The Growing Power of Trial Lawyers
Lochhead, Carolyn
The Growing Power of Trial Lawyers By Carolyn Lochhead Everybody knows there is money to be made in lawsuits these days—suits against breast implants, asbestos, Norplant, and the like....
...This would be an extreme miscarriage of justice...
...They’ll go after you,” says former Monsanto Chemical chairman Richard J. Mahoney, who was deeply involved in last year’s tort reform fight in Congress...
...Another from “Big Ridge Cattle Company” had the same post-office box as leading trial lawyer Paul Wilkins...
...Brickman says “the activities of the attorney general of Mississippi, to name just one,” are heavily influenced by the state’s trial-lawyer bar...
...That enhances its leverage considerably...
...The future of our practices is in our hands...
...It turns out there’s more of it floating around than anyone could have imagined...
...Louisiana and Mississippi are both pursuing so-called mitigation cases against asbestos makers—on contingency fee...
...By amassing thousands of plaintiffs into one gigantic suit—a so-called mass tort—a trial lawyer can blackmail a company into a huge settlement for a claim resting on little or no evidence...
...But informal coordination among the trial lawyers is already well established...
...Attorney general Mike Moore awarded the lead portion of the tobacco contract to his top campaign contributor, Richard Scruggs of Pascagoula, a wealthy asbestos litigator...
...You gotta take ’em one at a time...
...It could mean hundreds of millions of dollars to the people of Mississippi, which would be tremendous— better schools, better roads, better hospitals, better health care...
...Fully two-thirds of the $100.4 million total came from individual attorneys and not from organizations...
...Warren Miller, executive director of Contributions Watch and a former analyst at the Federal Elections Commission, calls the numbers “very conservative,” and indeed they are often smaller than tallies done by local newspapers...
...Belton sees no conflict because so many trial lawyers contributed to Ieyoub’s campaign...
...A handful of trial attorneys will get a 25 percent cut in most cases...
...When these lawyers are making large political contributions to the attorneys general who hire them to sue, in lawsuits that have contingency fees running literally hundreds of millions of dollars, prosecution for profit takes on a whole new dimension...
...As A. Foster Sanders, a district court judge in Louisiana, asked in a decision on a contingency-fee contract there, “Is it prudent to give away, potentially abandon, the state interest in such huge sums of money...
...Indeed they were...
...Ginger Sawyer, who tracks contributions for the Louisiana Association of Business and Industry, says that after judicial elections, defense attorneys “who didn’t play” are invited to fund-raisers to help pay off the trial-bar loans...
...Proponents of the tobacco suits dismiss these fears as scare-mongering by business...
...state campaign records often consist of boxes of paper filed away in state capitals...
...Lerach’s core business is suing companies for fraud when their stock price falls—a weird form of tort litigation made possible by a poorly written sub-clause in the Securities Exchange Act of 1934...
...It’s extraordinary that this kind of attack can be organized in this way, because of course the implications go far beyond the tobacco companies,” says Walter Olson, author of The Litigation Explosion...
...Trial lawyers and their consumer-activist allies say business gives money too, and plenty of it...
...Trial lawyers have become the most powerful professional special-interest group in American politics...
...Texas attorney general Dan Morales did not use competitive bids to find a lawyer for his $4 billion tobacco suit...
...That’s a real danger...
...Contributions Watch matched thousands of individual contributions with a directory of the American Trial Lawyers Association (ATLA), then added the names of well-known nonATLA litigators like Lerach...
...If you can loan the campaign $5,000,” the letter said, “we will see to it that after the election, the committee has the fundraisers necessary to pay back your loan...
...Victories in tort cases are “generating literally billions of dollars in fees for lawyers to the point where they now effectively control certain political processes,” says Lester Brickman, a professor at the Benjamin N. Cardozo School of Law in New York...
...There are the obvious targets: alcohol, automobiles, guns...
...The astonishing extent of political giving by trial lawyers has been brought to light for the first time in a report by the non-profit Contributions Watch...
...The report also takes the first in-depth look at individual donations that usually escape notice because they are so hard to identify...
...Scruggs, the main lawyer in Moore’s suit, even hired Clinton’s disgraced former top strategist, Dick Morris, to poll Mississippians about their opinions on the tobacco suit...
...If you are unable to loan your own money at this time, we have financing available for you personally...
...The criteria were “primarily their success rate and their reputations for this type of litigation, and also their financial strength...
...A $4.25 billion settlement against the makers of breast implants was based on allegations of silicone diseases without basis in medical fact—a settlement that drove Dow Corning into Chapter 11 bankruptcy...
...Douglas was referring to an audacious Florida statute, written by Pensacola trial lawyer Fred Levin, that slipped through in the hectic waning hours of the 1994 legislature...
...Besides which, the attorneys general argue, the lawyers cover all expenses and are paid only if they win...
...Florida governor Lawton Chiles says he will pursue nothing but tobacco in this way...
...the Big Three automakers $842,000...
...But the real evidence of trial-lawyer political power comes at the state level...
...Trial lawyers have no fears, they’re well funded, and they’re well organized...
...There is money to be made and corporations to be pillaged...
...These are the gunfighters, these are the guys who do high-profile, high-stakes litigation...
...Like Lerach, the top trial-lawyer contributors nationwide are a Who’s Who of mass-tort litigators...
...Florida assistant attorney general Jim Peters insists, “We’re not handing it to them...
...They earned it...
...Trial lawyers are bankrolling politicians at a level unmatched by any profession: $100.4 million in combined state and federal giving from 1990 through 1995, heavily concentrated among a tiny core of extraordinarily rich plaintiffs’ attorneys...
...Where does all this money come from...
...It targets a despised industry with lots of sick customers and $43 billion in assets...
...Vice President Al Gore joined Mike Moore at a June 4 rally in Jackson, where he blasted the Republican party as “almost a wholly owned subsidiary of the tobacco industry” because it has “made the conscious decision to accept so much money from the tobacco companies...
...11,045 from Williams...
...If you have enough money— and the litigation generates enough money—it’s going to be able to buy the political process...
...They are mass-tort specialists and big Texas campaign contributors: the aforementioned Harold Nix, Walter Umphrey, John O’Quinn, John E. Williams, and the law firm of Reaud, Morgan & Quinn...
...John O’Quinn’s firm, a big player in breast implants and involved now in the tobacco case, is handling those suits...
...ATLA has asked for FEC approval to set up a program that would target favored candidates, recommend how much to contribute and when, and track the money...
...Or they could hire other lawyers by the hour...
...With a 15 percent contingency fee, the five law firms will split $600 million if they win...
...Originally devised as a way for a poor man to get a fair shake in court, the contingency fee has become a trial-lawyer bonanza...
...Their model is EMILY’s List, the feminist political fund...
...Bribing judges was long ago made a crime...
...It would be astonishing if a single one of them turned down any further business once that line is crossed, by saying, ‘Oh no, I promised that it would only be tobacco, so I’m not going to take this lead paint case.’” Would an aspiring attorney general really tell Katie Couric on national television that he would not rescue children from lead poisoning...
...Indeed they are...
...Scruggs earned a $2.4 million contingency fee in the case...
...This lawsuit is not costing the taxpayers of Mississippi any money,” says Bobinger...
...For a sense of just how much money we’re talking about, in 1995 trial-lawyer PAC and “soft money” contributions at the federal level were $8.1 million...
...The numbers show stunning largesse over the past six years...
...The attorneys general say tobacco litigation is so complex and the tobacco companies so powerful that such suits are simply beyond their expertise and financial capability...
...These are cases for which the trial lawyers can earn colossal contingency fees—cases in which the lawyers receive no money up front but a large cut of any settlement or jury award...
...But success means that billions of dollars in government proceeds will be transferred to private lawyers...
...Paul Hendrie of the Center for Responsive Politics, a nonpartisan research group that tracks special-interest spending, says that “consultants have a special close access to those candidates and that access is not going to end when the campaign is over...
...To have that type of counsel on board would require a substantial change in pay grades,” says Florida’s Peters, with considerable understatement...
...This is very important litigation and we want to be able to choose who we are going to use and not necessarily be required to choose the lowest bidder...
...And now these lawyers are being deputized by attorneys general to prosecute under cloak of state authority...
...Moore, who literally stood at Clinton’s side when the president vetoed a productliability bill in 1995, also threw Scruggs a state asbestos lawsuit in 1992 after Scruggs contributed $20,550 to his 1991 reelection campaign...
...The law does not even mention tobacco...
...The attorney general would have the authority, uncontrolled, as to how to spend state funds in whatever amounts he deems appropriate...
...A letter dated June 25, 1993, from the Louisiana personal-injury firm Gauthier & Murphy, marked “PERSONAL AND CONFIDENTIAL,” said: “A number of us, all of whom are members of the Louisiana Trial Lawyers Association, are getting together with Judge Joseph Bleich to discuss his interest in the Supreme Court...
...Attorney Peter Angelos, who owns the Baltimore Orioles and got rich on asbestos litigation, got the tobacco contract in Maryland...
...We will be meeting with Judge Bleich at 1:15 on Tuesday, July 20th, at the Windsor Court Hotel in New Orleans...
...Trial lawyers are now seeking to leverage their individual political contributions even more by starting a “bundling” operation...
...Lerach fired Carrick after Clinton announced his opposition to Prop...
...Of the $9.7 million trial lawyers contributed in Illinois, for example, just $1.9 million came through a PAC...
...Another Gauthier & Murphy letter, this one from 1992, announced a dinner at Antoine’s restaurant in New Orleans “honoring Kitty” Kimball, also now a state supreme court justice...
...One small-town Texas lawyer and bigtime political contributor, Harold Nix, has made millions in a mass tort alleging without evidence that hundreds of industrial products—including factory hand soap—caused “chemical AIDS,” an illness he invented...
...The Baton Rouge Morning Advocate reported last year that nearly half the law firms contributing to his campaign got contingency-fee contracts...
...The trial lawyers invest a portion of their earnings in the campaign coffers of elected officials, who then soften the ground for further litigation...
...It’s a Frankensteinian joinder of the all-powerful state and the perverse incentives of the contingency-fee arrangement,” says Rep...
...The suits primarily involve tobacco companies and the health-care costs incurred by smokers...
...But the recent pattern of mass torts suggests much broader arenas—pesticides, chemicals, medical devices, pharmaceuticals...
...The amount of money involved, as well as the results that money has bought, tell us something new, fascinating, and troubling...
...Bleich won a special election to the Louisiana Supreme Court in February, after receiving $217,000 from the trial bar...
...More than two dozen cities in Texas have hired contingency-fee lawyers to sue pipeline companies for franchise fees that the cities contend the companies owe them for crossing city property...
...A clear conflict of interest...
...Fabulous riches to be made, amounting to billions of dollars for hard-working trial lawyers...
...The Clinton White House, which found in tobacco a perfect foil for its efforts to prove that the president cares about children and families, has a keen interest in the tobacco suits...
...In Texas, Louisiana, and other states where judges are elected, not appointed, trial lawyers make major campaign contributions to the men and women who then preside over cases argued by the very same trial lawyers...
...They certainly were in some instances contributors to his campaign...
...Brickman estimates that in mass torts, where the lawyer receives one-third to one-half of the settlement as his pay, the hourly attorney rate has reached spectacular levels—in some instances as high as $150,000, with fees of $500 million and more...
...I don’t believe anybody in the world could handle all those industries at once...
...He knew these people...
...True enough...
...Yet when asked at a press conference about alcohol, his general counsel, former trial lawyer Dexter Douglass, replied, “At this point, we don’t have the statistics to proceed in that regard...
...Harvard Law School professor Laurence Tribe, who is on the Texas tobacco team, told the Wall Street Journal, “This could be the beginning of a beautiful relationship...
...And half of that came from a small core of about 150 plaintiffs’ lawyers...
...from lead paint and liquor to nursing homes and Norplant...
...The tobacco suits may open up a wide new avenue for litigation in all states, even those where companies are permitted to defend themselves...
...In the past year, President Clinton has twice vetoed legislation aimed at tort reform— and one of the vetoes came just days after William Lerach, the most successful securities tort lawyer in the country, attended a White House dinner...
...We have black folks, we have white folks, we have people with established track records in litigation, and like I said, some of these people have contributed but they also happen to be the best lawyers in the state...
...In all, Morales received $740,067 from trial lawyers...
...Please remember that Kitty is a sitting trial judge now...
...Even where there is bidding, the tobacco contracts somehow wind up with big campaign donors...
...Federal Election Commission records are computerized and centralized...
...They have a single issue and nothing else on their minds...
...Yet such suits have already begun...
...The law explicitly strips companies of their ability to defend themselves against state Medicaid suits and allows statistics to count as evidence, rather than actual injuries...
...Contributions Watch data from January 1991 to June 1996 show Ieyoub receiving $412,948 from contingencyfee attorneys...
...And some contributions appear to be disguised, Sawyer says...
...Absolutely never in my 20 years of hanging around state attorneys general have I ever heard of any other business that would be treated in this fashion,” says James E. Tierney, Maine’s former attorney general and a consultant on the tobacco suits...
...Chris Cox, the California Republican who battled Lerach over securities-litigation reform...
...oil and gas companies $2.8 million...
...In 11 states where data were compiled from January 1990 to December 1995, individual trial lawyers gave $61.3 million at the state and local levels, swamping the $39.1 million they gave to national campaigns...
...Morales received $149,545 from 1990 to 1995 from four of them—$85,000 from Umphrey...
...Donations by relatives were also included if a match could be verified...
...ATLA’s “litigation groups” include everything from AIDS and automatic doors to breast cancer and butane lighters...
...After the rally, Gore attended a $25,000-per-couple fund-raiser at the home of Jackson trial lawyer David Nutt...
...Contingency fees...
...After speaking with a number of law firms, he chose five firms,” says spokesman Ron Dusek...
...But they have moved beyond tobacco to asbestos and environmental litigation...
...The pattern is the same in state after state...
...Anyone treated under Medicaid for an illness or injury that can be related to a product now represents a potential state claim...
...Assistant attorney general Emory Belton says Louisiana’s tobacco suits were given to these lawyers because of their experience pursuing asbestos cases...
...Carolyn Lochhead is a Washington correspondent for the San Francisco Chronicle...
...But trial-lawyer money is aimed at just one thing: promoting litigation...
...Mass torts have become a threat to entire industries, not to mention due process, scientific research, and public health...
...Louisiana attorney general Richard Ieyoub, now running for the U.S...
...The horror stories are familiar by now—padlocked playgrounds, swimming pools bereft of diving boards, exorbitantly expensive auto insurance...
...And the technique is moving from the state to the local level...
...What makes the Contributions Watch study such a breakthrough is its focus on state campaigns, where trial lawyers actually make their biggest political investments...
...The same kinds of claims are rapidly moving beyond dubious cosmetic surgery to life-saving medical devices such as pacemakers, heart valves, artificial joints, vascular grafts, shunts for kidney dialysis, and bone screws for spinal-cord injuries...
...What else can one really conclude but that there’s a quid pro quo...
...Bill Lerach similarly hired Bill Carrick, Clinton’s chief California political strategist...
...Tobacco litigation promises to be the mother lode of mass torts...
...But for tobacco, says Mississippi’s Bobinger, “if we did it in-house, we’d have to go to our legislature and ask for $5 million or $10 million to fund the litigation...
...Bounty hunters were banished and state prosecutors put on salary for a reason—to remove any financial stake in their prosecutions...
...A $4,000 contribution to Bleich was listed on disclosure statements as coming from Oak Management, with the same address as Gauthier & Murphy...
...It is fiendishly difficult to figure out how much money is spent at the state level...
...of the $5.4 million in Arizona, just $88,000 did...
...There is no conflict,” says Mississippi assistant attorney general Trey Bobinger...
...From Florida to Arizona, state attorneys general are actually deputizing trial lawyers to litigate tort cases for them...
...They’re in a position to make the case for their clients informally or directly...
...But the consequences are much more severe than these petty inconveniences and small injustices...
...tobacco companies gave $3.2 million...
...The attorneys general implicitly concede as much by insisting that tobacco is unique...
...from deliveryservice negligence and diet products to inadequate security and interstate trucking...
...These attorneys general, of course, are employed to argue cases on behalf of their states so that the states don’t have to hire other lawyers...
...A conference in Philadelphia last March advertised, “Toxic and Mass Torts: New Exposures...
...211 (the president was sucking up to Silicon Valley executives who were enraged by his original veto...
...Such conflicts of interest once were considered a threat to justice...
...And the litigation has blossomed...
...Senate seat vacated by retiring Democrat Bennett Johnston, is also awarding huge contingency-fee contracts without bidding, often to the same attorneys who contributed to his campaigns...
...Contingency-fee lawyers have a stake in litigation that reaches grotesque proportions...
...Business agendas run from taxes to regulation to trade...
...So should it come as any surprise that this money has entered the bloodstream of politics...
...Mississippi was the first state to file suit against tobacco companies on the Medicaid-recovery theory in 1994...
...The contingency-fee industry not only protects its turf, but forever prowls for new targets...
...Lerach alone gave $1.5 million over the six-year period in state and federal contributions...
...41,500 from Reaud, Morgan...
...I don’t think it was any kind of quid-pro-quo-type scenario at all...
...Because trial lawyers have such a simple and single-minded program, they know exactly who their opponents are and can punish them easily— particularly straying Democrats...
...Scruggs had been looking for a “masterstroke” against the tobacco companies, and he found it in Medicaid and Mike Moore...
...Lerach is now funding Proposition 211, an initiative on the California ballot that effectively guts the federal legislation...
...The state tobacco suits push contingency-fee litigation into unexplored ethical territory, and not just because a state bears no resemblance to a poor person unable to afford a lawyer...
...Nobody on the side of tort reform would dare do that because you’d be back looking for support on another issue in another month...
...And in a blatant conflict of interest, a number of state prosecutors are handing out these multibillion-dollar contracts— without competitive bidding—to the same lawyers who donate money to their campaigns...
...Texas’s Morales has said he is considering hiring contingencyfee lawyers to pursue environmental litigation in addition to the state’s $4 billion tobacco suit...
...It is not surprising that some of them got contracts,” Belton says...
...With enough money, you can buy a veto from the president of the United States...
...The lawsuits are intended to help the states defray costs in coping with the impact of tobacco on public health...
...Attorneys general in 15 states have hired contingency-fee lawyers to sue the tobacco companies, seeking recovery of Medicaid expenses for state residents treated for smoking-related illnesses...
...He was confident in their ability...
...In Florida’s $1.43 billion tobacco litigation, the lawyers are expected to get upwards of $400 million...
...States routinely hire outside counsel by the hour for specialized matters such as university patent litigation...
...Lerach’s specialty, the “strike suit,” is now threatened by securities-litigation reform—which became law after Congress overrode Clinton’s veto...
...Donations to political-action committees, which are easy to find, make up just a fraction of the money...
...They created something where before there was nothing...
...Competitive bidding, Dusek says, “is not required for professional services...
...from tap-water burns and traumatic brain injury to vaccines and vending machines...
...Money talks and big money talks loudest...
...and $12,000 from O’Quinn...
...It’s bad enough that lawyers give money to judges who then sit on their cases, but it’s really outrageous for a judge to actually solicit money from an organized group of lawyers who have a political agenda,” says George Mason University law professor David Bernstein...
...That, of course, while scads cheaper, would be highly inconvenient, provoking all kinds of debate about the wisdom of trying to ban smoking and using lawsuits to do it...
...If successful, these suits could transfer roughly $20 billion from shareholders to state treasuries...
Vol. 2 • September 1996 • No. 2
