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Commentary
Contingency fees encourage lawsuit abuse
By Don Wolfe
We've all heard examples of lawsuit abuse. A woman sues a fast-food chain because she spilled coffee on herself while driving. A prison inmate sues the taxpayers because one of his cookies was broken. A lawyer sues computer makers over the size of their monitor screens and then pockets millions while his "clients" get a $6 coupon.
These examples are all real cases. Simply put, it's not justice, it's lawsuit abuse, and it costs you $574 per year. That's what comes out of your pocket when California's legal system is used for the purposes of greed and undeserved financial gain instead of justice. If you factor in the costs for all lawsuits, that figure jumps to an astonishing $1,200 per person per year, or nearly $5,000 per year for a family of four.
It's popularly called the "lawsuit tax" and you pay it every time you go to the doctor, to the grocery store or to your favorite restaurant.
The lawsuit tax is the cost built into the price all consumers pay for goods and services. It's the price manufacturers and retailers incur when they pay for liability insurance, or when they pay out settlements and jury awards.
The larger the award, the more you, the consumer and the taxpayer, are punished.
Those who profit from meritless litigation--namely, personal injury lawyers--often view local governments as deep pockets. Thus cities and counties, as well as the state and the nation, are routinely sued over everything from a crack in the sidewalk to road conditions.
It may not seem a big deal for your city to settle a lawsuit for $1 million, unless you stop to realize that those are taxpayer dollars paying that settlement.
To make matters worse, governments often are faced with the choice of settling a lawsuit quickly, or investing a great deal of time and money in presenting a legal defense. According to a recent survey, 80 percent of all cities and counties say they must settle "winnable cases" in order to save money. Think about that the next time your taxes go up.
The costs of lawsuit abuse aren't limited to dollars, either. Lawsuit abuse can also cost you your job. Whether you work for yourself, for a small business or for a large company, lawsuit abuse takes a serious toll on job creation and retention in California. When a plague of frivolous lawsuits forces a business to shut its doors, people are put out of work, creating an additional strain on the community. It also takes away a source of tax revenue, as well as a valuable entity that contributes to the quality of life in a community. It's a tremendous loss.
Scientific progress is also a victim of lawsuit abuse, as lawsuits and the fear of lawsuits keep important medical products offthe market. For example, in the early 1970s there were 13 U.S.-based companies that conducted research in fertility and contraception. By 1988, there was only one. As another example, Benedictin, a prescription drug to reduce morning sickness, used by 33 million women, was forced off the market after 27 years of use after a barrage of lawsuits.
One more example: the technology exists to place easy-to-use defibrillators, used to restore a normal heart rhythm in the event of cardiac arrest, in shopping malls and other public gathering areas for use in emergencies. Untold lives could be saved, but fear of liability has prevented a placement of a single one.
How did this happen? The biggest turn for the worse in American civil justice took place when the nation's personal-injury lawyers were allowed to work on a commission--the contingency fee. In most contingency-fee arrangements, anywhere from 33 percent to 50 percent of any award goes to the lawyer. If there's no award, then the lawyer gets nothing. That's touted as "the risk."
It might sound like a reasonable arrangement, but there's more to the story. More than 90 percent of cases are settled because it's cheaper to settle than to fight.
Further, when a personal injury lawyer files a lawsuit against you, you can't simply ignore it. By filing that suit the lawyer has the power of the federal government behind him. In the same way, police officers also have the power of the government behind them when they perform their job duties.
What if we were to put the police on a commission system, just like the lawyers? To say we'd live in a police state would be the understatement of the century.
We cannot simply leave it to our elected officials to reform our flawed legal system. The trial lawyers who profit from the status quo have used their enormous wealth to fund the election and reelection campaigns of many elected officials. These legislators need to hear from you, their constituents, in order to make informed decisions on civil justice reform issues. It's up to us, the taxpayers, to tell legislators that bills supported by the trial lawyers are not in the public's best interest, and it's up to us to hold elected leaders accountable for holding the public interest higher than the special interests of trial lawyers.
You can join the fight by supporting Silicon Valley Citizens Against Lawsuit Abuse, a nonprofit, grass-roots education dedicated to reforming a civil justice system that is out of control. More than 6,500 local residents already support SVCALA, and we have room for thousands more. Take a stand now to stop lawsuit abuse.
Don Wolfe is the executive director of Silicon Valley Citizens Against Lawsuit Abuse. He can be reached at 975-0820. and at www.cala.org.
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Saratoga, California Since 1955
