Litigation is destroying American companies
Glenn W. Bailey
A SURVEY that was conducted by a congressman among his constituents showed that, while most of them were concerned deeply about the economy, very few seemed to be worked up about America's competitiveness, even though competitive superiority in the world made the US. prosperous. The economy depends on it. Americans take US. manufacturing superiority for granted. However, the country is losing it, and litigation is one of the big reasons why.
Litigation impedes productivity. Forty-seven percent of the nation's manufacturers threw in the towel on some product they were making or planning to produce because lawyers have a chance to sue over a customer misusing the product or improperly handling it. Losses due to litigation might be endless, explaining why 25% of manufacturers discontinued some forms of product research and 15% laid off workers. Americans have forgotten that their rights are dependent on the willingness to take responsibility for their actions.
Compare Japanese and American cultures. The Japanese are motivated by a cooperative system that benefits all. A struggle for power in the Japanese culture is paramount. He who has the power, has the right.
Now look at Americans. They all ought to be proud of their individual rights, but, somewhere over the past decade or two, one's responsibility for his or her actions has been forgotten. People now look at power and perceive it as immoral. Americans say power works against the average person. How did that attitude come about? It's partly because we are becoming a nation of crybabies and busybodies, as an August, 1991, article in Time magazine stated.
Individuals forget their responsibilities, demand rights and entitlements, blame others for their problems, and don't want to pay for what happens to them as a result of their own actions. Lawyers exploit these trends and become rich. A number of them are obscenely greedy. As a result, the American civil justice system is breaking down, businesses are becoming less competitive, and jobs are disappearing.
What exists today is a lawsuit lottery that leads to legalized extortion. Lawyers feed on the "entitlement generation" to create panic over asbestos and other products. Attorneys blame the suppliers of the products despite the fact that warnings on packages were ignored by workers, their unions, and their employers. Lawyers wrongly claim that suppliers were concerned about profits over people. They preach that they are taking from rich companies and giving to the poor, yet two-thirds of the money goes to attorneys.
A Roper poll of the American people reported in the Wall Street Journal showed that 70% agree that liability suits give lawyers more money than they deserve, and 63% agree that some people start frivolous lawsuits because the awards are so big and there's so little to lose. Almost 70% would limit punitive damage awards. By contrast, a survey of lawyers and judges also reported by the Wall Street Journal found that only 22% viewed the civil justice system negatively, while 77% blamed the media for clogging the courts and the breakdown of the system.
The New York Times reported that the American Bar Association rejects all limits on fact-finding before trial, appeals on convicted criminals, punitive damages, fees they charge, and so-called "junk science experts." Instead, the Times said, the ABA calls for more taxpayer funds for legal aid lawyers, tax benefits for payments to attorneys, a halt to Federal crime statutes, and additional judges appointed to handle more cases.
What has been the reaction to proposals for civil justice reform recommended by the President's Council on Competitiveness? Non-lawyers support them by 100 to one. Perhaps surprisingly, individual attorneys back the civil justice reform package by four to one., So, who's more in touch with reality, the public or America's largest organization of attorneys?
The fact is, lawyers are overwhelming America. The U.S. has one lawyer for every 300 people--about 70% of the world's attorneys--while Japan has one for every 10,000 of its population. With all of the lawyers we have in America, some of them have found it expedient to inspire panic to promote litigation through which they can build income for themselves.
Keene Corporation's experience with asbestos litigation is a perfect example of the civil justice system run amok as well as the negative effect litigation has on competitiveness. Keene bought Baldwin-Ehret-Hill in 1968 for $8,000,000. A small percentage of BEH's sales were in asbestos-containing products, made to meet U.S. Navy, utility, and construction project requirements. BEH placed warnings on its packaging before Keene purchased the company. In 1972, BEH stopped production of these products, which never produced a profit for Keene, and the company was shut down completely by 1975. Yet, despite this minimal involvement with a company it owned for a mere seven years, Keene is a major defendant in prohibitively expensive asbestos litigation.
Through 1992, Keene and its insurance carriers had spent about $415,000,000 on this litigation, even though the company never did anything illegal or improper. Keene has expressed willingness to provide total settlements up to $500,000,000--and lawyers will get more than $300,000,000 of that amount.
All of this has occurred even though it is undisputed that, when properly handled, asbestos products are safe and of great social utility. The U.S. Navy maintained as late as 1979 that it was impossible to build efficient naval vessels without asbestos.
While asbestos is number 90 on the Environmental Protection Agency's list of items that should concern people, asbestos litigation is number one as a cause of court clogging, number one in number of claimants, number one in causing bankruptcies of otherwise healthy and productive companies, and number one in generating lawyers' fees for damage litigation.
The existing format for processing asbestos claims--through the tort system--is the most inefficient way to get money to claimants. In asbestos litigation, less than 35% of the funds go to the plaintiff. Because a system has evolved that establishes different legal standards for asbestos claimants--making it easier for unimpaired claimants to obtain grossly inflated damage awards--as few as five to 10 cents on the dollar are delivered to the truly impaired plaintiffs.
Judges' efforts to resolve cases all too often have resulted in a perverse incentive--causing more cases and more backlog. The opportunity for contingency fees that yield some attorneys returns of well over $5,000 per hour drive them to recruit more plaintiffs, many of whom are not sick. When cases are settled, these lawyers recruit still more plaintiffs and file still more cases, resulting in even more serious docket clogging and the further depletion of funds needed for truly impaired plaintiffs in the future.
Today's trials limit the plaintiffs' responsibility for ignoring warnings and the employer's responsibility for not providing a safe workplace and enforcing the company's then-existing requirement to wear respirators in areas where dust could not be controlled by the use of ventilation and dust collection equipment. Instead, they focus solely on the supplier and permit the introduction of irrelevant and inflammatory evidence, resulting in verdicts not related to the extent of the plaintiffs' injury, but to the heat of the lawyers' rhetoric. This combination inevitably leads to more cases and more trials.
Various cases yield unpredictable, inequitable, and arbitrary results. Juries, confronted with essentially the same facts, have awarded damages ranging from zero to millions of dollars! This "asbestos lottery" and its attendant high contingency fee payments have motivated plaintiff lawyers to recruit increasing numbers of unimpaired claimants to perpetuate their fee-feeding frenzy.
In some jurisdictions, defendants have been "gagged" from commenting on matters of public concern and presenting historical facts while judges and attorneys publicly have aired frequently prejudicial opinions.
Since the bankruptcy of Johns-Manville and other major suppliers, plaintiffs' law firms have scrambled to retool their practice and target smaller companies like BEH. The burden of larger and larger "lottery" type awards now falls on fewer and fewer companies with less and less money. For example, in a current case, with 8,555 plaintiffs, approximately 85% of the 100-plus original defendants are not in the courtroom. Furthermore, though BEH had less than a few percent of the market and never mined or milled asbestos, Keene currently has more than 90,000 cases pending against it.
The asbestos litigation thus far has cost the American economy around $20,000,000,000, with about $12,000,000,000 going to lawyers. Those billions could have been used to invest in and create more than 200,000 jobs or 90,000 housing units.
This article is old but I thought it summed up what is going on in this country fairly well. I could research longer for more numbers and facts however, It's Saturday morning and I'm actually getting tired of this thread. This was all about a silly speeding ticket and mailings I received from attorneys and somehow it morphed into a huge debate about Constitutional Law and how lawyers are needed in society. SHEEEEESH