Edwards and the Problem with the Trial-Lawyer Lobby

You don't have to be a fan of corporate fat cats to be concerned that under a Kerry-Edwards administration, tort rules might become even more damaging to our economy.

John Kerry's choice of John Edwards as his running mate has produced an outpouring of corporate complaints about the damage that a plaintiffs' personal-injury lawyer could do as vice president.

Some of this is unfair to the multitalented Edwards, who won his many millions working hard for horribly injured clients and playing by the rules of the tort litigation game. But you don't have to be a fan of corporate fat cats or the Bush-Cheney team (I am neither) to worry that under a Kerry-Edwards administration, the tort rules might become even more damaging to our economy and our over-lawyered culture than they are now.

Kerry and Edwards will be even more beholden than previous Democratic tickets to an ever-more-potent trial-lawyer lobby dedicated to that peculiar form of income redistribution that serves mainly to make the richest lawyers richer. And Edwards talks like a man who believes that the solution to every misfortune is to find a deep-pocketed villain.

I don't know whether the Kerry-Edwards dependence on the trial-lawyer lobby would be worse for the country than the Bush-Cheney fealty to scandalously overpaid corporate kingpins and a myopically anti-lawsuit, anti-regulation, anti-tax ideology. And I am aware that the "greedy trial lawyer" moniker that some attach to Edwards is as crude a stereotype as the "greedy corporate plutocrat" label that others hang on Dick Cheney.

But the symmetry is a bit false. Contrary to the media-fostered myth that trial lawyers are the scourge of the corporate plutocracy, their lawsuits have virtually no impact on overpaid corporate executives or malefactors such as those who conspired to hide the deadly dangers of tobacco and asbestos. Rather, the $230 billion-plus consumed annually by the lawsuit industry (according to the best available estimate) ultimately comes from the pockets of the same ordinary Americans whom the trial-lawyer lobby purports to champion—to the tune of more than $3,000 in higher prices and insurance premiums per family of four—as well as from small businesses, doctors, city governments, school systems, clergy members, Little League coaches, and many others.

This is not to deny that honest trial lawyers perform two essential functions: compensating injured victims of unsafe conduct, and deterring such conduct by visiting the costs of injuries on the economic interests that cause them. The problem is the overly broad liability rules created by state and federal judges and legislators at the behest of the trial-lawyer lobby. These rules long ago veered from giving victims a fair shake to rewarding abusive and unwarranted lawsuits. And the trial-lawyer lobby reflexively trashes every serious legislative move to combat the abuses.

A leading example is the inexcusable effort by Edwards and most other Senate Democrats to derail the class-action legislation now before the Senate. It would make much-needed changes in a system that often operates as an "extortion racket ... in which truly crazy rules permit trial lawyers to cash in at the expense of businesses," in the words of a Washington Post editorial. And the proposed remedy—moving cases with nationwide impact to federal courts, in order to stop forum-shopping lawyers from exploiting connections to friendly state judges who help them pocket millions while their clients get coupons—is eminently fair to consumers.

Nor has Edwards shown any sign of supporting efforts to reform the multibillion-dollar asbestos litigation system, which has reaped huge rewards for big Kerry-Edwards backers such as Fred Baron of Texas, a former finance co-chair for Edwards who is now a big Kerry-Edwards fundraiser. The asbestos litigation has evolved over the past three decades from a laudable push to compensate thousands of people with asbestos-induced cancers and other diseases into "a malignant enterprise which mostly consists of a massive client-recruitment effort that accounts for as much as 90 percent of all claims currently being generated, supported by baseless medical evidence which is not generated by good-faith medical practice, but rather is primarily a function of the compensation paid, and by claimant testimony scripted by lawyers to identify exposure to certain defendants' products."

This stunning indictment is copiously documented in a 137-page investigative article in January's Pepperdine Law Review by professor Lester Brickman of Cardozo Law School. He is the leading critic of the 50,000 to 100,000 asbestos-related injury claims now being filed each year on behalf of people who, Brickman says, "have no discernable asbestos-related illness or impairment" in more than 80 percent of the cases.

But even apart from asbestos, tort litigation as we know it is appallingly inefficient: Only 22 percent of the more than $230 billion in estimated annual tort system costs goes to compensate alleged victims' economic losses, according to Tillinghast-Towers Perrin, an actuarial firm; almost as much (19 percent) goes to the plaintiffs' lawyers; another 14 percent goes to legal defense costs; 24 percent goes to payments for non-economic losses, mainly pain and suffering; and 21 percent goes to tort insurance overhead costs. Then there are the indirect costs, including an estimated $50 billion to $100 billion in unnecessary "defensive medicine" tests, and many thousands of lost jobs at more than 60 companies that have been bankrupted by asbestos lawsuits.

What are the chances that a Kerry-Edwards administration would slow down the trial-lawyer lobby's gravy train? Or that it would reform a medical-malpractice system in which (according to the best estimates) 80 percent of claimants are not victims of malpractice and over 90 percent of actual victims receive no compensation—a system that has added as much as $2,000 to the cost of delivering a baby in Florida and has forced some good doctors out of lawsuit-plagued specialties such as obstetrics and surgery? Or that it would curb the kinds of lawsuits that punish people and companies that have done nothing wrong; that force New York City's taxpayers to shell out over $500 million a year in tort awards and settlements (including $6.3 million to a pedestrian hit by a drunk driver who disregarded signs and mounted a curb that the jury later found to be too low); that deter development of better contraceptives and other liability-prone products; and that suffuse our society with a fear of litigation, evidenced by the removal of monkey bars and jungle gyms from public playgrounds and the reluctance of schools to discipline unruly students or fire incompetent teachers?

On the campaign trail, Edwards has reveled in the populist rhetoric that helped charm juries and make him rich, with his "two Americas" theme and his boast: "What I have been doing my entire life [is] fighting against big corporations, pharmaceutical companies, big insurance companies, big HMOs." (He rarely mentions all the doctors he sued.)

Try saying it this way: "What I have been doing my entire life is fighting against companies that create millions of jobs for Americans and help make this the world's wealthiest country, that develop miracle cures for once-debilitating diseases, that enable us to buy cars and houses without fear of financial ruin, and that seek to put a lid on the soaring health care costs that threaten to bankrupt our nation."

Of course, some companies do bad things some of the time. But Edwards seems to suggest that most companies do bad things most of the time. "It's as if Michael Moore checked into a spa and finishing school and emerged with good looks and polished manners," in the words of Walter Olson of the Manhattan Institute.

Edwards's own legal career illustrates some of the lawsuit industry's flaws. As detailed in my February 21 column, some of his victories were of doubtful merit, including an apparently unwarranted $4 million punitive award—on top of a more reasonable $2.5 million compensatory award—against the owner of a truck involved in a horrible accident. Edwards also won a fortune suing obstetricians and hospitals on behalf of babies born with cerebral palsy, at a time of accumulating medical evidence that botched deliveries are very rarely the cause of that disease. Cerebral palsy lawsuits have spurred doctors to order millions of medically unwarranted cesarean deliveries in recent decades.

Edwards has claimed that he took such cases only when he had strong evidence. Perhaps. But as he well knew, the lawsuit industry does nothing for the vast majority of babies with cerebral palsy whose claims don't look like winners. And when a North Carolina state legislator sought in 1991 to create a special fund for all families victimized by the disease while curbing malpractice awards, Edwards helped defeat the bill, according to The New York Times.

So most brain-damaged babies' families still got no help; malpractice premiums kept going higher; more and more medically unwarranted cesareans were done; and Edwards kept getting richer.