Letter from Phil Kirk

Looking at the Lawsuit Industry

The Manhattan Institute for Policy Research has released its report on “Trial Lawyers, Inc.: A Report on the Lawsuit Industry in America 2003.” I want to emphasize that the report is about the plaintiffs’ bar, not the defense trial attorneys who represent the business community.

This report is important for many reasons. The plaintiffs’ attorneys are able to practice in private partnerships that hide their finances under the guise of attorney-client privilege, unlike the public business corporations that must disclose all their financial dealings.

The public needs to understand that one of the primary reasons healthcare costs are out of sight are not only the huge lawsuits filed by plaintiffs’ attorneys, but also the fear of being sued and the billions of dollars being spent on unnecessary defensive medicine.

Frivolous lawsuits and other unnecessary legal expenses caused by the plaintiffs’ bar are among the reasons why more and more businesses and industries are moving out of the United States. Legal expenses are much greater in the U.S. than in most countries, thus adding to the cost of doing business in the U.S. and destroying the bottom line.

Plaintiffs’ attorneys are also tied in with the extreme environmentalists and together they cause business and industry to lose billions a year unnecessarily — another nail in the coffin of U.S. business. The class action asbestos lawsuits are but one example of a system out of control.

Total tort (legal) costs in the U.S. today exceed $200 billion annually — or more than 2 percent of America’s gross domestic product. Over the last 30 years, tort costs grew at a compound annual rate of 9.1 percent while our population grew 1.1 percent; the consumer price index, 5 percent; and the gross domestic product, 7.6 percent annually. These estimates are conservative.

The attorneys have previously targeted asbestos, tobacco, pharmaceuticals and insurance. They are moving into the fields of lead paint and mold while looking for popular new targets, such as the fast-food industry. Sixty-seven companies have been bankrupted and $54 billion taken from businesses on asbestos cases alone.

Many plaintiffs’ attorneys are utterly shameless in their relentless pursuits of clients through the use of the Internet and creative advertising in the media. They also put a high priority on funneling millions of dollars — often won from victories in the courtroom — into the campaign treasuries of sympathetic state legislators and U.S. congressmen and senators.

Their aggressiveness could mean that the overall cost of the tort tax could almost triple the size of the 2001 and 2003 Bush tax cuts combined! And there are far fewer beneficiaries from the tort tax, but they receive unbelievable amounts of money. New billionaires have been created, often by charging $500 or more per hour. There are examples of awards that have average fees of $30,000 per billable hour.

For the lawsuit industry as a whole, fewer than half the dollars actually go to the “victims.” And less than a quarter of all dollars actually go to plaintiffs’ economic damages.

What can be done? Pressure members of Congress to support class action reform. Typically, Republicans support reform of the legal system while Democrats do not — perhaps because many consider the plaintiffs’ attorneys to be an arm of the Democratic Party. There are, of course, some exceptions, and we applaud the pro-jobs Democrats who are willing to stand up to the plantiffs’ bar. Nearly 90 percent of campaign contributions go to Democrats. The more huge awards the attorneys win from business mean more campaign funds for their candidates.

In a recent key vote on a measure to curb abuses in class action lawsuits, N.C. Sen. Elizabeth Dole voted with the business community.

Between 1997 and 2000, U.S. firms saw a 300 percent jump in federal class actions and a 1,000 percent spike in state class actions filed against them.

Congress needs to solve the asbestos crisis before it does more damage to the economy. Both the Congress and the North Carolina General Assembly need to reform the medical malpractice crisis rather than put bandages on the patient and appropriate tax money to aid helpless medical specialists. Regretfully, the public does not have the facts on this issue, and it is up to the business community to help educate both them and public officials before it is too late.

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