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Introduction
During the last
several decades, the plaintiffs bar, aided by alliances with
state attorneys general and the proliferation of mass tort
litigation, has transformed itself from the once scorned
step-child of the legal profession into the legal equivalent of
Cinderella.
They have taken on industry after industry, securing
huge, and at times, crushing awards for their clients and
exorbitant contingent fees for themselves. As a group, they has
become one of the richest and most powerful lobbies in the
United States, working with lightning speed and precision to
ensure the enactment of favorable legislation and election or
selection of judges and legislators sympathetic to their
positions, and the utter defeat of any perceived threats to
their livelihood.
Fast Facts
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The trial lawyers’ industry is sometimes referred to as
Trial Lawyers, Inc., a hypothetical corporation, "raking in
almost
$40 billion in revenues annually – 50% more than Microsoft
or Intel and double that of Coca-Cola."
(KRC:
from
Manhattan Institute,
Trial Lawyers, Inc., p. 2)
-
"Trial Lawyers,
Inc.’s revenues have risen to a staggering $46 billion."
(Manhattan
Institute,
Trial Lawyers, Inc. website, August 2005. Click to see
Citation 1)
-
"Over the past
three years for which data are available, the litigation
industry’s revenues grew by 11.1 percent annually, as
compared with 3.9 percent growth in gross domestic product,
2.22 percent growth in inflation, and a 5.6 percent annual
decline in the stock market."
(Manhattan
Institute,
Trial Lawyers, Inc. website, August 2005. Click to see
Citation 2)
-
"The lawsuit industry’s lack of transparency prevents us from
making an accurate profit estimate, but if its margins are
as high as we suspect, Trial Lawyers, Inc. might well be the
most profitable business in the world."
(KRC:
Manhattan Institute,
Trial Lawyers, Inc., p. 2)
-
"The point here is not that these are very rich people. It is
that their law firms are even richer—with the depth and
agility to field an array of well paid experts, legal
strategists, private detectives, jury consultants, and top
public relations people. Against such outfits, even the
largest corporations can be left feeling intimidated."
(KRC:
Hantler, "Seven Myths ...", p. 23)
-
"This plutocracy of 60,000 plaintiffs’ attorneys is so
powerful it can overwhelm the broader interests of industry,
workers, municipalities, schools, charities, and individual
citizens."
(KRC:
Hantler, "Seven Myths ...", p.23)
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"The most cherished myth of the trial lawyers is that they
are so many Robin Hoods struggling against the armed might
of the powerful Sheriff. Examined closely, the trial bar
looks less like a tender
shepherd boy with a slingshot and more like a band of
Goliaths."
(KRC:
Hantler, "Seven Myths ...", p. 23)
What’s in It for Them: Contingent Fees
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"In theory, contingent fees work well: They enable a person
who has been harmed to hire an attorney who will only be
paid if the person receives a settlement or jury award. In
practice, however, contingent fees create perverse
incentives for plaintiffs’ lawyers to find or trump-up cases
where there has been little or no real harm just so they can
get millions or more in legal fees."
(Steven B. Hantler, "The Urgent Need for Contingent Fee
Reform", Jul 27, 2005, unpublished article)
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“Contingency fees yield 3-10 times the effective hourly rate
that plaintiff lawyers would charge if they did charge on an
hourly rate basis. From that perspective, contingency fees
are clothed in stealth sheathing. They enable contingency
fee lawyers to charge effective hourly rates of thousands of
dollars an hour without disclosure or detection – even in
cases where from the outset it is apparent that a
substantial settlement offer is going to be made after the
expenditure of only a handful of hours and in the absence of
any meaningful risk of nonrecovery.” (Lester
Brickman, Comments to the ABA Center for Professional
Responsibility on the Proposal to amend Rule 1.5 of the
Model Rules of Professional Conduct, March 23, 2000.)
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Most personal injury lawyers refuse to accept payment on any
terms other than a contingency basis, even when it is clear
from the start that their clients’ success is almost certain
and very little time and effort on their part will be
required.
(from Walter K.
Olson, The
Litigation Explosion, St. Martin's Press, 2003)
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"[T]he kingpins of the lawsuit industry have pursued mass
tort and class action suits and turned litigation into a
multi-billion dollar business. More and more, the industry
resembles a racket designed to do little more than advance
the incomes and interests of its members – everyone else be
damned. In most class action cases, Trial Lawyers, Inc.
rakes in huge fees while individual plaintiffs walk away
with pennies. In medical malpractice cases these days, Trial
Lawyers, Inc. often takes between 40% and 70% of the award
for its fees and cost. In tobacco litigation, lawyers who
never went to trial and never filed an original brief have
claimed hundreds of millions of dollars in fees." (KRC:
Manhattan Institute,
Trial Lawyers, Inc., p. 5)
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The
Plaintiffs Bar Targets AutoNation
The prospect of striking it rich, often with very
little effort, by filing a frivolous lawsuit just to gain a
multi-million dollar fee motivates some plaintiffs’ attorneys to
assault one company after another.
Consider the recent lawsuit against AutoNation, a car
dealership company based in
Florida.
A plaintiffs’ firm found that AutoNation’s dealers had failed
to sign one of the forms required in car sales transactions in
Florida and filed suit
for $100 million alleging technical disclosure violations.
 In this 90-second
video, AutoNation General Counsel Jonathan Ferrando
tells the story.
Not one of the 28,000 customers had complained and not one
customer suffered any real harm.
However, because of the potential $100 million exposure for
the technical violation, AutoNation was forced to settle by paying
$1 million to the plaintiff’s firm and token payments to the
customers.
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