Monday, July 09, 2007

Defending Lawyers ...

In a somewhat surprising turn, CNN Money and Business 2.0 magazine are defending lawyers (no joke). From the article:

(Business 2.0 Magazine) -- Decades after Tylenol bottles were tampered with and Ford Pintos exploded, you'd think that product-safety panics would be nearing extinction.

No such luck. Consider just the past few months: Pet food laced with poison killed more than a dozen dogs and cats. Toothpaste shipped from China to Latin America turned out to be tainted with a potentially fatal thickening agent. And the FDA issued yet another recall for defective defibrillators, bringing the total number of heart devices that need to be replaced to nearly 200,000.

Here's another frighteningly persistent trend: The drumbeat for weakening the ability of people to seek redress in court by curtailing product-liability suits continues unabated.

A recent study by the nonprofit Pacific Research Institute estimated that the cost of tort law in the United States had reached $865 billion, equivalent to an 8 percent tax on consumption or a 13 percent tax on wages. But much of that analysis leans on faulty logic, and while most of my friends in business consider lawyers at best a necessary nuisance, for the most part, they're dead wrong.


Tort-reform advocates love to rail against the skyrocketing costs of litigation and multimillion-dollar damage awards, yet one definitive study from Rand showed no increase in the percentage of tort cases won by plaintiffs and no statistically significant increase in the median award paid by businesses. Comparisons with other countries can also be misleading because they have more stringent regulatory regimes.

True, regulatory agencies cost billions, and so does our legal system. But I would argue it's a pretty good deal -- simply a necessary cost of running an economy in which people rely on the promises and products of strangers.

The alternative is precisely what we see in the case of the pet-food mess: agencies and companies sending people to inspect factories and raw materials more carefully, and increased testing of products coming into the country.

The next time you want to complain about "frivolous" lawsuits, picture doing business in a world where promises can't be relied on and you can only deal with people and organizations you already know well. There are undoubtedly abuses and problems in our current system, but the cost of punishing malfeasance is a necessary and small price to pay for running a modern economy.


Check out this link on "Tort Reform" in Oklahoma:

Tort terminators, not ‘reformers’. From a Letter to the Editor of the Edmond Sun:

EDMOND — As professors of torts and civil procedure, we disagree with the views of our colleague, Andrew Spiropoulos. We applaud the governor and the attorney general for the veto of the so-called “tort reform” bill.

We say “so-called” because this bill was neither confined to torts nor did it envision “reform.” It sought the curtailment or outright elimination of remedies for injured and wronged people and businesses. We prefer to call advocates of this bill tort “terminators,” not tort “reformers.”


[T]he bill itself — provides no evidence that Oklahoma’s civil justice system is in a state of crisis that would justify the draconian measures proposed. As one example, the bill would have all but eliminated class actions in Oklahoma. Is there a problem with class actions here? Not at all.

In Oklahoma County, about six cases a year — out of thousands — are filed as class actions. Only one class action filed in Oklahoma County in the past five years has awarded fees to plaintiffs’ counsel.

Most of the remaining cases were dismissed.

Our courts are well-equipped to weed out unmeritorious lawsuits with the tools they already have. Yet the “tort terminators” continue to try to “fix” a system that is not broken — slandering the plaintiffs’ bar in the process.

We eschew [Professor] Spiropoulos’ use of the term “bottom feeders” to refer to members of the plaintiffs’ bar. We take pride in plaintiffs’ attorneys’ efforts to provide access to courts and to obtain compensation for ordinary residents for harms caused by negligent doctors, shady businesses and other wrongdoers. Space limitations prevent a detailed response to the bill’s many other questionable provisions.

The bill’s elimination of joint and several liability could leave an innocent injured person without full compensation, while shielding a wrongdoing defendant from paying for an injury he helped to cause.

The bill also would have restricted prejudgment interest, which Spiropoulos claims violates the principle of “innocent until proven guilty.” Besides misapplying a criminal, not civil, law principle, the claim is false. Prejudgment interest is never paid unless and until the defendant is found liable by a judge or a jury.

Spiropolous talks about “doing justice.” We believe justice lies in a legal system that compensates people for the wrongs done to them. Where is the “justice” in a “reform” that leaves those people with nothing?

Professors Patricia Hatamyar and Carla Spivack are on the faculty at Oklahoma City University School of Law.

In fairness, here is a link to the article the two law professors were responding to: Lawyers not ready for reform.


Anonymous said...

Patricia Hatamyar and Carla Spivack do NOT know what they are talking about. Spiropolous on the other hand, does know what he is talking about.

Thank you Spiropolous for stating the truth.

OkieLawyer said...


Here are my thoughts on a related legal issue:

New Supreme Court Case Limits Punitive Damages

What concerns me about this principle is that in the financial torts area, it is possible for a business to "overcharge" for it's services or product and then make out like bandits after paying the damages that are limited to the actual plaintiffs. For example: credit card company charges customers an $85 annual fee when they only should be charging $30.

Most people never notice the charge and pay it -- not knowing that they have been overcharged.

Others notice and call to complain, but the $85 charge puts them over their credit limit and they are charged an overlimit fee of $49. When they don't pay, they are charged a $49 late fee. When they cancel the card, the fees run their balance up to thousands of dollars. Credit card company sues customer. By the time the case goes to an overcrowded small claims court, the judge is not even the slightest bit interested in the defendant customer's complaint of how they were overcharged. Credit card company gets a judgment for the entire amount and collects.

Of those that complain, some will make the minimum payment, but the $85 charge doesn't get corrected for several months "due to computer glitches." In the meantime, the credit card company makes money in interest "on the float." That is, by the time the error gets corrected, they have been able to collect 18-30% APR interest (with an APY -- annual percentage yield -- even greater than that) on the $85 for several months which, in the aggregate, amounts to millions of dollars.

Of those that complain and pay their bill in full, the credit card company makes money "on the float" because they have had the use of the aggregate $85 from all those customers and invest it in short term securities and they have the use of $55 (the overcharged $85 - $30 legitimately owed) of the customer's money to invest in the market or short-term securities. The use of the money nets millions of dollars in interest gained from the use of that money.

Assume for the sake of argument that a lawsuit ensues. If damages are limited to actual plaintiffs, how can the credit card company be discouraged from repeating the practice?

Of course, your statement, being merely conclusory, was woefully short on facts to support your position.

So, is it your position that injustices like this should uncorrected when confronted by the courts?