Lawsuit Abuse Fortnightly #2-12
Bigger Than Microsoft, Intel, or Coca-Cola
If you add up all the money trial lawyers in the U.S. "earn" each year, how would it compare to, say, Microsoft – the giant software company – or other megacorporations? Most law firms are private partnerships so detailed information about the size of the litigation industry is difficult to come by, but James R. Copland, director of the Center for Legal Policy at the Manhattan Institute, has come up with an estimate. "Given that 19 percent of all tort costs go to plaintiffs' attorneys," he writes, "we can imagine a corporation called Trial Lawyers, Inc. which rakes in almost $40 billion per year in revenues--50 percent more than Microsoft or Intel and twice those of Coca-Cola." Trial Lawyers, Inc., Copland says, "might well be the most profitable business in the world." From www.triallawyersinc.com
Sometimes, Winning Isn't So Great
The U.S. Chamber Institute for Legal Reform describes a class-action lawsuit brought in state court in Alabama on behalf of a nationwide class of 700,000 people who had mortgage escrow accounts with the Bank of Boston. A settlement was reached that awarded $8.5 million in fees to the attorneys and much smaller awards for the class members. To pay the attorneys' fees, class members had amounts up to $91 deducted from their accounts. One class member received an award of $2.19 but had his account debited $91.33 to pay the lawyers fees! From www.legalreformnow.com
Bad News for Lead Paint Lawyers
On October 7, a Cook County judge threw out a lawsuit filed by the City of Chicago against companies that manufactured lead paint prior to 1978. The city claimed the companies were liable for the ongoing health costs of children who allegedly got lead poisoning eating old paint in their homes. Similar cases have been dismissed in Wisconsin, California, Mississippi, and Rhode Island. Dan Webb, an attorney for one of the companies sued by the city, said "the city's lawsuit has been a misguided attempt to reverse the policies established by the state legislature and the Illinois Department of Health, which have concluded that intact lead paint is not a hazard and that enforcement efforts should focus on landlords and property owners who allow lead paint to deteriorate." Lead-based paint was banned for residential use in Chicago in 1972 and banned for sale by the U.S. in 1978. From the Chicago Tribune
Really Bad News for Lead Paint Lawyers
According to a lengthy New York Times article in September, last year in New York City 25 percent of all children with elevated lead levels were foreign-born. Of pregnant women with severely elevated blood lead levels, 95 percent were foreign-born, 60 percent of them from Mexico. In fact, only about half of elevated lead levels in children could be definitely traced to paint exposure. It appears that many cases of lead poisoning are being brought to our shores by children or pregnant women from countries where lead exposure has not been as thoroughly controlled as it is here. This is bad news for lead paint lawyers who have been trying to convince juries for years that old lead-based paint is the only possible source of lead exposure in U.S. children. From the New York Times
These Lawyers Got Rich from Tobacco Litigation ...
We have commented before on the outrageous fees paid to law firms who represented states in negotiating the $250 billion national tobacco settlement. A number of states have balked at the size of these awards, the most recent being Missouri. Alas, the Missouri Supreme Court this month upheld an award of $111 million to five politically connected law firms, even though the firms were retained by the state a mere five months before the settlement was reached. The firms had initially asked for $480 million for their tag-along efforts. From the Jefferson City News Tribune
... And These Lawyers Are Going to Jail ...
A Houston attorney has agreed to plead guilty for his part in a scheme to funnel $520 million in fees from the Texas tobacco settlement into his own pocket and that of former state attorney general Dan Morales. Morales and the Houston attorney forged documents to make it appear the lawyer had worked on the settlement when he had not. Morales pleaded guilty and agreed to a four year prison term. From the Houston Chronicle
... While These Lawyers Are On the Run
New developments have come in the case of trial lawyers and their hired-gun doctors trying to steal from the Fen-Phen trust fund set up to compensate people who suffered heart damage as a result of taking the diet drug combination. Now the New York Times reports trust administrators have ordered third-party audits of thousands of suspicious claims of heart damage approved by at least 10 doctors nationwide. One Kansas City cardiologist reviewed more than 10,000 echocardiograms for some 25 law firms and claimed 40-70 percent of the claimants had serious heart damage. By contrast, a medical study published in 2000 to which the same cardiologist contributed found heart damage in a mere 5 percent of the cases reviewed. The cardiologist earned several million dollars a year for her work for the law firms and is now being sued for fraud by the fund. From the New York Times
Guilty-Just-For-Being-There Gets Another Try
Seven years ago a New Jersey postal worker was injured when the metal cover of a letter carrier (a large metal box on wheels) came unhinged and fell on her head. Under the state's workmen's compensation laws, her medical bills and lost salary were paid, but she could not sue the post office for "pain and suffering." She could, however, sue the carrier manufacturer ... but unfortunately had no idea who the manufacturer was. Under a seldom-used and much-discredited concept called "market share liability," she sued all carrier manufacturers and demanded they pay her according to their share of the national carrier market at the time of her injury. The New Jersey Supreme Court will decide if her suit can proceed. From the Trenton Times
"Excessive punitive damage awards are not harmless transfers of wealth: They damage the function of the U.S. economy and judicial system. Companies pass these costs on to consumers via higher prices. In addition, large punitive damages encourage expensive class-action law firms, driven by the prospect of big contingency fees, to pursue unwarranted suits."
Gary S. Becker
BusinessWeek, September 15, 2003
Lawsuit Abuse Fortnightly
Published by The Heartland Institute (312/377-4000), a nonprofit 501(c)3 organization founded in 1984. The full text of this newsletter is also available in Adobe Acrobat's PDF format; click here.
Phone 312/377-4000, fax 312/377-5000
Back issues are available online at http://www.heartland.org
Publisher: Joseph L. Bast
Editors: Diane Carol Bast, Paul Fisher, Dan Hales
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