Posted in , on June 19, 2008

Tort Reformers Have a Problem

Tort Reformers have a problem. They can push through laws that limit damages by harping on the “litigation lottery,” but inevitably, people will start to realize that what those laws do is essentially declare “You, an individual citizen, cannot possibly be harmed more then this amount.” This statement doesn’t sit well with most people, since Americans tend to recoil from legislative fiat. So now, the tort reformers have another tact they’re trying: the tort system needs to be reformed because plaintiff’s attorneys are making too much money.

Comes now a Colorado ballot initiative, aimed at severely limiting attorney’s fees. The initiative would have set a schedule for contingency fees, reducing from the standard 30%, down to 20% and then to 10% as the amount of the jury award rises. It also would have set a severe limit on overall contingencies, essentially allowing the percentage to plummet with no bottom in certain circumstances.

Now, admittedly, this is slightly older news, the backers of the initiative agreed to withdraw it as long as the Colorado Trial Lawyers Association withdrew their competing ballot initiatives. But I think three things are worth considering, because I truly believe this is the future of tort reform.

First, as I said, limiting awards only seems like a good idea until the public realizes what it truly means, a flat edict about how much every single life and injury is worth. So now tort reformers are going to try to limit attorney’s fee; but note, only plaintiff’s attorney’s fees. The goal is, I’m sure, to demonize plaintiff’s attorneys further, painting them as rich fat cats leeching money from injured people. Pay no attention to the fact that a large award and contingency indicates that the lawyer is good at his job and that the plaintiff experienced some colossal damages.

Second, note that the initiative says nothing about defense attorneys. Plaintiff’s attorneys work on contingency, because their clients often can’t afford to pay a hourly rate. But defense attorneys can, under this regime, charge as much as they like: $500 an hour, $600 an hour, $1000 an hour.

Which leads us to the third point, the true import of this kind of regulation. It isn’t to restrict unconscionable fees, it is to drive lawyers away from representing injured people. Even laying aside the fundamental unfairness of saying “Defense attorneys can charge what ever they want to defeat a claim, plaintiff’s attorneys can only charge a set amount,” consider this: if you suggested “Automakers are making too much money, they should be limited to charging a set percentage above the cost of production” the howls of outrage would be deafening. You would hear screams about how that was ridiculous, un-American, and that your true goal must be to drive the automakers out of business. And that is what is happening here. By and large, plaintiff”s attorneys are not operating on huge profit margins, and this type of regulation is squarely aimed at convincing current and future plaintiff’s attorneys to decide that it would easier, and certainly more lucrative, to just walk away and do something else. Maybe become a defense attorney, since defense attorneys apparently deserve to charge as much as they like.

Because nothing would make tort reformers happier then for an injured person to limp into an attorney’s office, tell their story of negligence, bad faith, and down right evil behavior, and have the attorney say “I’m sorry, I’d go bankrupt just trying to get you your medical fees.” And for the injured person to drag their broken body to the next lawyer, and hear the same thing. And then again and again until the injured person hobbles home, with empty pockets and a broken body.

Nathan T. Swanson
Summer Intern
JD Candidate, 2009
University of Denver

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