The legal system in the United States has been widely criticized for being one of the main reasons that health, auto, and business liability insurance rates continue to climb; for being a notable factor in a decrease in new products being introduced into the marketplace because of lawsuit fears; and for unnecessarily delaying or halting the implementation of building projects, government programs, and legislative decisions.
At the same time, the legal industry employs millions of workers; generates billions of dollars of economic activity, provides necessary services to those needing legal representation and advice; and ensures that our laws are constitutional and fairly administered. Our society needs lawyers but can it continue to afford them?
I, for one, do not agree with Shakespeare that “first you kill all of the lawyers”. Rather, I believe we need to reform the tort system in our society to ensure that safe goods and services are widely available but are not inflated in price by higher and higher costs of auto, liability and health insurance caused, in part, by larger and larger lawsuit awards.
There are thousands of articles citing thousands of statistics about how legal and tort reform could benefit us. But there are a like number of articles and statistics that can refute those arguments. Thus the issue of tort reform has become as competitive and combative as any good political fight.
My opinion on this matter is based on economic theory. I believe the noble practice of law has left its roots of providing the best possible representation to those who need legal services and, instead, has become just another profit oriented business in which too many lawyers are pursuing too many cases simply, and understandably, to earn a living. How else can you explain those specialized law firms that sue small businesses for technical breaches of the Americans with Disabilities Act; or those that specialize in manufacturing class action lawsuits when individual cases better serve the original claimants; or those that advertise on television and in the telephone books for slip and fall injuries that in my grandparents’ generation were heeled with an ice bag and bed rest.
As a small business owner, I have seen my firm’s auto insurance rates skyrocket because of the explosive number of contested insurance claims which sometimes involves teams of legal professionals who lengthen the process to maximize their revenues rather than simply settling a case as efficiently as possible. Our group health insurance costs have been rising upwards of thirty percent per year because doctors and hospitals now practice defensive medicine including prescribing multiple tests and procedures lest they be sued for less than comprehensive care. I have even noticed that more and more of my firm’s customers want to ensure that we have adequate business liability insurance before they will let my employees deliver our goods or perform our services at their sites.
What can be done to bring back common sense to our tort system? First let me state that I believe that the legal system provides an important check and balance process to ensure that bad doctors, shady businesses, and corrupt government projects are brought to justice and the injured are amply compensated. Lawyers are well schooled professionals who deserve compensation commensurate with their level of training and experience. That said, I believe and support those efforts to reform the tort system and reduce insurance and liability costs by changing the way contingency fees are paid to lawyers. One good plan I have read would end the use of the contingency fee in cases where the defendant makes a reasonable offer to settle early. If the early offer is accepted, then the plaintiff’s lawyer is amply paid based on an hourly rate plus expenses so that the injured party can benefit from more of the award proceeds. A fair legal wage for a reasonable effort. However, if the early offer is rejected, then a contingency fee can only be applied to awards in excess of the amount of the early offer while a minimal capped fee is paid for the amount below the early offer amount. This plan, I believe, would provide incentives for the plaintiff to accept reasonable early offers while making their lawyers think twice before forging ahead for a larger jury award.
I also strongly support those plans which would ensure the imposition of appropriate “economic loss” awards to compensate the injured party for their current and anticipated medical costs as well as for expenses associated with the degradation of their lives and earnings potential, while capping subjective “pain and suffering” awards to $250,000 and limiting “punitive” damages to only egregious cases where willful neglect or fraud are proven. To control the growth of multi-state class action lawsuits in which the injured receive pennies while the lawyers receive millions, multi-state class action suits should only be heard in Federal courts because of their impact on the broad interstate economy.
Unfortunately, as I stated earlier, tort reform has become a political hot potato with the legal profession and consumer interest groups typically supporting Democratic Party candidates who are usually against tort reform while doctors, hospitals, insurance firms, and business groups typically support the Republican Party candidates usually in favor of tort reform. This causes deadlock in the legislative process. And in those states where Republicans control the legislature and executive branches such as in Florida, the anti-tort reform lobby has smartly focused some of its political contribution dollars on key Republican legislative leaders where those dollars will gain important lobbying access to delay or water down tort reform bills.
Until broad coalitions of small business owners and individual citizens start personally contacting and lobbying their state and Federal elected officials about the need to reform our tort system, I believe that our society will continue to be penalized by ever increasing costs of health, liability, and auto insurance rates and a continued decrease in new and necessary products and services coming to market. The good news is that a recent Kaiser Foundation study showed that 63% of the public favors capping “pain and suffering” awards and 72% want independent case reviews before a lawsuit can be filed. If only our legislators would take heed of these sentiments and enact sensible tort reform sooner than later.
Art Waganheim has been a resident of South Florida since 1991 and was raised in the Washington, DC area which gave him the political bug at an early age. He is a partner in a South Florida small business, is involved in local Republican Party activities, ran for the Florida Senate in 2002, and tends to think conservatively on most political issues.
