Fool’ Coach” A 12-year-old Little League player was injured sliding into second base and his mother filed a lawsuit claiming poor coaching.
· “Perfume Lawsuit.” A Detroit city employee is suing because she claims her co-worker’s perform makes her sick.
· “Cheerleader’s family to sue school district” A Texas couple plans to sue their local school board because their daughter did not make the cheerleading squad.

You and I pay for these abusive lawsuits through higher consumer costs, higher taxes, lost jobs and stifled innovation. And the trial lawyers? With apologies to Mark Twain, rumors of their deaths have been greatly exaggerated. They are alive and well…just ask the Little League coach, the perfume wearer or the Cheerleading captain. I wonder who will be next?

Steve Hantler

Location, Location, Location: The Best & Worst Legal Climates in America

Given the economic costs imposed by today’s legal system (a staggering $865 billion per year according to one recent estimate), it’s surprising more companies don’t take into account a state’s liability climate when making critical decisions like where to open a new plant or invest in existing facilities.

A new report could help change that.

Risky Business: The Annual Boardroom Guide to Litigation in the 50 States provides the first ever ranking of state legal environments that combines economic science, real world corporate experience and input from state legal reform experts – people with the most current intelligence from the front lines.

It builds on a few landmark studies, including the American Tort Reform Association’s “Judicial Hellholes,” the Pacific Research Institute’s U.S. Tort Liability Index, and the Institute for Legal Reform/Harris Interactive survey.

So where are the soundest states – and where is the swampland?

Nebraska and Virginia top the list with the best legal climates. What do they have in common? Reasonable limits on punitive damages, a “rule of law” majority on the state Supreme Court, and Attorneys General who specialize in law enforcement, not grabbing the spotlight at the expense of businesses.

In stark contrast, West Virginia, Rhode Island and Florida round out the bottom of the list. All have activist Supreme Court majorities who consistently rule in favor of trial lawyers. West Virginia has a governor who supports legal reform – a reminder that having a pro-reform governor does not necessarily translate into a sound legal environment.

To see the full list go here.

Steve Hantler