Overlawyered: Chronicling The High Cost Of Our Legal System

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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

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Update: Judge rejects “Extreme Makeover” lawsuit

A judge has dismissed a case filed by five orphaned siblings against ABC Television based on the aftermath of their appearance on “Extreme Makeover: Home Edition”. The Higgins siblings said they expected to wind up with a new home after the show’s filming, but later disagreements with the couple who had hosted them, and who held title to the newly built mansion, led to their departure from the house. Awarding summary judgment, Judge Paul Gutman threw out the siblings’ case against ABC, the reality-TV producers and the homebuilder, saying that their remedy, if any, could be only against the host couple, Phil and Loki Leomiti. (AP/ABCNews.com, Jul. 17). Our earlier coverage: Mar. 4, May 17, etc.

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Breaking: Wood v. John O’Quinn ruling

Courtesy of one of the winning attorneys, Overlawyered is the first to have the July 18 arbitration ruling on-line, which, as we reported earlier, rejected O’Quinn’s affirmative defenses and finds that O’Quinn’s overbilling and breach of fiduciary duties to his clients requires him to pay $35.7 million in damages plus interest and attorneys’ fees. Not a great number of surprises in this if you’ve been following our previous coverage (Apr. 15, Jun. 9, Jul. 19), but there is one interesting disclosure: note how O’Quinn used $3 million of plaintiffs’ money to surreptitiously fund a “Baylor study” on breast implants and make it seem like it was something other than a litigation-generated study.

Once again, let us note the irony that trial lawyers recognize the value of mandatory arbitration agreements, even as they wish to deprive other professions of the ability to use them.

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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

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Who was the first legal blogger?

According to Robert Ambrogi of Legal Blog Watch, it may have been me (Jul. 16; more). I actually don’t remember whether there were any other law-related blogs when I started out eight years ago. Pioneers like Eugene Volokh were at that point doing things on the internet, but not yet blogging. It’s also possible that there might have been something going that is no longer published, so that Overlawyered might qualify as the oldest surviving legal blog.

Our very first post is here. For several days after that I believe the only reader was me, since I waited until a few posts were up before I began notifying friends about the site.

Also, David Giacalone contributes a haiku for the occasion (scroll).

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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

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July 17 roundup

  • Judge Bartnoff declines to reconsider decision against Roy Pearson in dry cleaner pants case [AP/WUSA]
  • Turnabout fair play? Louisville hospital sues trial lawyers, saying they injured its reputation and tried to extort settlement [Courier-Journal]
  • Employer sued for “post-traumatic stress disorder” after pranksters post co-worker’s profile on gay section of HotOrNot.com [McCullagh, CNet]
  • Former Belleville, Ill. cop sues over prosecutor’s letter suggesting his testimony not to be relied on [M.C. Record]
  • British race relations agency demands removal from shelves of Tintin comic book [Telegraph]; 22-year-old in Scotland sentenced for “racially aggravated breach of the peace” after website commentaries that went “beyond the realms of bad taste” [also Telegraph]
  • Farewell to that little patch of floating liberty, the South Carolina river shack [Zincavage]
  • Hey docs: if a plaintiff’s law firm calls your office to talk about a former patient, don’t call back [Medical Economics via KevinMD]
  • Yale Club replies to Judge Bork’s lawsuit [Turkewitz]
  • Arizona businesses aghast at hiring-sanctions law that suspends their license to operate should supervisor be found to have hired an illegal [Arizona Republic]
  • Grants from Bob Barker foundation (Jul. 5, 2001) help fuel animal rights boom in law schools [NLJ]
  • University of Utah settles lawsuit brought by devout Mormon student actress who refused to recite dramatic lines that were blasphemous or obscene [three years ago on Overlawyered]

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Coming up this week

Next up in this summer’s series of weekly guest bloggers is something new for us: a prominent voice from the business community. Steven Hantler, Assistant General Counsel for Government and Regulation at DaimlerChrysler, directs the automaker’s class-action, consumer-litigation and litigation-communications functions; outside the company he’s known as a tireless advocate for lawsuit reform, on which he’s become a veteran of state legislative initiatives and electoral battles. While new to blogging (so far as I’m aware), he’s the author of numerous articles in law reviews and more popular outlets, most recently in the magazine Directorship where he rated and assessed the fairness of each of the fifty states’ court systems from a litigation defense point of view (PDF). He’s also closely associated with the American Justice Partnership, which has links to many of his writings and speeches.

Also, and entirely unrelated to the above, check back tomorrow afternoon, Tuesday, for an announcement which may be of interest to some readers, especially those of a political bent.

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