Saturday, November 17, 2007

Then I got verbose with the professors

Dear Professor ____________,

Our society has multi-faceted systems that perform two important functions. These are, first, providing monetary compensation and protection when members of the society suffer economic or physical harm or damage, and, second, regulating the behavior of the members to try to lessen the harm they may cause one another. These multi-faceted systems employ millions of workers who are paid reasonable wages in the labor market place. The systems, to the extent they operate as commercial enterprises, are subject to marketplace demands of being efficient and cost effective. To the extent the systems are governmental, they are created by democratically elected legislatures and are implemented and carried out in ways that are responsive to the wishes of voters/taxpayers at large, and the voters/taxpayers usually want their government to be cost effective.

Plaintiffs' lawyers are actors within these multi-faceted systems. A major and growing societal problem, however, is that plaintiffs' lawyers operate in a realm of the systems that has allowed them to escape the constraints of either the market place or of taxpayer/voter control over the compensation they get paid. . Motivated by enormous greed and power lust, plaintiffs' lawyers have found ways, in their domain, to be untethered from restraints of efficiency and cost effectiveness and the application of rational cost/benefit principles in carrying out what they do, all in order to increase their compensation. Further they are expanding their domain to usurp the legislative branch of government as regards the setting of economic, social and tax policy, all motivated by greed and power lust. This is becoming increasingly costly, damaging and threatening to our society and its institutions.

The John Edwards candidacy on the Democratic ticket should raise the public's consciousness about the damage plaintiffs' lawyers are doing to the country and the risks they pose.

Further, for a long time the United States legal profession and the legislatures, judges, regulatory agencies and criminal law apparatus have failed in an obligation to advise the body politic adequately about what plaintiffs' lawyers are doing. The Edwards candidacy offers an unprecedented opportunity to try to rectify that failure.

I hope you will employ your stature and expertise as a law school torts law professor to raise the public's consciousness about these matters during the 2004 presidential campaign.


As stated, the plaintiffs' lawyers are actors in society's multi-faceted systems that, first, make transfers of money to members of society when they suffer losses or harms, and that, second, seek to regulate behavior and punish, in the name of deterrence, persons whose actions cause damage to others. An appreciation of the reprehensible and deleterious activity of plaintiffs' lawyers requires considering a number of aspects of society's systems of loss compensation and behavior regulation.

A civil society rightfully seeks and places great importance on mechanisms for compensating its members in situations where they suffer physical and economic harms and losses.

The body politic also rightfully seeks and places great importance on the regulation of the activities of its members to lessen harms the members may do to one another and on achieving a deterrent effect by punishing those whose deliberate or negligent actions cause damage to others.

The variety of mechanisms for providing compensation to persons who experience losses include private insurance, welfare programs, natural disaster relief, charities and the civil law liability system.

Under these systems, no payments are "free," and all the payments to compensate for a person's loss come out of someone's pocket. The range of sources of payments includes private insurance premiums, taxes paid to the government, gifts made to charities, and higher prices for goods and services so businesses can cover the liabilities that are imposed on them, or lower wages for employees of the businesses or reduced profits for their owners.

Further, economic resources are scarce, not all losses can be fully compensated to the extent a caring society would wish, and society is sometimes confronted with an extraordinarily complex (and frequently heart wrenching) task of deciding who should get compensated how much for what losses and from what source of payment. Examples are innumerable. Soldiers are asked to give up their lives for their country or suffer grievous injuries and for whom the government must decide how much tax moneys should be provided in the way of compensation. Yearly tens of thousands of mothers and fathers die of cancer and other diseases, leaving children deprived of needed financial resources and critical elements of a nurturing family environment; and society must find ways to address losses these families suffer. Tens of thousands of people are killed annually on the nation's highways, the extent and cost of disabling injuries can only be guessed at, and society must have ways to provide some remedial compensation. Other losses for which society can well wish to provide compensation result from natural disasters, other accidents, potentially beneficial medical procedures, physical and economic crimes, dishonest commercial dealings, drug, alcohol and gambling addictions, extreme social and educational deprivation, mental illnesses, and environmental pollution. Society cannot come anywhere close to making everyone entirely whole for all their losses, and a caring society will want to be judicious in allocating the scarce resources that are available among all the potentially deserving recipients of compensatory payments.

Private insurance works to protect citizens from losses by means of their paying premiums to insurance companies that, in turn, pay money out to insureds who have the misfortune of suffering an insured loss. There are costs in the administration of private insurance that include many employees involved in claims processing (clerical personnel, claims adjusters, investigators, etc.), not to mention battalions of salesmen trying to persuade customers that insurance protection is wise and the insurance offered by the salesman is better than another product. By reason of the regular operation of the labor marketplace, the employees in the insurance industry receive reasonable and justifiable compensation for their work in the implementation of a private insurance system whose object is to make transfers of money as described.

Private insurance maximizes freedom of choice of individuals to decide what losses they want to insure against, and for how much, and what level of premiums they are willing to pay to be covered. If a person wants to protect his family in the event of his death and thinks $10,000,000 is needed, he can buy that amount of life insurance and pay the $50,000 a year premium it takes to buy that much insurance. If a $10,000,000 death benefit is going to be paid, it has got to come out of someone's pocket, and the insured is paying very substantial premiums into the pool of funds needed to make the payment.

In the realm of government welfare programs (including natural disaster relief), society, through its democratically elected representatives, decides when some people who experience harms or are needy for various reasons should have transferred to them money that comes out of taxes collected from the citizenry at large. Democratically elected legislatures that are accountable to all the voters determine the circumstances and amounts to be paid. The governmental programs they create employ many workers, at modest salaries, to determine who qualifies for welfare and other aid and to make and monitor payments. Because the programs cost taxpayers money, and because people do not like to pay taxes, pressures are present to keep costs down, including costs of administration.

Private charities contribute tens of billions of dollars to helping people who suffer loss or harm and need help. The charities cannot remedy all of society's ills and charities judiciously allocate their funds among a myriad of worthy causes.

Society's two parallel systems of the criminal law system and the governmental regulatory system mete out penalties of jail sentences and fines to try to deter citizens from doing things that cause damage to other members of society. The governmental regulatory system includes forcing companies to pay for things like environmental clean up or back pay to employees where there has been unlawful discrimination in the workplace. This regulation can involve substantial amounts of money, and companies, which are trying to operate profitable businesses for their stockholders and employees, will resist making the payments.

In these two parallel systems, there are employed hundreds of thousands of police and other law enforcement agents, lawyers, prosecutors, investigators, scientists, researchers, accountants, legislators, judges and other administrative and clerical personnel. These workers first write the criminal laws and governmental regulations that intimately affect both personal freedoms and trillions of dollars of economic commerce. Ongoing policy debate transpires among democratically elected legislative bodies, government regulators, the regulated parties, and affected citizens as to what is cost effective in terms of the costs involved to achieve various levels of safety or protection in the environment, in consumer products, and in the workplace. There are those who advocate that very high levels of costs should be paid in order to achieve very small incremental improvements in the level of safety or protection, say, against the presence of cancer causing agents in a pesticide (e.g., one part per one hundred million is not acceptable and it must be one part per billion). Creative ideas get proposed, such as allowing rights to pollute the air to be bought and sold in order to achieve the best cost/benefit results, and some people are appalled by such a notion. Many consumers argue that the regulators are too lax, and industry frequently thinks the regulators are too strict.

These employees also carry out the wide range of activities needed to enforce the law and regulations, including investigating whether violations may have occurred. conducting tribunals to make legal determinations as to whether violations have in fact occurred, and determining and administering sanctions.

The armies of workers who toil in these arenas, under the economic laws of supply and demand, do so for reasonable wages. Tops might be $175,000 a year for a senior government lawyer.

When it comes to regulating the activities of society's members and meting out, in the name of deterrence, monetary fines and jail sentences as punishments, society thinks that, in addition to the judge being a neutral party, it would be wrong for the regulators or criminal prosecutors to be paid according to how much in fines they collect or how much jail time they get people sentenced for. Also, regulatory fines do not go into private pockets but rather into the government's coffers and are available for carrying out its regulatory activities.


Let us now consider the role plaintiffs' lawyers play in these systems in a particular context, say that of automobile accidents.

Somewhere in the range of fifty thousand people a year are killed; the extent of non-fatal injuries and economic losses growing out of car accidents can only be guessed at. For discussion purposes, put annual aggregate losses at $150 billion (which has a semblance of rationality if the value of a human life is put at $1,000,000 as an approximation of the amount an average person would earn over twenty or twenty five years, which would put the loss of life component of the total loss in the range of $50 billion).

This $150 billion annual amount of losses from car accidents alone is a significant nut to crack for society's mechanisms for making transfers of money and punishing people to deter undesired behavior. A large part of the loss will be covered under private life, medical and property insurance (paid for out of insurance premiums paid by all insureds). Many billions of dollars of the total loss likely goes without any compensation.

On the criminal law and regulatory fronts, the police and the courts try to reduce the amount of drunk driving that goes on in the country, and the National Highway Traffic Safety Administration spends substantial amounts budgeted to it by Congress in carrying out extensive regulatory activities to try to improve car and highway safety.

Then come the plaintiffs' lawyers -- the ones who get a judge and jury to extract $100,000,000 from an automobile company regarding, for example, an accident involving a vehicle whose fuel tanks arguably could have been mounted in an overall safer way (but maybe not, the safety of the totality of the engineering involved being a bit complex to evaluate intelligently), plus possibly a drunk driver plaintiff who was the most to blame for the accident. For his work, the trial lawyer gets to keep, say, $33,000,000, at an effective rate of compensation of, say, $15,000 per hour of work.

That $33,000,000 eventually comes out of higher prices for cars or lower wages for auto industry employees or lower returns to pension funds owning stock in the company's stock. People who do not like paying taxes for welfare programs should also object if they are being nicked by higher car prices or lower wages or reduced stock returns in their 401(k) retirement plan, in order for plaintiffs' lawyers to be compensated at the rate of $15,000 per hour.

Looked at another way, $33 million could pay for a lot of services of legislators, government lawyers, investigators, judges, and other regulatory bureaucrats, working for reasonable compensation, who are engaged in the serious business of designing and administering the criminal law system and the governmental regulatory system that endeavors to get persons (including automobile manufacturers) not to do things (including building unsafe cars) that damage other members of society.

The key question here is whether the $33,000,000 is reasonable compensation for the services performed by the plaintiffs' lawyers, either on the basis that it is determined in the regular operation of a labor market place (as results in reasonable wages for the other millions of workers in the arena) or under the constraints of being responsive to taxpayer and voter control of the compensation paid to public officials (as is the case with legislators and elected executive branch officers). The answer would seem to be clearly, no, the compensation to plaintiffs' lawyers is not reasonable (the way everyone else's compensation is reasonable) and is outrageously excessive.

The plaintiffs' lawyers will reply that it is all a free market economy, and, if entertainers and sports stars can command stratospheric levels of compensation under free and open competition of public performers, then, by the same free market principles, the plaintiffs' lawyers deserve whatever they can obtain by way of what they do in the legal system, it being open to all lawyers to compete there and bid down legal fees if legal fees are too high.

There is a telling difference. People who, by the millions, shell out $50 or $100 of their hard earned money (or their parents' hard earned money) for a ticket to a basketball game or a rock concert do so because of the pleasure they derive from attendance, and, in terms of alternative uses of their money, they choose to buy the ticket as opposed to use for another purpose. That being the case, one is able (perhaps reluctantly) to accept the ungodly amounts received by sports and rock stars who provide the desired pleasurable experience better than anyone else.

The plaintiffs' lawyers, on the other hand, operate in the legal system where the pay they receive is decided by judges and juries who are not spending their own money, who do not think in terms of alternative use for the money, and who act as if the money is not coming out of anyone's pocket. This mentality results in mindless verdicts, and the plaintiff, who stands to have bestowed on him stupendous fortune growing out of his misfortune, is not going to quibble about the prospect of $33,000,000 out of $100,000,000 going to the trial lawyer, the guy who makes it all happen.

The plaintiffs' lawyers, in recent years, have significantly ratcheted up the outrageous compensation they receive by usurping the functions of the legislative branch and by bringing within their purview entire fields of economic, social and tax policy. This allows them to be able to apply their legal fee percentage to monetary amounts that are in the tens of billions and hundreds of billions of dollar range. The most reprehensible example of this to date is the national tobacco settlements entered into in the late 1990's. Society, through its political, legislative and legal processes, and subject to constitutional limitations, is entitled to decide, and should decide, as a matter of economic, social and tax policy, the amounts, if any, under all circumstances considered, that should be extracted from the tobacco industry (and the tobacco industry's stockholders, customers and employees), and also the use of the money that is extracted.

If the democratically elected legislative branch made these policy decisions (as are properly in its domain to do), and if the executive branch agencies implemented the legislative program, all concerned would be paid only their reasonable salaries for doing this job on behalf of the citizens.

But, no, not the plaintiffs' lawyers. They shanghai national tobacco policy into their purview, implement national tobacco policy decisions, and turn around and charge the public billions and billions of dollars for their services. This is a larceny against the public of the highest order.


Once it has been discerned and determined that plaintiffs' lawyers have untethered their compensation from the constraints of the marketplace and also from the constraints of taxpayer/voter control, and that they are basically unaccountable for what they do, many very deleterious consequences flow as a result of human nature.

First, the plaintiffs' lawyers seek to expand their domain regardless of whether society's interest is well or ill served by the expansion. As in the tobacco settlements that are a usurpation of the legislative function, the plaintiffs' lawyers give no consideration as to whether the expansion is wrongful or unconstitutional under the three branches of government that are established by the constitution and whether there is a violation of the principle of separation of powers by reason of the plaintiffs' lawyers having usurped the legislative function. For the plaintiffs' lawyers, the expansion is motivated solely by the tens of billions of dollars of increased compensation to them that will result from the expansion.

Further, being unaccountable and with their eyes focused solely on the huge legal fees they will receive, the plaintiffs' lawyers do not particularly care what the economic, social and policy decisions are that get implemented in matters they bring within their purview. Their only goal is to get policy decisions implemented that give rise to transfers and payments to which the plaintiffs' lawyers can attach their percentage legal fees.

Second, the plaintiffs' lawyers are uninterested in the application of reasonable cost/benefit principles to the work they carry out if that application would be an impediment to a legal recovery and lessen the amount of compensation they can receive. Just about everywhere one turns in the world, one finds human beings trying to utilize cost/benefit principles to make decisions and carry out action. The plaintiffs' lawyers will do everything they can to exclude cost/benefit principles if they are an impediment to winning a lawsuit and giving them their percentage legal fee. This has resulted in thousands of completely absurd, ridiculous and outrageous verdicts and legal settlements.

In the realm of punitive damages, with the compensation of the plaintiffs' lawyers being based on the amount of punitive damages that get imposed, plaintiffs' lawyers have a financial incentive to seek higher rather than lower punitive damages (unlike criminal prosecutors and regulators) and this incentive severely risks plaintiffs' lawyers being improperly influenced in the amount of punitive damages they seek (when judged against the standards our society applies to prosecutors and regulators who are walled off from such a financial incentive).

With the potential of hundreds of millions of dollars of legal fees being gained for themselves, the plaintiffs' lawyers have no problem in maximizing the use of "junk science" to prevail. The silicon breast implant case is one of the better examples of this.

In short, with so much in legal fees to be gained, plaintiffs' lawyers, like any other human being, can be and are blinded by stupendous greed in going after their monumental legal fees, all to the great detriment of societal interests of democracy, cost effectiveness and fairness.


A couple of years ago, a civil jury in Hale County, Alabama, awarded $500,000,000 in punitive damages to three plaintiffs who were lied to by Whirlpool Corporation to the effect that the plaintiffs would have to make payments for about three years for a satellite dish, which would total roughly $1000, where in fact the contract called for payments for about 4-1/2 years totaling about $1600, or, in other words the plaintiffs were to be cheated out of $600 from what they were told.

There should be no doubt that the job of the state legislature in Alabama (or any other state) and of the state's regulatory agencies and its criminal law system includes or should include endeavoring to protect their citizens from Whirlpool lying to customers and cheating them out of $600.

One conclusion that one might arrive at is that, if it is needed for the state of Alabama to resort to a $500,000,000 punitive damage verdict against Whirlpool in order to protect Alabama citizens, there has been an abominable failure of the Alabama legislature, regulatory agencies and criminal law apparatus in doing their job of regulating Whirlpool's activities and imposing fines and jail sentences to deter Whirlpool from doing what it did. A $500,000,000 punitive damages verdict is ludicrous and preposterous overkill, which, if applied in a commensurate way to every other big and small dishonest commercial dealing would result in the bankruptcy of the entirety

Before resorting to that kind of preposterous overkill, it might behoove the citizens of Alabama first to make a wholesale eviction from office of the incumbent legislature, regulatory agencies, and criminal law apparatus, and replace them with a new set of legislators, regulators, prosecutors and judges to see if the new group could do better in dealing with Whirlpool so that a $500,0000,000 punitive damage verdict can be foregone. Further, if new officials are not successful and it is concluded that such a penalty is ultimately needed, hopefully the new officials would have the sense to arrange for the penalty to be paid into the state's coffers and be available to support regulatory efforts generally for the benefit all Alabama citizens, instead of allowing the penalty to be poured into the pockets of three private plaintiffs and their attorneys.

The possibility needs to be recognized, however, that there has not been such an egregious job failure on the part of the legislature, regulators and criminal law system as is suggested above. Conceivably it is a sham argument that $500,000,000 punitive damage verdicts are needed as a result of failure by the legislature, regulatory agencies and criminal law apparatus in regulating the activities of society's members and meting out punishments for deterrent purposes. The argument may be a pretense to distract from something else that is going on with $500,000,000 punitive damage verdicts. The truth of the matter may be that the civil liability system has been shanghaied by a bunch of greedy lawyers who are running it for the purpose of enriching themselves, and $500,000,000 punitive damage verdicts are reflective only of how successful they have been in achieving their objective, and not at all reflective of a need society has as a result of any egregious and irremediable failure of the regulatory agencies and criminal law apparatus.

The problem is that, if this alternative explanation of things is correct, and if the first suggested job failure is not so egregious as suggested, then the legislators, regulators, prosecutors, and judges are guilty of a second failure that would be equally deserving of condemnation. This second failure would be the failure to stand up and defend themselves, and say the truth of the matter, to wit, that the regulatory regime and criminal law apparatus are not so deficient, the argument that they are irremediably deficient to such a degree that $500,000,000 punitive damage verdicts are needed is a sham and subterfuge, a bunch of greedy lawyers has hijacked the civil law liability system for their own enrichment, and that system needs to be reclaimed by and for the people in order for it to serve properly society's legitimate goals of judiciously providing compensation for losses that citizens suffer and punishing in a reasonable way intentional or negligent harming of others.

A further possibility here is that Alabama's legislators, regulators, prosecutors and judges do not understand sufficiently what is black and white as described above and may not know of the pretense argument being made by the lawyers who have hijacked the civil liability system. If there is a lack of understanding, a partial excuse would exist for those officials failing to stand up in their own defense and failing to tell the public the truth about what is really going on.

Such a partial excuse would, however, point to perhaps an even worse failing, which would be that of the legal profession as a whole. That profession is best trained to know and understand what is black and white as describe above, to examine whether significant deficiencies in the regulatory and criminal law systems exist, to evaluate whether any inadequacies are so substantial and irremediable that alternative means must be found to regulate and to mete out punishments, to decide whether $500,000,000 punitive damage verdicts are needed, and to reach conclusions about whether the civil liability system has been hijacked by greedy lawyers who are running it to enrich themselves and to the detriment of serving society's purposes. Surely the legal profession's obligations to society at large would include informing the legislatures, regulators, prosecutors and judges about such matters. This would be particularly so if those officials lack an adequate understanding of things, and thus are not able to state their own defense against the hijacking lawyers who would assert that $500,000,000 punitive damage verdicts are needed, and further are not able to find the way to seize back the hijacked civil liability system from those lawyers so that the system can serve the citizens the way it should. For the legal profession not to fulfill such an obligation would seem the worst failing of all those considered here.


Society has a serious interest in its mechanisms of providing compensation and monetary protection when members of the society experience economic or bodily injury and loss and also has a serious interest in its criminal and regulatory law apparatus for regulating behavior to lessen harm and injury. The systems are broad based and multi-faceted and are constrained to operate in reasonable, democratic, judicious and economically efficient and cost effective ways. The workers in the systems toil for reasonable wages that are established in the regular operation of the labor marketplace or as the elected servants of the taxpayers who can remove them from office if the servants try to pay themselves too much money.

That is, all except for the plaintiffs' lawyers operating in their domain. Plaintiffs' lawyers operate in a realm of the systems that has allowed them to escape the constraints of either the market place or of taxpayer/voter control over the compensation they get paid. . Motivated by enormous greed and power lust, plaintiffs' lawyers have found ways, in their domain, to be untethered from restraints of efficiency and cost effectiveness and the application of rational cost/benefit principles in carrying out what they do, all in order to increase the amount of percentage legal fees they receive. Further plaintiffs' lawyers are expanding their domain to usurp the legislative branch of government as regards the setting of economic, social and tax policy, all motivated by greed and power lust. This is becoming increasingly costly, damaging and threatening to our society and its institutions.

The most serious threat and risk of the plaintiff's lawyers is their usurpation of the legislative branch function, as exemplified by the tobacco settlements, where the plaintiffs' lawyers scoop within their purview that which in substance is economic, social, and tax legislation and policy, all in order that there get set up stupendous amounts of monetary transfers to which the plaintiffs lawyers percentage legal fees can get attached. Legislators adopt and implement multi-billion dollar budgets and affect tens of billions of dollars of economic commerce through the laws they adopt, but the legislators do not get paid based on a percentage of those billions of dollars. Plaintiffs' lawyers implement things like a national tobacco policy through the national tobacco settlements, and claim more than ten billion dollars of legal fees as a percentage of more than one hundred billion dollars that their settlements determine are to be transferred among parties. This is monumental larceny of the taxpayers and puts the nation at risk of having significant economic, social and tax policy being determined and implemented by plaintiffs' lawyers who are not accountable to anyone for what they do and are blinded in what they do by their greed.

The legal profession, legislatures, judges, regulatory bodies and the criminal law apparatus have failed collectively to inform the body politic about what the plaintiffs' lawyers are perpetrating in the United States.

The John Edwards candidacy is an unprecedented opportunity to raise the public's consciousness about the harm that the plaintiffs' lawyers are doing to our society and to rectify the failures of the other mentioned parties to inform the body politic about this immense harm and risk.

I hope you will employ your stature and expertise as a law school torts law professor to raise the public's consciousness about these matters during the 2004 presidential campaign.

Thank you.

Sincerely yours,

No comments: