Trial Lawyers on Trial


They say they represent "the little guy."
But who pockets those colossal fees?


 At his office in Pensacola, Fla., attorney Fredric G. Levin discusses campaign contributions with disarming candor. "It is nothing for this law firm to pay $200,000, $300,000 a year toward political campaigns," he says. "And that was before the tobacco money." Levin smiles, then begins to laugh. Buoyed by the tens of billions in fees they expect to receive from the autumn 1998 settlement between the states and the tobacco industry, trial lawyers such as Levin will no doubt be spending more in the future on the political process than they already are. And that’s plenty.

During California’s 1998 gubernatorial race, for example, trial lawyers funneled $3.4 million to victorious Democrat Gray Davis and $200,000 to Dan Lungren, his Republican opponent. Between July 1 and October 24, 1998, the Texas Democratic Party received $4.3 million from all sources - but $2.4 million, or 55 percent, came from the plaintiffs’ bar.

No other profession funnels anywhere near as much into politics today. In 1997 and 1998, according to the Washington, D.C.-based Center for Responsive Politics, all lawyers and law firms combined contributed $59.7 million to both parties and their candidates. For Democrats especially, trial lawyers have become a vital funding source - "right up there with labor and Hollywood," says University of Virginia political science professor Larry Sabato.

These vast sums - and the influence they are intended to create - come mainly from a small subsection of the legal profession, whose practitioners handle personal-injury, product-liability and medical-malpractice cases. Unlike other attorneys who bill clients at an hourly rate, trial lawyers usually charge a contingency fee. If they lose your case, they get nothing. But if they win, they’ll take as much as 50 percent of your award.

Since litigation is expensive, contingency fees are justified as a way to give plaintiffs of modest means a way to sue wealthier defendants. "We try to level the civil-justice playing field," says Richard H. Middleton, Jr., president of the Association of Trial Lawyers of America.

But there’s a catch. Contingency fees, along with other devices such as the class action (which enables trial lawyers to sue on behalf of victims who may not even be aware litigation is proceeding in their name), encourage far more lawsuits, for much higher damages, than in other countries. All of this litigation is costly - more than $150 billion a year and rising, according to Daniel J. Popeo, chairman of the Washington Legal Foundation.

Trial lawyers say the system works just fine, and work hard to keep it in place. Critics - and not just corporate defendants - say it’s out of control. Let’s take a look.

Junk Science. Until a decade or so ago, more than 1.5 million American women had received silicone-gel breast implants - and while studies indicated that complications could arise from surgery or leaking implants, there was little evidence that they caused anything worse. Enter Dr. Sidney Wolfe, president of the Public Citizen Health Research Group. Concerned about ruptures, systemic disease and a study showing that small amounts of the gel inserted under the skins of rats had caused cancer, he urged the FDA to ban breast implants.

The agency investigated and found insufficient evidence to support the cancer charge. Then in December 1990, CBS aired a segment of "Face to Face With Connie Chung," in which two physicians claimed a link between implants and disease. Both were involved in pending litigation as paid experts for the plaintiffs’ bar, though that wasn’t mentioned.

As lawsuits multiplied rapidly, then-FDA Commissioner David Kessler announced a "moratorium" on the sale or use of these implants. Three months later he would backtrack on the moratorium, making implants available in certain instances with informed consent. And in 1995 he told Congress that there was reasonable assurance that the implants did not cause a significant increase in the risk of connective-tissue disease. By that time, the trial lawyers’ offensive had forced Dow Corning, the largest implant manufacturer, into bankruptcy.

Last June the National Academy of Sciences’ Institute of Medicine released the results of a two-year study into the possible link between implants and connective-tissue diseases. Its conclusion matched that of at least 17 other probes: there was no link. Nevertheless breast-implant litigation had resulted in settlements totaling $7 billion - with trial lawyers pocketing approximately one-third.

"There has never been anything but junk science to support the claims," writes attorney and National Journal analyst Stuart Taylor, Jr. Nevertheless, neither the trial lawyers nor the plaintiffs have to give the money back.

No Problem. Critics have long complained that the litigation stirred up by trial lawyers drives good products off the market and discourages further innovation. Contraception is exhibit No. 1. A generation ago at least eight major companies were researching new birth-control methods. According to Fordham law professor Marc Arkin, that’s down to two. Product-liability worries are one big reason.

Lawsuits drove the Copper-7 IUD, a safe and effective contraceptive device, off the market several years ago. The same thing is happening today.

When Wyeth-Ayerst Laboratories, a division of American Home Products Corp., brought Norplant onto the market in 1991, it had been tested for 20 years and proved to be safe, effective and easy to use. The device - six tiny capsules inserted by a doctor under the skin of a woman’s upper arm - inhibits pregnancy for up to five years.

With a failure rate of less than one percent, the method is more reliable than the birth-control pill, and within a month after its introduction Norplant was jumping off pharmacists’ shelves. Encouraged, Wyeth-Ayerst began working on a smaller, two-capsule version that would be easier to remove.

Then in May 1994, in another CBS segment with Connie Chung, women were quoted saying that they’d experienced pain, numbness and scarring when their capsules were removed. Almost overnight, Norplant sales began to decline; lawyers advertised in newspapers, on billboards, radio and TV, and then filed suit in their new clients’ names.

The FDA examined Norplant again and found "no basis for questioning [its] safety and effectiveness." But that didn’t stop the litigation train.

Initially, the trial lawyers charged that the tiny amount of silicone contained in the device triggered auto-immune disease. Lack of evidence caused that theory to collapse.

No problem. Lawyers found a new culprit - side effects (vaginal bleeding, headaches, nausea) that they said Wyeth-Ayerst had not issued sufficient warnings about.

In defense, the company said these side effects, when experienced, were temporary, no different from those caused by other hormonal contraceptives, and that adequate warnings were part of the package inserts. Still, by last spring Wyeth-Ayerst faced 3732 lawsuits encompassing the claims of 39,580 plaintiffs.

Most striking was that many of the plaintiffs were still using Norplant themselves. How come? Trial lawyers, like Houston’s Arturo González, claim their clients have limited access to clinics where implants can be removed. That’s true, but other factors also come into play. "A lot of them will tell you they don’t want to go back to the pill," says González, who has shepherded the cases of 3700 plaintiffs himself. "Others will say, ‘Maybe there’s something here. Let’s go sign up.’ That happens everywhere."

With an avalanche of cases scheduled for trial, Wyeth-Ayerst agreed to settle for about $50 million last August. And what of a new two-capsule Norplant that won FDA approval in 1996? Because of the litigation, Wyeth-Ayerst has thus far declined to make it available.

Changing the Rules. In 1996 Maryland Attorney General J. Joseph Curran (D.) reached agreement with trial lawyer Peter Angelos, the so-called King of Torts. Angelos would sue the tobacco industry to recover Medicaid funds that Maryland had spent on smokers’ illnesses. His fee: 25 percent of all he could collect.

A year later a judge threw a monkey wrench into Angelos’s suit. Maryland law was clear. Angelos would have to prove damages on a case-by-case basis.

Angelos knew he couldn’t win that way. Curran agreed. So they convinced Maryland lawmakers to change the rules. Angelos would now be able to cite health statistics to demonstrate tobacco’s toll instead of having to show cause-and-effect evidence of each smoker’s ills. Once that happened, the industry threw in the towel and agreed to a $4.43-billion settlement. Angelos will walk away with up to $1.1 billion, the final amount to be set by arbitration.

It’s not the first time that settled rules of law have been changed. For years the tobacco companies defended themselves with a long-standing common-law doctrine called assumption of risk. Smokers knew that what they were doing endangered their health; therefore, the tobacco companies weren’t responsible for what happened to them. Juries agreed.

Then Fredric Levin discovered a Florida law that said the state could recover costs from anyone who harmed a Medicaid recipient. He approached Democratic State Sen. W. D. Childers (now a Republican) who, in April 1994, during the legislative session’s final hours, introduced Levin’s amendment to remove such defenses as assumption of risk and to allow the use of statistics to prove causation of damages, calling it a measure to crack down on Medicaid fraud. With few legislators paying attention, it passed both houses and was signed into law. Its defenses stripped away, the industry has agreed to a $13.3-billion settlement that will net the lawyers a whopping $3.4 billion in fees. Levin’s firm will collect more than $300 million.

Smoke Screen. States that are seeking to recover Medicaid fees for smokers from tobacco companies have used trial lawyers to handle their cases. This has led to disputes over breathtaking fees.

Kansas Attorney General Carla J. Stovall (R.), for example, selected two out-of-state firms to represent Kansas in its tobacco suit. Then she picked her former law firm, Topeka’s Entz & Chanay, to be local counsel. Entz & Chanay was to receive $196 million in fees, the final amount to be set by arbitration.

"How many hours did you put in on this?" Reader’s Digest asked partner Stuart Entz.

"We have no way of knowing," Entz replied. His contract contains this caveat:

"Counsel are not required to maintain time records."

"That’s bizarre," says Kansas State Rep. Phill Kline. "As an attorney I have never been in a circumstance where we didn’t maintain records." Reader’s Digest tried to ask Stovall about this, but she declined repeated requests for an interview.

In January 1998, Texas Attorney General Dan Morales (D.) announced that his trial-lawyer team - "junkyard dogs," he called them - had reached a $17.3-billion settlement with the tobacco industry, which led to a stupendous $3.3-billion fee awarded by federal arbitrators. Houston attorney Marc Murr, a Morales friend and fund-raiser, demanded $520 million. The other trial-lawyer firms said Murr had played no visible role in the case. Secretly Murr and Morales selected the three members of a state arbitration panel to weigh the merits of Murr’s claim, then appeared before the panel as its only witnesses. The panel awarded Murr $260 million - or $130,000 for every hour he claimed to have worked on the case.

Last May a new Texas attorney general, John Cornyn (R.), filed papers in federal court charging that Morales had created bogus contracts for Murr. The trial lawyer’s fee award, he said, had been "procured by fraud." One day later Murr withdrew his request for the $260 million. The FBI entered the case, and a federal grand jury has convened. Morales has denied any wrongdoing, and Murr claims that he worked behind the scenes as a strategist.

Meanwhile, trial lawyers are looking for new worlds to conquer. Gun manufacturers are a prime target, and the lawsuits against them are mounting. Next up: legal assaults against lead-paint and latex-glove makers. There’s even talk of holding car makers liable for high-speed crashes, because they don’t install "speed governors" in their vehicles.

The prospects for reform are limited. While the Supreme Court has begun to eliminate junk science from federal cases, most state courtrooms are still wide open. And many state laws to cap damage awards have been struck down.

Most promising is a "loser pay" rule, which is the norm in most other countries. Whoever loses a lawsuit must pay the other side’s legal fees. "No other single reform would apply the brakes to runaway litigation more effectively," says author Walter Olson, a senior fellow at the Manhattan Institute for Policy Research and the editor of "," a popular Internet site. "A loser-pay rule will encourage plaintiffs and their lawyers to think twice before filing frivolous lawsuits. It will also encourage defendants to settle cases that have real merit."

Meanwhile, measures to cap contributions to candidates for statewide judicial offices make sense. And surely judges should not accept campaign contributions from lawyers with cases pending before them. (Under Ohio law, for example, that’s okay.)

Trial lawyers already exercise significant influence among legislators and governors today; many observers believe the courts are not immune. "They’re going to use their billions to get a kind of pliant, plaintiff- oriented bench," predicts John Langbein, a law professor at Yale. "They already have their yachts and condos. The danger is enormous that they’re going to buy the bench so they can have more."


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