The Threat
from Lawyers is no Joke
by Walter
Olson
Walter Olson, a senior fellow at the Manhattan Institute,
is a graduate of Yale University. He has served as an adviser to
political campaigns, testified several times before Congress, and
appears frequently on TV shows such as Crossfire and The NewsHour
with Jim Lehrer. He writes regularly for such publications as the
Wall Street Journal, the New York Times and Reason, and his books
include The Excuse Factory: How Employment Law is Paralyzing the
American Workplace; The Litigation Explosion: What Happened When
America Unleashed the Lawsuit; and most recently, The Rule of Lawyers:
How the New Litigation Elite Threatens America’s Rule of Law.
The
following is adapted from a lecture delivered at Hillsdale College
on February 11, 2004, at a seminar co-sponsored by the Center for
Constructive Alternatives and the Ludwig von Mises Lecture Series.
Many
of us have wondered over the years what the difference is between
satire and reality in the American legal system. I now have the
answer: one year, 11 months, and ten days. Let me explain.
It
was on August 3, 2000, that The Onion – America’s favorite
satirical newspaper – published an article entitled, “Hershey’s
Ordered to Pay Obese Americans $135 Billion.” This piece of
comic fiction reported that the chocolate company had been sued
by state attorneys general in a class action over the lack of warnings
on its product, over its marketing of products to children, and
over its having – most insidiously of all – artificially
spiked its products with nuts and crisped rice to keep people addicted.
The jury, by this satirical account, had responded by granting an
enormous award. “This is a vindication for myself and all
chocolate victims,” said one of the plaintiffs. In addition,
the company was ordered to place a warning on all of its products
reading: “The Surgeon General has determined that eating chocolate
may lead to being really fat.”
Well,
on July 24, 2002 – less than two years later – the wire
services reported that Mr. Caesar Barber of the Bronx, New York,
was filing a lawsuit against McDonald’s. (He was soon joined
by various other plaintiffs suing Wendy’s, Burger King, and
other fast food chains.) Mr. Barber had for years been wandering
into McDonald’s restaurants, apparently under the impression
that they served health food, and had been receiving hamburgers
and French fries instead of celery stalks. He had no idea that you
could get fat from such products, and sure enough he developed heart
problems and other medical conditions associated with obesity.
Although
many of us greeted this lawsuit with incredulity, it was taken quite
seriously by some veterans of the tobacco litigation that had succeeded
so gloriously a few years earlier. Here is a law professor from
George Washington University, quoted in Time: “A fast food
company like McDonald’s may not be responsible for the entire
obesity epidemic. But let’s say they’re five percent
responsible. Five percent of 117 billion dollars is still an enormous
amount of money.” Northeastern University organized a conference
on how to sue food makers that was attended by scores of lawyers,
one of whom – a recent Rutgers law graduate – told Time:
“It’s a very important and pressing issue and its outcome
will be with us for years to come. I’m hoping to be able to
build a career out of this issue.” Lawsuits against fast food
restaurants were also taken seriously by the New York Times, which
defended them as socially beneficial. Its general argument seemed
to be, “We’re not saying these lawsuits should win,
but what can they hurt?”
We
used to know the answer to that question. We knew that they could
hurt a lot.
The Older View
In
Texas, a woman dentist who found out that her dentist husband was
cheating on her ran him over in a Hilton parking lot. We used to
see clearly that it would be wrong in such a case to sue Hilton
hotels for negligent training of employees – thus for making
it too easy for wives to run over their cheating husbands. But that’s
what happened.
Speaking
of parking lots, the proprietor of one in Framingham, Massachusetts,
was sued after a thief broke into the lot, stole a car, drove off
at high speed and crashed. Indeed, the family of the thief sued
the lot owner for negligently making it too easy to steal a car
from the lot. We used to know what was wrong with that, too.
A
California man who passed out drunk on the railroad tracks sued
the Union Pacific railroad because its engineer and conductor did
not sound the train’s horn after seeing him – they were
too busy trying to engage its emergency brakes. On the other coast,
a woman who lay down on the subway tracks and was hit by a train
– police concluded that she had been trying to kill herself
– was awarded $14.1 million by a New York City jury. Not only
did we once know that such lawsuits are wrong – once they
would not have been imaginable.
Throughout
most of American history, we understood quite clearly that litigation
is for most people one of the most expensive, unpleasant things
that ever happens to them in their lives. It is incredibly expensive,
not only monetarily, but in the time and energy it absorbs. It is
an assault on the reputation of at least one party, and often both
parties, as charges are leveled back and forth. It is an assault
on privacy, forcing those involved to answer questions under oath,
involuntarily, about what they have done. It is a breach of the
social peace. It is something that tends to corrupt the participants
into doing things that they would not do otherwise. So while of
course it was recognized that litigation is necessary sometimes
as a last resort, it was seen as just that — a last resort.
And if you accept the idea that litigation ought to be a last resort
– and ought to be embarked on only in strong cases –
you will want to arrange the rules of your legal system in a way
to discourage weaker cases from going forward. We do not do this
today. In fact, we have intentionally dismantled such rules.
In
almost every country but the U.S., legal systems incorporate a “loser
pays” principle. If you sue someone and lose, you can’t
just walk away. You have to contribute something to making the victim
of the lawsuit whole for what he has paid. We had that same principle
in our legal system throughout much of American history, but it
gradually died out. We also had procedural rules discouraging ill-conceived
litigation. And we had rules of legal ethics prohibiting lawyers
from stirring up litigation for their own benefit. But something
changed around the 1960s and 1970s. It started in the world of ideas
– in the universities and the law schools. Litigation came
to be seen not as a necessary evil, but as a positive good. This
view can be identified with the career of Ralph Nader, and with
many of the professors who began to dominate elite law schools during
that period.
The
Newer View
According
to this new view, litigation deters wrongful conduct: The more lawsuits
that are filed, the more people will behave carefully. Litigation
also came to be seen as a way to redistribute wealth from those
who have it to those who need it. From this perspective, the more
litigation there is, the more redistributive justice the courts
can impose on society. And who can be against justice?
From
being a last resort, then, litigation came to be seen as socially
beneficial. And lawyers who advertise with billboards saying, “Sue
someone and let’s see how much money I can get for you,”
are seen not as sleazy but as public-spirited.
Given
this new view of litigation, rules discouraging lawsuits ceased
to make sense. This is why, starting in the 1960s and 1970s, we
began changing the rules to make it easier to sue. We liberalized
the rules of discovery – the rules governing how a person
can demand information from his opponent. We opened the door to
the “fishing expedition”: “I don’t know
for sure whether you have done me any legal wrong, but please hand
over the contents of your filing cabinets so that I can find out.”
We made it much easier to organize class actions, by which most
Americans are periodically dragged into lawsuits as plaintiffs without
even knowing it. We dropped many of the rules against lawyers stirring
up litigation. And we weakened traditional legal principles like
“assumption of risk.” Here’s what that means:
If you go to a baseball game and get conked on the head by a foul
ball, the old courts would have said that you have no grounds to
sue because everyone knows that foul balls happen at baseball games.
This no longer makes sense, however, if the point of lawsuits is
to encourage ball clubs to be careful about where they let their
players send their foul balls – and to redistribute wealth.
So out it went, at least in many courts.
All
these developments were bound to give us more litigation, and sure
enough they did. The share of America’s GNP that is devoted
to litigation has tripled over 50 years. We spend two to three times
more on it, in terms of percentage of GNP, as the other industrial
democracies. The figure for how much is spent annually on liability
insurance in the U.S. – a relatively easy thing to measure
– is now $721 per citizen, which comes to over $2,800 per
year for a family of four. So are we getting our money’s worth?
Everyone
has heard about the medical malpractice crisis that is driving doctors
out of high-risk fields like obstetrics and neurosurgery. The Harvard
University study of New York hospitals that is cited by both sides
in this controversy is very revealing. On the one hand – and
this is the part that has been best advertised – it found
that in the majority of cases where people are injured by negligent
care in a hospital, they never sue. True enough. But the same study
also found that in the majority of cases where people do sue, experienced
reviewers could not identify any negligence. So you have a lot of
negligence with no lawsuits and a lot of lawsuits with no negligence.
Is the latter somehow supposed to balance out the former?
The
Harvard study also found that a great many of the lawsuits filed
where no negligence was identified were nonetheless successful in
obtaining money. Even though we could go on at great length about
the monetary costs of lawsuits, those costs are not, in the final
analysis, of prime importance. Indeed, we are a very rich country
and can afford to spend a small percent of our GNP on litigation,
if only for the entertainment value. The non-monetary costs, however,
should give us real pause. For instance, at the real heart of the
medical malpractice crisis is the demoralization that spreads in
a profession like medicine at the knowledge that being the best
possible doctor will not save you from being sued. Most doctors,
I think, would be willing to pay high insurance premiums if they
could have confidence that the legal system works rationally in
identifying the doctors who ought not to be practicing. Few of them,
I believe, have that confidence today.
Think
of the knots that people tie themselves into, attempting to keep
from being sued. We’ve all seen crazy warning labels, and
each of us has his favorite. There’s the one on an artificial
fireplace log saying, “Caution: Risk of Fire”; the one
on a bag of peanuts saying, “Warning: Contains Nuts”;
and the one on a baby stroller saying, “Warning: Remove Child
Before Folding.” My favorite is the warning on the cardboard
windshield sunscreen that keeps the car from getting too hot in
the summer: “Do not drive with sunshield in place.”
This unhealthy level of caution infects many areas of our national
life. Consider the unwillingness of most businesses today to give
honest job references. That was one factor behind the recent case
of the alleged killer nurse in Pennsylvania and New Jersey, who
bounced from hospital to hospital, usually leaving under suspicion.
The hospitals hadn’t even bothered calling each other, because
they knew they wouldn’t get honest answers due to fears about
lawsuits.
Effects
on American Politics
This
revolution in the legal system has begun to transform American politics.
The part of this that gets the most press today is the litigation
lobby – “big law,” if you will – which has
become one of the most financially robust and effective lobbies
in American politics. It is among the three or four most important
financial bases of the Democratic Party, and also contributes to
some Republicans. But this financial involvement in politics was
just a prologue to a more disturbing trend: In recent years, litigation
has evolved into a kind of substitute for politics.
Until
quite recently, a group of Americans who saw the need for some sweeping
new law would march in the streets, organize a letter-writing campaign
to Congress or the state legislature, or try to replace congressmen
or state legislators with candidates sympathetic to their cause.
That was how politics was done. But today, politics is not necessary.
If you want gun control or tighter control over tobacco or more
environmental regulations, you can simply call 1-800-LAWSUIT. Operators
will be standing by around the clock, and once you agree to give
the lawyers a share of the monetary reward, you can lean back and
watch them go to work.
Take
tobacco. Despite years of agitation, Congress had not acted rapidly
enough for anti-tobacco activists who wanted an increase in taxes
on cigarettes and more regulation of advertising. The states were
doing some of this, but not fast enough for activists. So what happened?
We saw private lawyers flying around the country in their Lear jets,
signing up state attorneys general and brokering a settlement that
obtained $246 billion for state governments and $10 or 20 billion
in fees for the lawyers. The settlement also resulted in the adoption
of regulations that the elected branches of government had been
unwilling to enact. We also got what amounted to a new tax on cigarettes
– a tax increase unlike any other tax hike in that it did
not originate in a legislature.
Soon
we saw this same process of bypassing the political system being
tried in other areas as well. American Lawyer magazine published
an article on the origins of gun litigation, in which it interviewed
the private lawyer (a multi-millionaire, needless to say) who had
dreamed it up and flown around the country selling it to mayors.
The article explained that it fit his thinking – that the
plaintiff’s bar should act as a “de facto fourth branch
of government – one that achieved regulation through litigation
when legislation failed.” Richard “Dickie” Scruggs,
the private lawyer who organized the tobacco litigation (and whose
firm got an estimated one billion dollars for it), was profiled
in Time, which reported as follows: “Ask Scruggs if trial
lawyers are trying to run America, and he doesn’t bother to
deny it: ‘Somebody’s got to do it.’”
What
are the differences between this newly contrived fourth branch of
government and the three branches that the founders established
in the Constitution? The differences begin with the manner of selection.
Those in the fourth branch don’t have to worry about those
pesky things called elections – or even about getting confirmed
by the Senate, as federal judges do. Nor do they have to worry about
the safeguards of transparency that are built into our political
system. Much of their activity takes place behind the scenes. Indeed,
these cases nearly always are meant to be settled instead of tried,
and the public is not admitted into the negotiation room. And if
the public doesn’t like the results, there is, frankly, not
much the public can do about it. This is highly ironic: The proclaimed
goal of trial lawyers is to hold every profession and industry accountable
for their actions, yet they have created a litigation-based policy-making
process in which they themselves are almost entirely unaccountable.
Today
there are increasing reports about how environmentalists are beginning
to place their trust in global warming lawsuits against the auto
industry, electric utilities and the like. Racial reparations litigation
is beginning to absorb much of the energy that used to go into political
agitation for civil rights. You see this occurring now in so many
areas that William Greider, a leading left-wing journalist, has
proposed in Rolling Stone – in the context of discussing Senator
John Edwards of North Carolina – that trial lawyers have emerged
as the natural leadership of the left in America today. He may be
right.
After
years of refusing to govern our trial lawyers, it seems they have
decided to take it upon themselves to govern us. It is not too late
to do something about it. But neither is this a problem that can
be solved overnight by a quick fix such as tort reform legislation.
As I said before, the ideas that underlie the new legal system and
way of governing were born in the academy. This is where our judges
and lawyers learned them. And now these ideas are being spread among
the general public by the system itself. For instance, these lawsuits
teach us again and again the principle that some distant institution
with a lot of money is responsible for each individual’s problems.
It is this distorted view of responsibility that makes thinkable
today claims that were unthinkable a few short years ago. So the
first step in turning things around, I would say, is to come to
a real understanding of exactly what we did wrong in changing the
rules of our legal system and handing the trial lawyers so much
power.
Until
we reverse this process, it will remain the rule that if you want
to hurt someone in America, you may not be able to do it with impunity
using a scalpel or a car. But you can do it with a lawsuit and no
one will lay a glove on you.
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Copyright
© 2004. Reprinted by permission from IMPRIMIS, the
monthly journal of Hillsdale College (www.hillsdale.edu).
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