“A Trial Lawyer on Ticket Has Corporate U.S. Seeing Red”

Reading a story like this make me think I’m in the right party but the wrong pofession. Or maybe it’s the other way around. Corporate America –that great evil!– is scared of the thought of a trial lawyer being only a heartbeat away from the Presidency. Rightly so! But beyond the political lines being drawn, I think the article raises some other good points.

You don’t have to be in law school very long to realize that lawyers get a lot of bad press thanks to a few “outrageous” law suits. For example, that oft-pointed-to case of the lady who got burned by McDonald’s coffee was blown way out proportion (did you know that McDonald’s had their coffee heated to 170 degrees? That’s enough to give 3rd degree burns) and nobody really heard about how the case really ended (the final damages awarded were under $1 million). The article nicely describes the current state of torts:

The Justice Department’s Bureau of Justice Statistics and the National Center for State Courts track civil trials and verdicts in the nation’s 75 largest counties. In April, the bureau reported that in the last decade, the number of cases had gone down, not up.

The number of general civil cases disposed of by trial in the nation’s largest counties declined from 22,451 in 1992 to 11,908 in 2001, it reported — a 47% decline. The plaintiffs won about half the time, and the overall median award was $37,000 in 2001, down from $65,000 in 1992.

These cases included automobile accidents, medical malpractice and product-liability claims. About one-third of the cases involve contract claims, which typically involve one business suing another.

The medical malpractice claims resulted in larger verdicts; 27% won a verdict, but the median amount in 2001 was $431,000, up from $253,000 in 1992.

These data include only trials and verdicts; most civil suits are dismissed or result in settlements, and no figures are available on those outcomes. Nonetheless, government statistics do not show a sharp rise in big-money verdicts.

Close readers of the news may be surprised at the relatively small size of the typical verdict because of what University of Wisconsin law professor Marc Galanter calls “media distortion.” Multimillion-dollar verdicts won by plaintiffs are deemed news. Small verdicts are not.

He cites studies of newspapers and magazines during the 1990s to illustrate the point. A study over six years in the New York area found the median jury award to be $250,000. However, during the same period, the median of the jury awards cited in the New York Times and New York Newsday was $4.3 million.

Furthermore, the fact that tort lawyers don’t get a dime if their case loses is a highly effective disincentive for lawyers to not pick frivolous suits. Only the largest of firms could make a regular practice of this, but the largest firms didn’t get large by picking loser cases. One thing I find remarkable is that people often blame lawyers for petty lawsuits, but they forget that it takes a client willing to go along with the suit. The idea of an ambulance-chasing lawyer is obviously a bald mischaracterization of the vast majority of civil lawyers. People with frivolous lawsuits seek out attorneys; attorneys don’t seek out frivolous lawsuits.

However, there is one problem with the statistics above. As it mentions, there really is no data on claims settled out of court. That’s where almost all the action is. And it can be some very big action, like the rumored settlement that Apple is making (I read somewhere it might be close to $300 million). Unfortunately, there really is no check that stops frivolous lawsuits from getting to this point. Sometimes it’s just cheaper to pay off a plaintiff than go to court. The only thing that prevents complete abuse of out of court settlements is that the plaintiff’s claim can’t be so frivolous and exploitive that the defendant will just say, “To hell with you, I’ll see you in court.”

The conventional wisdom is that there needs to be tort reform. I think I would agree, though I would qualify that the tort system isn’t as bad as it is made out to be.

One thought on ““A Trial Lawyer on Ticket Has Corporate U.S. Seeing Red”

  1. The notion of tort reform is generally that we need to reform so that people can’t bring frivolous suits.

    I submit that the standard is already high, and that if the person bringing the suit hasn’t the damages or evidence of wrongdoing, they will be laughed out of court, and that it is hard on a lawyer’s career when he is repeatedly laughed out of court.

    The alternate view is, certainly sophisticated trial lawyers can bend the truth: As long as the jury is convinced, the truth may take a back seat. We saw evidence of what this looks like with Mr. Edwards’ pursuit of and winning of cases involving cerebral palsy using ‘junk science.’

    Now, for a political viewpoint on the matter: For the first time in years, the American Trial Lawyer Association has a conflict over how to perceive Republicans: as the hands-off, no-government-interventionist conservatives, or as subscribers to Mr. Bush’s tort reform positions: Cap on jury awards, no frivolous lawsuits, limited punitive damages.

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