Damage Control [Commentary on needed tort reform]

Wall Street Journal ^ | dec 11, 2002 | C. BOYDEN GRAY

[The Raven]

America's tort system has become one of the most costly and inefficient methods of dispute resolution in the world, raising the costs of goods and services while reducing the availability of important products in the marketplace. All told, the legal system's direct costs are more than $180 billion annually, roughly 2% of GDP. Furthermore, less than half of the money spent on tort litigation goes toward compensation. The bulk of the costs are administrative and legal fees. Today the Supreme Court will hear oral arguments in Campbell v. State Farm, a case that has the promise of restoring a sense of rationality to the legal system.

[The Raven]

>> $180 billion annually, roughly 2% of GDP

Arghhh!! That's $90 B to the lawyers!

[StoneColdTaxHater]

It's about time for a loser pays system. Hit 'em where it hurts and they might think twice about wasting court time

[oldvike]

All told, the legal system's direct costs are more than $180 billion annually, roughly 2% of GDP.

Ouch!!!

[Dog Gone]

That's one idea that has some traction to it. Another one, that I especially like, is that punitive damage awards are paid to the government, not the party filing suit.

The logic for that is that the suit is supposed to recover damages for actual losses (including whatever is necessary to cover pain and suffering, etc.), but punitive damages are supposed to punish and deter further wrongdoing. There's no logical reason why they belong to the plaintiff. You could still accomplish the punishment and deterrence by having the award paid to the government, but attorneys would not be able to claim 1/3rd to 40% of those awards as part of their fee in contingency cases.

Take away the financial incentive for lawyers to bankrupt companies with big punitive damage awards, and you'll solve a lot of the problem.

And yes, I'm a lawyer.

[LibertarianInExile]

Punitive damages go to the GOVERNMENT? That's less sensible than them going to the plaintiff! What about the incentive this would provide to the government to bring product liability and other suits?!?!

How about we just say the loser pays and make that the rule? That would be fair and would ensure real cases make it court.

[Dog Gone]

I'm not sure the government would have any legal standing to bring a product liability suit, but if that's your concern, there's nothing preventing the government from taxing a company out of business today.

[LibertarianInExile]

What about the tobacco situation? Wasn't that government involved there? :)

And I mentioned product liability, but who knows what other punitive damages situations much be created which government could ride to an increased budget? Punitive damages can be awarded for more than just product liability torts, right?

[Dog Gone]

Sure, but my point is that the government can squeeze money out of companies any time it wants to, even under the current system. They don't even have to win a court case to do it.

A major incentive for the trial lawyers is the prospect of punitive damages. I'm trying to take that away.

If you do something bad and damage me, you should be forced to pay for it. That makes me whole. There's no logic that dictates that I should also get millions of dollars extra to split with my attorney. All that system does is make me hope that you damage me, so that I can win the equivalent of the Lotto.

[big gray tabby]

That is a sound and thoughtful suggestion that ought to be part of a wholistic approach to tort reform.

Another would be to take all your colleagues out of their offices and flay them with knotted horsewhips, throw them into boiling salt water and then push them out to sea on flaming rafts.

And then just laugh and laugh. We'll spare those of you not perpetuating or defending this excuse for a civil system.

[Dog Gone]

That reminds me of some lyrics from one of my favorite musicians, Al Stewart:

We've got seven hundred thousand attorneys at law
Nobody can tell me what we need them all for
We should throw them in chains
Chastise them and rebuke them
If it doesn't work
We ought to take 'em out and nuke 'em
Blow a lawyer to pieces
It's the obvious way
Don't wait for a thesis
Do it today
Take him to the court of no final appeal
When you're fresh out of lawyers
You don't know how good it's gonna feel

[big gray tabby]

That "Year of the Cat" folkie? Who'da thunk?

[Dog Gone]

Yep. He got caught in the middle of a recording studio squabble between two different labels, and was unable to release any new material for several years. He sorta has a beef with lawyers, I think...

[nicollo]

Is this notion of applying punitive awards to the community at large, the supposed benificiaries, btw, going anywhere? Is it an issue in this case?

Seems to me to need a legislative cure. Too bad the legislatures cow to the lawyers that milk them. A punitive damage by definition belongs to the community.