Bell Curve The Law Talking Guy Raised by Republicans U.S. West
Well, he's kind of had it in for me ever since I accidentally ran over his dog. Actually, replace "accidentally" with "repeatedly," and replace "dog" with "son."

Wednesday, July 07, 2004

In Defense of Trial Lawyers

With Kerry’s appointment of John Edwards as his running mate, there has been renewed attention, and criticism, directed at trial lawyers and especially at lawyers who help bring personal injury law suits and other so-called “frivolous” law suits. I’ll let Law Talking Guy speak to the technical definition of a frivolous law suit. My area expertise is more in line with the institutions and practices of regulatory policy. In today’s posting I intend to explain the important role that trial lawyers, especially personal injury lawyers, play in the American regulatory system. It has long been a pet peeve of mine that people accept attacks on trial lawyers on face value as if such attacks were limited in scope to the lawyers themselves. But trial lawyers and law suits against misbehaving corporations are crucial to the smooth functioning of a well regulated capitalist democracy based on the rule of law.

It is one of the great misconceptions in the common political discourse that capitalism depends on the absence of regulation. All capitalist democracies regulate the behavior of individuals and corporations. Dumping of toxic waste, reckless driving, the sale of dangerous and defective products, paying prices and delivering goods and services agreed to in contracts, the maintenance of safe working conditions, and other activities are regulated in all capitalist democracies. Indeed, if such things were not regulated at all, capitalism would eventually break down, degenerating into the kind of cleptocracies common developing countries.

How are such regulations enforced? In some countries, officers of the state monitor business activities in a constant search for misbehavior. But this approach is costly and invasive. Employing large numbers of inspectors costs enormous sums of money. Law abiding business people resent being constantly inspected. To alleviate some of these costs and to reduce the need for constant monitoring, many democracies replace a system that depends on finding every potential problem with a system that responds to complaints. In the American system, those complaints run through the judicial system in the form of law suits.

Such law suits serve several functions. First, they provide a consistent procedure to determine if there has been any violation of regulations, laws or contracts. Second, if a violation has taken place, law suits provide a means for compensating those who were wronged. Third, law suits impose penalties – in may cases the only penalties – on the corporation or person who violated the law, regulation or contract.

During the 1980s and 1990s conservative majorities (remember in the 1980s Southern conservatives were still nominally Democrats) in Congress pushed through a series of reductions in regulatory protection and enforcement. These changes have meant that law suits are an increasingly important part of regulatory policy in the United States. In essence law suits have become a kind of market based regulatory system. If people care enough to sue, it goes through the court, but minor transgressions that harm few people go unpunished. The debate now is how easy should it be to sue? If the barrier is raised too high, serious violations of important regulations will go undetected and unpunished.

Because of the vital role law suits play in ensuring a well regulated capitalist system, making it harder to sue misbehaving corporations has the effect of protecting those corporations from taking responsibility for their actions. In short, attacks on trial lawyers are little more than a cynical political strategy for placing large corporations beyond the rule of law.


The Law Talking Guy said...

The theory that citizens can act as "private attorneys general" to enforce basic legal norms is probably the best expression of how we use our system, and also the most problematic. It is an expensive, cumbersome, and often arbitrary system with many negative externalities. To begin with, the law is essentially barred to plaintiffs who either (a) lack approx. $100,000 for a short trial, or (b) have too small an amount at stake (approx. $200,000 or less) to warrant contingency work. Next, the law may go unenforced for years until a plaintiff arises who is willing to take on the challenge. Furthermore, it is a long and cumbersome process. Finally, it has an odd lottery-like aspect. The winning plaintiff and his attorney may get millions, future harm is deterred, but other past harm is not compensated.

In an era, however, when the government simply will not pay for sufficient public enforcement, this will have to do. The tragedy is "tort reform" that is not accompanied by dramatic increases in public enforcement budgets.

US West said...

Government has a responsibility to protect citizens. That is partly why we pay taxes. The problem with deregulation is that it forces those citizens who can to protect themselves. And it shifts the burden of expense onto the shoulders of the average, working person. We still pay the costs. We have to pay for the court system that determines these cases. We pay higher prices to the companies that are subject to suit. We pay higher fees for things like medical services because doctors have to meet the increasing rates of malpractice insurance. And, as LTG points out, many problems can do damage unabated for years. And no amount of money will make the victims "whole". So I say bring back the 40% tax bracket on the wealthiest Americans (the ones who own the business that are sued) and bring back the tax funded regulatory system.

Perhaps the worst effect is that we breed in society this attitude that lawsuit is the best revenge, which is, in my view, an abuse of the system. And it also breeds stupidity. When McDonalds has to warn people that coffee is too hot or that its food can make you fat, or Norelco has to tell us not to use our hairdryer in the shower, or the owner of a business has to fret because some customer slipped while coming in the door, there is a problem. In Carmel, there is an ordnance against wearing high heels on the sidewalks. Why? Because the sidewalks are cobblestone and brick in the downtown area, and the city has to protect itself if some woman twists her ankle.

So while I think there is a respectable place for the legal system in redressing wrongs, I don't think we should be relying on it as a regulatory agency.

Raised By Republicans said...

I agree with most of the previous comments: Yes, using law suits is a poor substitute for actually enforcing regulations that protect people. And "tort reform" is little more than an attempt to give corporations an even greater immunity than they already have.

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