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Wednesday, July 7, 2010

The Rule of Lawyers: How the New Elite Threatens America’s Rule of Law

A Deliciously Written Expose of an Injust Legal System

Know any good lawyer jokes? They’re quite abundant and often tasteless, reflecting the widespread opinion that the legal profession is composed mostly of unethical rogues who say anything and do anything to squeeze money out of people. It certainly is not true that the entire legal profession consists of scoundrels practicing what amounts to legalized extortion, but those lawyers who do, deserve all the opprobrium of the nasty jokes—and far more.

It is that rogue element of the legal profession that draws Walter Olson’s fire in The Rule of Lawyers. Olson, a fellow at the Manhattan Institute, has come to specialize in the predations of tort lawyers. He previously wrote The Litigation Explosion and maintains the website Olson writes here about the most egregious and damaging instances of litigation run amuck and how the plaintiffs’ bar uses its enormous political muscle to prevent any sensible change. There is plenty of material here for dozens of lawyer jokes, but reading the book won’t bring any smiles, except at the author’s sardonic wit.

Consider the shameless attempts (usually successful) at extorting money from companies that had nothing to do with the injuries that the lawyers’ clients claim to have suffered. In the frenzy of asbestos suits, for example, the lawyers went after firms that hadn’t had any connection with the production or sale of the asbestos that might have caused illness in workers. How could that be? Because the defendant companies had acquired firms that had at one time sold products containing asbestos. Olson cites the case of Crown Cork and Seal, which in 1963 had acquired a smaller firm that made, among other things, a line of asbestos insulation. Crown sold off that line three months later, but that was enough exposure to trigger a swarm of suits years later. Crown was nearly bankrupted by hundreds of millions in damages as lawyers went almost to the bottom of the firm’s pockets.

If the trial bar does not care about actual fault, it is equally unconcerned with actual injury. In their eagerness to sue on behalf of some class of “victims,” lawyers often recruit individuals whose injury or illness is speculative or imaginary. A jarring example is a suit against Toshiba for $2.1 billion over a minor malfunction that might occur in one of its laptop computers. No Toshiba owner had complained about it, but no matter. Enough people who had purchased that model were recruited to constitute a class and the case proceeded in a friendly Texas court. Toshiba decided to settle; the deal gave the owners of the allegedly defective computers coupons good for some money off their next ones, and the lawyer who dreamed the suit up walked away with $147 million.

Olson gives us many such examples where the shield of the justice system has been turned into a sword for the expropriation of stockholder wealth. In the hands of the trial lawyers, it often becomes an injustice system.

Truth doesn’t matter any more than fault or injury. Tort lawyers, the author shows, routinely coach witnesses to lie, pay off “expert witnesses” to give the desired testimony, and use “junk science” evidence.

What we have on the whole is a huge transfer of wealth from corporate stockholders to people who, if they were harmed at all, receive far more than the amounts that would cover their damages, and to lawyers who go from being merely rich to superrich with the fees they collect. The lawyers have created a new kind of entrepreneurship, but it doesn’t entail the production of value. Instead, it consumes resources in a great negative-sum game. Besides the unjustified expropriation of stockholder wealth, the lawyers’ system often has unanticipated side effects, such as the unavailability of silicone for medical products following the destruction of Dow Corning and other manufacturers in the great stampede of suits over silicone breast implants.

One reason why bogus tort cases do so well is that lawyers can file them almost anywhere. They always choose sympathetic state courts where the judge is anything but impartial and the jurors want to “send a message” to business with enormous damage awards. Olson explains that the legal system wasn’t supposed to work that way. In suits between parties from different states, the case should be heard in federal court. The lawyers have cleverly found ways around that restriction, however.

Olson suggests several remedies, but he isn’t optimistic that anything will be done to stop the feeding frenzy. That is because the trial lawyers recycle a good portion of their booty into politics, supporting candidates who will protect their operations and often using the dirtiest tactics to oppose any candidate who talks of legal reform.

The Rule of Lawyers is a well-researched and deliciously written expose of a serious national problem.

  • George Leef is the former book review editor of The Freeman. He is director of research at the John W. Pope Center for Higher Education Policy.

  • Walter Olson is a senior fellow at the Cato Institute’s Center for Constitutional Studies.