Billion-Dollar Legal Paydays Hurt Ordinary Americans

One lasting effect of Watergate, rarely remarked upon now, was its impact upon the career choices of young people. Because of Watergate, large numbers of young people concluded that journalism – with its king-killing journalists later to be portrayed by film idols Dustin Hoffman and Robert Redford – was a glamorous profession.

What are today’s headlines teaching young people about prospective professions? Sadly, it may be about the benefits of chasing ambulances rather than headlines.

Recent newspaper headlines that attorneys representing just three states in tobacco litigation will be paid $8.2 billion1 – that’s billion with a “b” – tells young people one thing: the way to become almost unbelievably rich is to become a lawyer. And not just any lawyer, but part of “Big Law” – one of the lawyers who seeks to instigate cases on public policy issues that used to be the province of our Congress and state legislatures, and regulatory agencies in Washington and our state capitals. Issues like tobacco, guns, asbestos and silicon implants.

The harm done by these lawyers is insidious.

* Neutral scientists working to determine if silicon implants pose any health risks tell, for instance, of continuous harassment by lawyers trying silicon cases that drained from them the time and energy that could instead have been used in their work to benefit the public. Researcher Sherrine Gabriel of the Mayo Clinic, who published a major implant safety study in 1994, describes how lawyers suing implant manufacturers demanded “staggering’ amounts of material for their lawsuits, including “hundreds of databases, dozens of file cabinets and the entire medical records of Olmstead County women, whether or not they were in [Gabriel’s] study.”2

* Patients suffering from maladies that can be eased by legal products suffered from the threat of Big Law as well. In 1997, for instance, members of a U.S. House of Representatives committee listened to testimony from a 13-year-old Maryland seventh grader, Rita Bergmann, who described losing her left knee and part of her femur (thigh bone) to bone cancer. Because doctors gave her a polyethylene and titanium knee joint and rod, Bergmann is now about to go hiking with friends and is even studying ballet. But, Bergman testified, in ten years her artificial joint will need to be replaced — and class action lawyers were threatening to put polyethylene joint manufacturers out of business.3

* In the tobacco cases, money that will now go to lawyers could have gone to pay for health services for the poor, to improve educational opportunities for inner city kids, or to fund tax cuts for the poor and middle class. Instead, thanks to a decision by a three-man arbitration panel, in Mississippi, a whopping 35% of the $4.1 billion tobacco firms will give the state is going to lawyers. In Florida, 26% of the $13.2 billion the tobacco companies will pay the citizens of Florida will instead go to lawyers. In Texas, the lawyers will receive 19% of $17.4 billion. In Florida and Texas the states had signed contracts “limiting” the legal fees to only 25% and 15% respectively, but the arbitration panel declined to honor those contracts.4

Advocates of Big Law’s windfall claim that the states wouldn’t have received any money if it weren’t for the work of these selfless, soon-to-be billionaire trial lawyers. Not so. As Lester Brickman, professor of legal ethics at new York’s Benjamin Cardozo School of Law points out,5 had the states choosing to sue tobacco companies simply raised tobacco taxes by 80¢ per pack instead of entering into expensive agreements with lawyers to sue the tobacco industry, the states would have received more money than they ever will by suing. And all the proceeds, save collection costs, could have been spent on services for citizens, or to cut other kinds of taxes.

Despite the fact that dealing with the tobacco issue through legislatures instead of lawsuits raises more money for the public, President Clinton has just instructed the Justice Department to start another round of expensive tobacco suits. Cynics may be forgiven if they note that trial lawyers are among the very largest contributors to President Clinton’s campaigns.

Clearly, for the sake of everyone – taxpayers, the poor and the sick – something needs to be done.

Fortunately, some steps are under contemplation and others are being taken. Alabama Senator Jeff Sessions, a lawyer himself, has suggested a “windfall profit tax” on billion-dollar legal paydays.6 Such a tax makes sense as a means of deterring lawyers from encouraging elected officials – including some to whom the same lawyers have given campaign contributions – to retain these same lawyers at fees that will pay them billions.

Congress and many state legislatures also need to pass comprehensive legal reform. Recently, Congress fortunately passed legal reform to protect from lawsuits the suppliers of raw materials used in medical devices, which means that these devices are less likely to be withdrawn from the U.S. market because their manufacturers fear lawsuits. This legislation will go a long way to protect Americans who need devices like silicon shunts to stay alive, but it won’t protect patients completely. More legislation is needed. Congress and state legislatures should enact a cap on punitive damages, make it harder for plaintiffs to sue the richest person involved in a case instead of the guiltiest, and place limitations on a person’s ability to sue for damages in accidents in which their own intoxication was the main cause. “Loser pays” arrangements should also be enacted. This policy, which works very well in Great Britain as a technique for reducing frivolous court cases, mandates that the losing parties in a lawsuit pay the court expenses of the winner.

The law is a fine and honorable profession. Our system of justice requires that some members of every generation pursue careers in law. But young people should pursue this career because they believe in justice and the rule of law, not because they hope to become billionaires.


 Amy Ridenour is president of The National Center for Public Policy Research. Comments may be sent to [email protected].

Footnotes:1 Samuel Goldreich, “Lawyers in Tobacco Deal Win $8.2 Billion in Fees,” Washington Times, December 12, 1998.

2 John Schwartz, Search for Answers Impeded by ‘Noise,'” Washington Post, December 7, 1998

3 “Polyethylene Keeps Young Woman on Her Toes!,” Legal Briefs newsletter, Issue Three, May 23, 1997, The National Center for Public Policy Research, Washington, D.C.

4 Goldreich.

5 Goldreich.

6 Goldreich.

The National Center for Public Policy Research is a communications and research foundation supportive of a strong national defense and dedicated to providing free market solutions to today’s public policy problems. We believe that the principles of a free market, individual liberty and personal responsibility provide the greatest hope for meeting the challenges facing America in the 21st century.