Thursday, November 22, 2007

Brief fling with state attorney generals

I contend that the behavior regulating component of the civil liability system has become very expansive into the public domain in the way there is widespread consequence for the public generally growing out of private litigation and that public policy and regulatory rules are in effect being determined by the litigation.

Insofar as this is happening (appropriately or inappropriately), I contrast the plaintiffs' lawyers with governmental prosecutors and regulators. The latter are paid on a salary basis and do not have a financial interest that biases them in how they carry out their behavior regulating activities in the pubic, and further they have some accountability to the public. Plaintiffs' lawyers do not have any such accountability, and the way they are compensated biases them to achieve results that maximize their compensation regardless of the merits of the public policy and the regulatory effect that are a consequence of such results.

Based on the foregoing, it occurred to me that I would solicit state attorney generals to sign a "position" letter for submission to The Wall Street Journal. I did the following email to state attorney generals:

Dear Attorney General ______________,

I have contacted The Wall Street Journal to inquire whether it would be interested in publishing a letter that is signed by state attorneys general (or their staff lawyers) that sets forth their perspective about plaintiffs' lawyers and tort reform.

It seems that plaintiffs' lawyers function in a public role like that of government regulators, prosecutors, state attorneys general and legislators but that their fee driven motivation has had baneful effects on the legal system and the economy. These include great disrespect for the law by a public that thinks plaintiffs' lawyers egregiously exploit the legal system to enrich with little regard for achieving reasonable objectives of behavior regulation and loss compensation.

I do not believe that state attorney general offices are fee driven, and I believe they endeavor to achieve reasonable objectives of behavior regulation and loss compensation. I further believe that the work of state attorney general offices gets undermined and is tainted by the dim view that the public has about plaintiffs' lawyers and their exploitation of the legal system. As a result, I think it would behoove state attorney general offices to offer to the public a just critique of plaintiffs' lawyers.

To that end I submit to you for your consideration a suggestion for a letter to The Wall Street Journal. If you would have an interest in participating in this project and signing a letter, along with other attorneys general (or staff lawyers), for publication in The Wall Street Journal, please read the draft letter appended below and advise me of any suggestions or comments you have.

I look forward to hearing from you.

Thank you.

Sincerely yours,

[my name, address and telephone number]

[suggestion for letter to The Wall Street Journal]

Dear Sir:

The undersigned are state attorney generals and staff lawyers who wish to offer their perspective about plaintiffs' lawyers and tort reform.

Our state attorney general offices focus a great deal on the use of the law to regulate human behavior to try to reduce the harms to people that are caused by the wrongful acts of others. We also work a lot to achieve loss compensation for victims of these wrongful acts.

President Bush's tort reform proposals continue to focus attention on plaintiffs' lawyers whose work is similar to ours, and we offer the following observations from our particular perspective:

1. In the separation of powers under the American form of constitutional government, a democratically elected legislative branch enacts laws that regulate business and other activities and that impose taxes. The executive branch, headed by a democratically elected President or other chief executive officer, implements (executes) the mandated regulation and taxation, with some delegation of authority by the legislative branch to the executive branch to write "legislative" regulations (i.e., regulations where the law is lacking in specific detail and the legislative branch has instructed the executive branch to develop details, subject to the power of the legislature to change subsequently any "legislative" regulation that the democratically elected legislature disagrees with). The judicial branch applies and interprets those laws and "legislative" regulations in particular cases where parties have a dispute. It appears to us that plaintiffs' lawyers, working within the judicial domain, have effectuated a usurpation of legislative and regulatory functions of the other two branches of government. This seems to be an undemocratic violation of separation of powers that has had some baneful effects for the legal system and the economy.

2. It seems to us that plaintiffs' lawyers act in a public role similar to that of governmental regulators, criminal prosecutors, state attorneys general and legislators. This, we believe, should raise questions of oversight and accountability. Governmental regulators, prosecutors, state attorneys general and legislators are subject to public oversight, either by voters/taxpayers directly or by their democratically elected legislatures and executive branches of government. This is proper in our democracy, and we think part of the current tort reform controversy is that plaintiffs' lawyers are not subject to adequate public oversight.

3. We believe the area of compensation calls for special scrutiny. . The compensation received by governmental regulators, prosecutors, state attorneys general and legislators is reasonable for the work done, and in particular it is not geared to the dollar amount of economic activity that their public work affects (i.e., legislators and regulators don't get paid millions of dollars because they put into effect large governmental budgets, levy commensurate amounts of taxes, and write and enforce laws and regulations that affect billions of dollars of economic activity and that impose and allocate large economic costs on and among businesses, consumers and other parties.) Plaintiffs' lawyers receive huge amounts of compensation that is geared to the amounts of economic activity that their work affects and economic costs that they get shifted around among various parties, and the larger the scope of their lawsuits and the greater the dollar amount of the costs they can get shifted around, the greater their compensation.

4. In evaluating plaintiffs' lawyers' compensation, we think due attention needs to be paid to human nature and baneful effects that can result from overpowering inducements that can be provided by large amounts of compensation. Our country has seen enough of that phenomenon in recent years. Corporate executives standing to gain fortunes from stock options committed massive accounting frauds that contributed to maintaining and increasing lofty stock price levels that would enormously benefit them under their stock options and other compensation arrangements. Accountants have been charged with faulty accounting work arising from the conflict of having lucrative consulting work with the audit client. Stock analysts have been inappropriately influenced in their stock reports by reason of getting compensation based on investment banking business their employer gets from companies the analyst covers. Brokerage firms corrupted the IPO market by allocating stock in hidden exchanges for inflated commissions on unrelated transactions. Mutual funds and insurance brokers have acted in wrongful disregard of conflicts of interest in order to increase their revenues and profits.

5. The plaintiffs' lawyers' compensation creates very powerful incentives for them to seek: (i) expansion of harms or detriments for which a payment should be made, (ii) higher rather than lower amounts that should be paid, (iii) expansion of liability where there is no fault, (iv) disregard of distinctions between intentionally culpable, negligently culpable and faultless defendants (and other parties who bear the cost), (v) disregard of culpability of plaintiffs in their own injuries and harms, (vi) disregard of rational cost/benefit principles, (vii) the invocation of junk science, and (viii) expansion of the usurpation by them and the courts of the powers of the legislative branch and the executive branch regulatory apparatus. The crux of the current controversy is that plaintiffs' lawyers have been very successful in accomplishing the foregoing objectives, which stupendously benefits themselves financially, but which has harmed the legal system and the economy. Our attorney general offices are particularly sensitive to the baneful effect of widespread disrespect for the law as an instrument for achieving reasonable goals of behavior regulation and just compensation of harmed parties. We are not fee driven the way plaintiffs' lawyers are, and we think our work suffers from the plaintiffs' lawyers, and that more public oversight is needed over them and their compensation.

6. We are cognizant of the argument by plaintiffs' lawyers that they are needed because the legislative branch of government, and its regulatory apparatus, are not functioning properly, because of undue control by "special interest" money or because of the regulatory agency/industry "revolving door" syndrome. If a deficient legislative branch and regulatory apparatus is concluded to be a contributing cause to the courts and plaintiffs' lawyers acting in the judicial domain to usurp the legislative and regulatory function, we can only strenuously urge that the legislatures act to reform themselves and the regulatory apparatus.

In conclusion, we think the public and the lawmakers are ill served by categorizations of the debate as "business against the little guy" or "patients against rich doctors." We consider it unfortunate that the most vocal protagonists, to wit, the plaintiffs' lawyers on one side, and business and doctors on the other side, have a predominant financial interest only on one side, whereas the reality for the citizenry is that they have more equal financial interests on both sides. Citizens may themselves be plaintiffs seeking fair and appropriate legal recovery on the one side; on the other side they ultimately, in small amounts, and hundreds and thousands of times over, and in a fashion similar to being taxed, are the source of payment of court judgments, legal settlements and plaintiffs' attorneys fees. We believe that the controversy over plaintiffs' lawyers needs to be approached from the perspective of the public that has financial interests on both sides of the debate, and the proper resolution of the debate should seek to balance those interests.


__________________, [position], Office of Attorney General of State of ______
__________________, [position], Office of Attorney General of State of ______
__________________, [position], Office of Attorney General of State of ______
__________________, [position], Office of Attorney General of State of ______

[end of suggestion for letter to The Wall Street Journal]

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