“When I was growing up, we went to films on Saturday afternoons…. The good guys wore white, and the bad guys wore black,” the former chairman of New York law firm Fried, Frank, Harris, Shriver & Jacobson, Leon Silverman, told me recently. “The heroes were always in favor of waiting to find the sheriff, waiting for a law-abiding method for dealing with disputes,” he said. “The other guys just wanted to string ’em up.” Mr. Silverman is ticked at those who treat his profession like a “cancer,” and he’s looking to set the record straight. On October 29, aggrieved lawyers, tired of jokes where they end up at the bottom of the East River, can attend the Association of the Bar of the City of New York, where he will lecture on “The So-Called Litigation Explosion.”
That qualifier, “so-called,” might elicit a chortle from the folks over at the Manhattan Institute who just released a report titled “Trial Lawyers Inc.” The report makes the case that plaintiffs’ attorneys operate as an industry — with tremendous profits, their own trade publications, and even new product development, such as the recent test case in the Bronx against McDonald’s for making children fat.
While the debate over lawsuit reform is currently on the docket in the nation’s capital, there’s hardly a city that will be more affected by the outcome than New York: Its bar association has more than 22,000 members, or roughly one for every 360 New Yorkers.
While that may sound like a lot of lawyers, remember that not all of them are responsible for those subway ads with cartoons of smiling people getting injured and giving the thumbs up. It’s easy to forget that in a society based on the rule of law and the sanctity of contract, there are going to be a lot of people arguing over what the laws mean and drawing up the contracts. Think of it this way: How many lawyers did Iraq need last year? Or, as Mr. Silverman put it, increased litigation represents a “triumph of democracy.”
There is no doubt that the amount of litigation has gone up. Whereas in 1950 payouts from lawsuits accounted for 0.6% of America’s Gross Domestic Product, in 2001 it was up to 2.04% — not counting the billions of dollars the tobacco companies have bled. “It really has exploded,” the director of the Manhattan Institute’s Center for Legal Policy, James Copland, said.
The question, however, is how much of this explosion has taken the form of frivolous lawsuits as opposed to just claims. The frivolity might be less than most people think. Everyone remembers that a New Mexico woman won $3 million after spilling McDonald’s coffee on herself; few people know that the award was later reduced to around half a million dollars.
Still, the tort system costs about $200 billion a year, according to the Manhattan Institute, and the president’s Council of Economic Advisors says at least $87 billion of that is pure waste.
The Republicans say that something must be done, but their ideas are a mixed bag. President Bush, disregarding federalism, wants Congress to set a $250,000 cap on punitive damage awards in medical malpractice lawsuits, which are by nature a state matter. But if New York wants to allow for huge awards — which apparently it does, as three of the top 10 jury verdicts in medical malpractice cases were in New York last year — the state can decide if it’s worth the exodus of doctors.
Another Republican idea is to move more class-action lawsuits to the federal courts. This would take claims against companies that operate nationally — many of them headquartered here — out of Southern and Midwestern county courts where indignant jurors, and judges elected with plaintiff-bar money, are happy to stick it to people 1,000 miles away. That’s the gist of the Class Action Fairness Act that the Senate is set to take up in the next few weeks.
A problem Mr. Silverman sees with diverting cases out of state courts, though, is that the federal courts are already overburdened and would need to be expanded, with judges better compensated. In England, which he uses as an example, judges make about $230,000 a year; in America, it’s more like $150,000. “Second year associates make what a federal judge makes,” he said.
Mr. Copland said he would be happy to see more, better-paid federal judges. Perhaps he should head to Mr. Silverman’s talk late this month. If well-meaning lawyers and reform-minded conservatives could find their way into the same posse, New Yorkers and other Americans might be more inclined to see lawyers as the guys in white.