Lawyers Run Sue City
By Walter Olson
Newsday, September 15, 1992
* * *
According to "focus-group" interviews, nothing in George Bush's acceptance speech was more popular than his criticism of litigation and trial lawyers.
"Sharp lawyers are running wild" in our towns and neighborhoods, the president said. He called for "an end to crazy lawsuits." Similar language appears in the Republican platform.
There's a political irony here. The GOP may have seized on legal reform as an issue with Main Street appeal. But it's actually the nation's biggest and most troubled cities - invariably run by Democrats - that in many ways have the most to gain from cleaning up the litigation mess.
That's because big cities, more than suburbs or small towns, are the favored stomping grounds of the aggressive lawyers Bush is talking about. And what gets stomped is often municipal finances.
New York City recently disclosed that it pays out a staggering $ 229 million a year on personal injury suits alone. That amounts to $ 120 annually for every Gotham family of four - more than the city spends on parks and libraries combined. Legal defense costs are on top of that. So are the Transit Authority's lawsuit payments, which ran $ 45 million last year. Since New York is self-insured, the money comes straight out of taxpayers' wallets.
Urban transit authorities make a favorite target for creative lawyers. A whole book of "crazy cases" could be put together from recent New York subway verdicts:
* A man who fell on the tracks while inebriated was awarded $ 9.3 million for the loss of his left arm in a case that was later remanded for retrial. Another tipsy track totterer won a $ 61-million award from the Transit Authority, which was reduced by the judge to $ 5 million. That case is still in litigation.
* A would-be suicide who jumped to the tracks got a $ 2.4-million award, of which $ 1.2 million was upheld on appeal.
* A man involved in the brutal mugging of a 71-year-old man, and later convicted, was awarded $ 4.3 million for being shot by police, a decision upheld on appeal so far.
Roxanne Conlin, head of the Association of Trial Lawyers of America, has dismissed talk of excessive suit-filing as "myth . . . there is no explosion in personal injury litigation." But according to figures from the city comptroller, New York City's payouts have soared 48 percent in three years and - no kidding - 750 percent since 1979. (Go ahead and adjust for inflation; your hair will still stand on end.) Project the trend line out a few years, and before long the lawyers could wind up owning Brooklyn.
Hardball litigation hurts cities indirectly, too, by driving away employers and businesses. A survey of 13 states by the Association for California Tort Reform found that litigation was a major variable in the cost of doing business in one place rather than another. It estimated that an electrical contractor with revenue of $ 1 million and payroll of $ 500,000 a year could expect to pay $ 11,000 for liability insurance in Charlotte, N. C.; $ 23,000 in Newark; $ 47,000 in Los Angeles; and $ 60,000 in New York City.
The Sue City image was not helped when the Hertz Corporation announced that over wide stretches of New York City it was paying more in liability awards and settlements than it was collecting from renting out its cars - leaving less than no money to pay its employees, buy the cars and so forth. But neither Hertz nor anyone else has had much success in getting past the trial-lawyer lobby. New York City officials proposed legislation to transfer suits against the city from the regular court system to the state Court of Claims - a plan they say would speed up cases and save city taxpayers millions, without taking away anyone's right to sue. Albany lawmakers wouldn't touch it. "We had a terrible time finding even one sponsor," says Lorna Goodman of the city's law department. In committee, the bill won only one vote. "I can't conceive of how the trial lawyers have so much power," she says. "But they do."
Plenty of other legal-reform proposals are circulating, and most would help city finances. One idea is to enlist legislative policy behind the old common-sense notion of "assumption of risk": If you come to watch the softball game, don't run to court if you get hit by a foul ball. Another idea is to revamp procedures - for example, by letting judges throw out weak claims at an earlier stage. In the long run, it's hard to escape the need to provide a real downside for both parties in a lawsuit - not just the side that gets sued. Other countries do it through the principle "loser pays." We could at least put teeth in our current sanctions for wrongful lawsuits.
President Bush has promised a showdown with the trial bar this fall. Even a lot of staunch Democrats in the nation's city halls must be secretly hoping that he wins that showdown.
Walter Olson, senior fellow at the Manhattan Institute, is the author of The Litigation Explosion.
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