Results matching “lead paint”

CJD's med-mal math - PointOfLaw Columns

By James R. Copland

Back in January, I responded to a Bob Herbert New York Times column that attacked President Bush's medical malpractice liability reform plan. Herbert had relied heavily on the "Center for Justice and Democracy" (CJD), a Naderite shill for the trial bar that counts on its board of advisors such luminaries as Michael Moore and Erin Brockovich. (For more on the CJD, see Ted's dissection of their "Zany Immunity Laws Awards" at Overlawyered and my challenge to their misleading statements about the Tillinghast study here.)

Yesterday, the "paper of record" was at it again -- this time on the news page -- trumpeting the results of a new CJD study (PDF) purporting to show "that doctors have been price-gouged for several years as insurance industry profits have ballooned to unprecedented levels." Can this be right? As Ted has argued here, such claims make little economic sense: new entrants would take advantage of the abnormal profit opportunity and enter the medical malpractice market. Instead, though, what we've seen in recent years is medical malpractice insurers losing money and exiting the market. Something doesn't add up.

A look deeper into the numbers shows that, as usual, CJD is "creatively" using statistics to mislead its readers:

(1) The study mismatches cash flows by linking current premiums payments to current claim payments. The Times notes that the study claims that "the increase in premiums collected by the leading 15 medical malpractice insurance companies was 21 times the increase in the claims they paid" from 2000-2004. And indeed, the bulk of the report focuses on the relationship between current premiums and claims. But such year-to-year comparisons make no sense, since the average claim takes about 4.5 years to resolve; indeed, about 12 percent of claims take at least 8 years to resolve. It is thus hardly surprising that premium growth might outstrip current claim growth, substantially, over a short period of time. (The CJD report does give some attention to the relationship between incurred losses and premiums, the only sensible comparison from an accounting perspective. Indeed, the CJD admits that "insurers and regulators typically use the incurred loss ratio as a measure of profitability." Nevertheless, the study argues that "many malpractice insurers have in the past posted incurred loss estimates that ultimately proved to be overstated." While that is the case, such variations are not only inevitable given the inexact science of predicting liability exposure, but loss reserves must be reconciled in the accounting statements each year -- a point that might not be self-evident to those with no background in accounting. Also, it's worth noting that in its discussion of incurred loss ratios, CJD mysteriously (or not so mysteriously, see point 3 below) shows only 2003-2004 dollar total comparisons, otherwise sticking to company-by-company ratios.)

2. The study is seriously skewed by "survivorship bias" effects. The CJD study inevitably generates a disconnect between premiums paid and claims paid (or losses incurred) because it fails to acknowledge and account for the exit from the market of major medical malpractice insurers, which guarantees a skewed result that shows premiums growing much more quickly than they actually are and claims/losses not growing as quickly as they actually are. How so? Well, in 2001, the then-largest medical malpractice insurer, the St. Paul Companies, exited the market. In 2001 alone, St. Paul had collected about $530 million in premiums (and generated an underwriting loss of $940 million--out of over $3 billion in underwriting losses that year for the industry, see here (PDF), p. 13, exh. 3). In 2002, the physician-owned Pennsylvania insurer PHICO went bankrupt; by the end of last year, PHICO still had over $1 billion in claim liabilities. Then, in 2003, The Farmers Insurance Group exited the malpractice market; Farmers had written $231 million in premiums as recently as 2002. The exit of these and other major insurers from the medical malpractice market not only contradicts the basic theme of the CJD study--that insurance companies are scoring unprecedented profits by "gouging" their customers--but the sheer volume of these companies' premiums and claims completely distorts the numbers presented by CJD, whose study includes only the 15 largest surviving companies. Let's see how:

Table 2 on page 7 of the CJD report shows premiums growing from 2001 to 2004 79 percent, an annual growth rate of 21 percent. But wait--CJD only shows the $3 billion in 2001 premiums collected by these 15 companies, and does not account for the $500 million+ collected by St. Paul, not to mention those collected by PHICO and Farmers, among others. Add back in ~$1 billion, and all of a sudden the annual growth rate in premiums from 2001-04 is 10 percent--well above inflation, but completely in line with health care inflation. Moreover, it's important to remember that St. Paul and Farmers are still paying claims, and PHICO has $1 billion in claim liabilities outstanding, so the growth in claims paid presented by CJD, at 2 percent per annum from 2001-04, grossly distorts the real picture.

It is hardly surprising that companies like Lexington (a subsidiary of AIG) and MedPro (a subsidiary of GE Insurance) have had such rapid growth in premiums written in recent years after the exodus of such major players as St. Paul, PHICO, and Farmers; nor is it surprising that claims paid (which, remember, take about 4.5 years to resolve on average) have not yet caught up with that rapid premium growth.

3. The study hand-picks its time frame to generate its results. CJD's study picks as its beginning year 2000. At first glance, such a selection might seem arbitrary and innocuous, but in 2000, the industry generated a record $1.8 billion in underwriting losses, followed up by a $3 billion loss in 2001 (see here (PDF), p. 13, exh. 3). These losses followed naturally from an unanticipated and unprecedented rise in the expected value of med-mal claims: the median jury verdict in med-mal cases rose from $500,000 in 1997 to $712,000 in 1999 to $1 million in 2000, where it has since remained. Thus, CJD's use of ratios (e.g., page 14, Table 3) is inherently skewed. Is 2004's 51% incurred loss ratio out of line with what the med-mal insurance industry saw in the 1990s or before? We don't know, because CJD only begins with the beginnings of the current crisis in 2000.

That CJD's choice of years is not merely arbitrary is also evidenced by its "surplus analysis" (see pages 17-19). Without explanation, Table 5 on page 18 shows insurers' surpluses only for years 2002-04. Why would CJD omit years 2000 and 2001, which it had included in its earlier analysis? Well, because the med-mal insurers lost a ton of money in those years and had to draw down their surpluses, which for the industry topped out at $4 billion in 1999 and then were drawn down some $600 billion by 2002 (see here, slide 11). The increase in surpluses since that time is, therefore, merely a return to normalcy for the industry (plus, probably, a little extra cushion given the recent crisis and heightened concerns about potential future claims). (I also note that CJD's insistence that any surplus over the level deemed "adequate" by NAIC is "excess" and thus somehow unneeded is poppycock, akin to arguing that any bank which holds reserves above the minimum level prescribed by the Federal Reserve is somehow acting improperly. There's nothing wrong with management being risk averse, particularly in light of recent industry insolvencies; remember too that 9 of the 12 monoline insurance companies in CJD's analysis are mutual companies, thus owned by their (doctor) policyholders, not outside shareholders.)

Similarly, CJD's "note about medical malpractice stock performance" (pages 19-20) shows similarly manipulative date selection. It tracks the 3 publicly held monoline med-mal insurers' stock performance from May 17, 2002 through May 17, 2005, as compared to the Dow Jones (see Table 7, page 20). But why 2002? Because, of course, in May 2002 med-mal stocks would understandably be depressed, since the industry had had enormous losses ($4.8 billion) in the two preceding years. Remember that St. Paul had exited the market in December 2001 and PHICO was declared insolvent in February 2002. Let's go back further--to 1999, before the 2000-01 med-mal insurance crisis--and check things out:

Of the 3 monoline public companies CJD examines, only FPIC has had publicly traded stock since 1999. On May 17, 1999, FPIC's stock closed at $45.19, which means that it subsequently declined 34 percent by May 17, 2005. On May 17, 1999, the DJIA closed at 10,853, which means that it subsequently declined 5 percent by May 17, 2005.

When you don't use CJD's hand-picked dates, the situation for med-mal insurers doesn't look so pretty does it? Have med-mal stocks grown a lot since 2002? Of course, but only because regulators have permitted premium increases to cover the increases in expected liability, which were generated by the rapid rise in verdicts in the late 90s through 2000. Again, the change is only natural, and has not yet even returned to the status quo ante.

4. The study ignores all costs insurance companies incur apart from payments to claiments to create the illusion of profitability. Finally, it deserves mentioning that CJD seems to assume that insurance companies' only costs are incurred losses, i.e., payments made to claimants. But insurance companies also have allocated loss adjustment expenses (e.g., their own defense costs, including attorneys' fees and expert witnesses) and underwriting expenses (the administrative cost of writing policies). It's not as if an insurance company with an incurred loss ratio of 50 or 60 percent is making huge profit margins (though we can be sure that when the industry has an incurred loss ratio of 100 percent--as CJD shows that it did in 2001, see Table 3, page 14--it's losing a lot of money). Unfortunately, the costs of insuring tort liability are very high; there's just tons of administrative expense in the system.

In failing to take account for the market exit of some of the industry's largest players, mismatching premiums and losses, hand-picking dates to skew results, and painting a deceptive picture of the insurance industry's profitability, CJD's research is at best shoddy and at worst intentionally misleading. It's somewhat tiresome to rebut these studies, but as long as mainstream media sources pick them up rather uncritically, I think it's a useful exercise. For more information on medical malpractice and the misuse of statistics by the trial bar and its supporters, see my rebuttal to a similar Public Citizen report released a couple of months back.

CJD's med-mal math - PointOfLaw Forum

Back in January, I responded to a Bob Herbert New York Times column that attacked President Bush's medical malpractice liability reform plan. Herbert had relied heavily on the "Center for Justice and Democracy" (CJD), a Naderite shill for the trial bar that counts on its board of advisors such luminaries as Michael Moore and Erin Brockovich. (For more on the CJD, see Ted's dissection of their "Zany Immunity Laws Awards" at Overlawyered and my challenge to their misleading statements about the Tillinghast study here.)

Yesterday, the "paper of record" was at it again -- this time on the news page -- trumpeting the results of a new CJD study (PDF) purporting to show "that doctors have been price-gouged for several years as insurance industry profits have ballooned to unprecedented levels." Can this be right? As Ted has argued here, such claims make little economic sense: new entrants would take advantage of the abnormal profit opportunity and enter the medical malpractice market. Instead, though, what we've seen in recent years is medical malpractice insurers losing money and exiting the market. Something doesn't add up.

A look deeper into the numbers shows that, as usual, CJD is "creatively" using statistics to mislead its readers:

Maag suit, pt. II: What trial lawyers think - PointOfLaw Forum

Yesterday, I noted (see also back links there) that Gordon Maag, the sore loser in Illinois's Supreme Court race -- the most expensive judicial race in American history -- has filed suit against the Illinois State Chamber of Commerce and the Coalition for Jobs, Growth, and Prosperity for defamation over allegedly false charges in a political flyer, to the sum of $110 million (who knew a state judicial seat paid so well?). Our editor has more on overlawyered, with lots of links.

Although local newspapers have condemned the suit, Madison County lawyer and blogger Evan Schaeffer finds much to like and agrees with Maag attorney Rex Carr that "the charges are so blatantly false that no one could make them without lying or recklessly ignoring the truth." (The legal standard for libel against a public official is "actual malice," i.e., that you published material you knew was false or in reckless disregard of the truth.) Evan goes on to take up each part of the flyer, point by point, and asserts that each part meets this high threshold. (Read the post in its entirety, including all the comments -- our own Ted Frank has some good observations.) To me, Evan's very analysis -- and its sloppiness and one-sidedness -- gives insight into how trial lawyers think (and goes a long way toward showing why there's no way Maag should be able to win his case).

I've looked up each case alluded to in the flyer myself, and I'll address each in turn below.

A brief rejoinder - PointOfLaw Featured Discussion

I think Professor Painter and I have covered most of the salient points. I offer only a brief rejoinder to three of Professor Painter�s arguments in his latest response.

1. Professor Painter identifies as a defect of the �early offer� proposal that alleged responsible parties (�ARPs�) may make �very low [settlement] offers.� The fact is true but not the characterization. The �early offer� proposal has a built-in self-effectuating mechanism to discourage defendants from gaming the system by making a �very low� settlement offer. If an ARP makes a derisorily low settlement offer in order to reduce the fee that the plaintiff lawyer will ultimately receive, this will deprive the ARP of the financial benefits made available by the proposal. Self-interest dictates that when ARPs believe that they will ultimately have to compensate the plaintiff, they will make settlement offers that are calculated to be sufficient (but not more) to deprive the plaintiff�s attorney of the incentive to go forward and continue the litigation through trial if necessary. If the ARP fails to make a sufficient early offer and it is turned down, it loses most of the benefits that the �early offer� proposal offers, including substantial savings on medical care cost �build up� and defense costs. To be sure, the sufficiency incentive already exists in tort litigation where the dominant determinant of whether a plaintiff will accept a settlement offer is usually plaintiff lawyer�s self-interest. What the �early offer� proposal does is move up the timing of such a settlement offer from much later to near the very beginning of the claiming process because of the benefits that an ARP can realize for doing so. The effect is to significantly reduce transaction costs.

2. Professor Painter again cites to statistics on tort lawyers� income which he says belies the level of windfall fees that I indicate are commonplace. I have devoted an entire article to the subject. See Effectively Hourly Rates of Contingency Fee Lawyers: Competing Data And Non-Competitive Fees, 81 Wash. U.L.Q. 653 (2003). In that article, I conclude that the leading data on tort lawyers� earnings ranges from the trivial to the unreliable to the unrepresentative. The Manhattan Institute has published a study, Trial Lawyers, Inc., concluding that tort lawyers� gross $40 billion a year in revenues. A significant percentage of this revenue is in the form of windfall fees as I have explained previously. Effective hourly rates of tort lawyers range from $350 in auto tort claiming to multiples of that in product liability, medical malpractice and other specialty areas. A top echelon of tort lawyers commands effective hourly rates of $5,000 - $10,000.

3. With regard to the political context, it is interesting to note that in survey after survey, the American public, by wide margins, believes that lawyers charge too much. If the political merits of the respective proposals are compared, there is compelling reason to believe that a proposal that seeks to curb unethical price gouging by lawyers would be overwhelming endorsed by the electorate.

A final note. The �early offer� proposal has been widely reported in the media and is discussed in most legal ethics casebooks. Professor Painter�s New American Rule is also worthy of serious consideration and hopefully will also come to gain such attention.

Professor Brickman responds - PointOfLaw Featured Discussion

Professor Painter expresses basic agreement with my core thesis but disagrees on a number of issues. Although our areas of agreement far outweigh our disagreements, in this response, I will focus on two areas of disagreement: contingency fee practices and the relative merits of the �early offer� proposal versus the �New American Rule.�

While Professor Painter agrees that there is considerable price gouging by some lawyers, he believes that this is not true for the �vast majority.� I disagree. Contingent fee lawyers routinely charge standard contingency fees even though there is already a settlement offer on the table at the time they begin representation as well as in other cases without meaningful risk. As I indicated in a recent article:

A frequent abuse in personal injury representation occurs when lawyers routinely charge standard contingency fees of one-third or more even though the insurance company has either already offered to pay policy limits to the injured party or claimant before the lawyer was retained or would have offered to do so, if approached, and, in fact did do so after the claimant retained counsel. For example, a former insurance adjuster in Missouri has stated under oath:
From 1962 until January 1, 2002, I was employed by State Farm Insurance Company . . . as an adjuster. . . [and] supervised other adjusters. Over the years I witnessed many examples of attorneys charging their clients (people with a claim against State Farm) a contingency fee of one-third or more when State Farm had already or would have offered to pay that client all that State Farm was obligated to pay under the policy of insurance in force.
Quoted in: Lester Brickman, Effective Hourly Rates of Contingency-Fee Lawyers: Competing Data and Non-Competitive Fees, 81 Wash. U.L.Q. 653, 660-61 (2003).

Price gouging is thus the norm, not the exception. Price gouging and price fixing largely account for the 1400% inflation-adjusted increase in the effective hourly rates of contingency fee lawyers over the past 40 years. See id. at 707. Corboy & Demetrio�s declination to apply their contingency fee to the pre-representation settlement offer was both ethical and honorable--and extremely rare. Mr. Dowd�s action in taking a percentage of the offer that he did nothing to generate is both commonplace and well within the standards that courts and disciplinary agencies apply to contingencies fees. Therein lies the problem. Professor Painter�s observation that the Dowd case is a referral fee problem and not a contingency fee problem is off the mark. Mr. Dowd�s action in taking a percentage of a settlement that he did little or nothing to generate is replicated every day by hundreds of contingency fee lawyers. Professor Painter is certainly correct that what is different about the Dowd matter is that it has attracted some publicity and may yet attract more. Beyond that, however, it is a run-of-the-mill commonplace occurrence � and an indictment of these contingent fee practices.

Of course, I agree with Professor Painter that the Illinois courts� decisions are at best regrettable. To be sure, Illinois courts have been in the forefront of the movement to depreciate clients� fiducial and co-relative ethical rights in favor of the rights of lawyers. See Lester Brickman, The Continuing Assault On the Citadel of Fiduciary Protection: Ethics 2000�s Revision of Model Rule 1.5, 2003 Ill. L. Rev. 1181 (2003). Even so, the Illinois courts� treatment of Mr. Dowd�s claim is consistent with the practices of other courts in other jurisdictions.

�Early Offer� vs. the �New American Rule�

Professor Painter�s proposal is a commendable effort to deal with contingency fee lawyers� price gouging. It is a variant of a proposal I set forth 15 years ago. See Lester Brickman, Contingent Fees Without Contingencies: Hamlet Without The Prince of Denmark?, 37 UCLA L. Rev. 29, 115 (1989). There, I also attempted to empower clients to bargain with contingency fee lawyers over fees. Over the years, however, I came to realize that the impediments to price competition erected by the bar, including ethical rules designed to preclude price competition, were simply too formidable to overcome without more direct intervention. See Lester Brickman, The Market For Contingent Fee-Financed Tort Litigation: Is It Price Competitive?, 25 Cardozo L. Rev. 65 (2003). A summary version of this article is set forth in 27 Regulation 30 (Summer 2004). In light of that insight, I set out, with others, to devise the �early offer� proposal.

Professor Painter criticizes the proposal because it �interferes with market mechanisms more than is necessary.� In my view, the �early offer� proposal replicates the market bargain that would be concluded if consumers of legal services were able to do what businesses and corporations do when they hire lawyers on a contingent fee basis in commercial litigation. In these instances, corporations bargain out terms that identify the underlying value of the claim, agree to a set fee for the legal effort to assert the claim and agree to pay a percentage of any recovery in excess of the agreed upon underlying value of the claim. This is precisely the market bargain that the �early offer� proposal seeks to extend to consumers of legal services.

Professor Painter also identifies as a defect in the �early offer� proposal that it is only triggered if the defendant makes a settlement offer. The latter is true but is this a defect?

Consider the ethical substructure upon which the proposal is constructed. We both agree that lawyers are charging standard contingency fees in cases devoid of meaningful risk and that this is or should be considering unethical. That is, such conduct violates the ethical rule that fees be limited to �reasonable� amounts. In the contingency fee context, I previously established that risk is the ethical underpinning of the ethical validity of contingency fees and that such fees must be commensurate with the risk being undertaken by the lawyer. See Contingent Fees Without Contingencies, id. A contingent fee includes a risk premium for assuming risk. When lawyers charge standard and substantial contingency fees in cases without meaningful risk, they are charging risk premiums though not assuming risk. That is price gouging. But how then to breath life into the dormant ethical rule that lawyers cannot charge risk premiums if they are not assuming any remotely commensurate risk?

The practical problem this poses is how to measure the existence of risk without creating a bureaucratic structure or imposing new burdens on judges who already shirk their responsibility to apply ethical rules to lawyer�s fees. The �early offer� proposal presents an elegant solution to this conundrum. It identifies as a marker of the absence of risk, the amount, if any, offered by an allegedly responsible party to settle a tort claim, before any substantial value adding efforts have been contributed by the lawyer. Against such amounts offered in settlement, the lawyer may not charge a risk premium.

Thus, the �early offer� proposal depends upon a marketplace assessment of the underlying value of a tort claim by an allegedly responsible party putting its money on the line. That decision, however, is guided by the same invisible hand that �regulates� competitive markets: self-interest. Consider the financial incentives that motivate an allegedly responsible party to make an early offer of settlement.

Allegedly responsible parties will only make early settlement offers if they believe that they will likely be found liable for an injury suffered by the claimant. Currently, because of the time value of money and for other reasons, such parties have financial incentives to delay paying claims until the last possible moment. This raises transaction costs and lowers efficiency.

The �early offer� proposal changes those incentives as follows:

1) It allows allegedly responsible parties to offer settlements in dollars worth 90-95 cents versus the current value of such settlement offers to claimants of 66 2/3 cent dollars. They will allow both lower settlement costs and higher in-pocket receipts for claimants.

2) It allows allegedly responsible parties to save on defense costs which consume a formidable 14% of the total amounts spent by defendants and their insurers for tort claim costs.

3) It allows allegedly responsible parties to avoid medical costs �build-up� which amounts to tens of billions of dollars a year in inflated and fraudulent medical care costs incurred by tort claimants. Under contingency fee �math,� each $1 in medical care costs incurred by a claimant generates $1 in legal fees for the contingent fee lawyer. (For an explanation of this process, see Effective Hourly Rates, id. at 673-74). It is because of contingency fee �math� that someone who suffers a weight-bearing bone break in an automobile accident will incur $14,165, mostly in medical care costs, compared to $5,228 in such costs incurred by someone identically injured, who does not hire a lawyer to press her claim.

To avoid such medical care cost �build up,� and to realize the other savings identified, allegedly responsible parties have an financial incentive to make early settlement offers that are sufficiently substantial to gain acceptance. This will lead to earlier settlements and considerably lowered transaction costs.

To be sure, the �early offer� proposal will prove costly to constituencies that own shares in Litigation, Inc., including: plaintiff lawyers, defense lawyers, doctors, chiropractors, expert witnesses, court reporters and process servers. Indeed, the only group that will benefit is consumers through lowered insurance and product costs.

One final point is Professor Painter�s assertion that political arguments weigh in favor of the �New American Rule� over the �early offer� proposal.

Unlike most tort reform proposals, �early offer� is not susceptible to the sound bite-sized criticism that the proposal takes away victims� rights to seek redress from the courts for their injuries. �Early offer,� instead of playing the �take away� game, is designed to protect consumers of legal services from price gouging by lawyers. It is for this reason that Ralph Nader, in referring to a variant of the �early offer� proposal that was on the California ballot, termed the proposal �diabolical.�

The essence of the �New American Rule� is that consumers of legal services get to choose, at the conclusion of their representation, whether to pay a contingency fee or an hourly rate fee instead. Lawyers will claim that the proposal is a Trojan Horse designed to do away with contingency fees � the poor man�s �key to the court house.�

I will leave it to readers of this discussion to determine which proposal wins the �political� debate.

Featured Discussion underway now! - PointOfLaw Forum

Our Featured Discussion on contingency fee reform, with leading legal ethicists Lester Brickman and Richard Painter, has begun. Professor Brickman has started the discussion with a description of the contingency fee problem and a summary of his "early offer" proposal as a potential solution. For a fuller overview of the participants' positions, see my earlier entry here. Check back here throughout the week to see the conversation unfold.

Contingency fees: format, links down - PointOfLaw Featured Discussion

Our second Featured Discussion brings together two of the nation's leading experts on legal ethics, Lester Brickman and Richard Painter, to discuss potential ways to improve the legal system through reforming the way lawyers charge contingency fees. For a fuller introduction to their views, see my entry on the main forum page.

Also, in contrast to the usual weblog format, new entries in this Featured Discussion are posted at the bottom rather than the top of the page. So scroll down. Thanks!

Table of contents of the discussion: August 17 Brickman; August 18 Painter; August 19 Brickman; August 20 Painter; August 26 Brickman.

New Featured Discussion next week on contingency fee reform! - PointOfLaw Forum

Next week, PointOfLaw.com will have its second Featured Discussion, on the subject of contingency fee reform. Two of the nation's leading experts on legal ethics, Lester Brickman and Richard Painter, will discuss potential ways to improve the legal system through reforming the way lawyers charge contingency fees.

As our editor Walter Olson described in his first book, The Litigation Explosion, the contingency fee lies at the heart of the lawsuit abuse problem in America: "The ethical rules of many professions share a common underlying principle: if temptations are allowed to get out of hand, many will yield. To put it in raw dollar terms, if under system A people can grab a thousand dollars by telling a lie, and under system B they can grab a million by telling the same lie, more people-not all, but more-will tell the lie under system B." (Walter's entire chapter on the contingency fee from The Litigation Explosion is available at PointOfLaw.com here. For a condensed version, see our overview under "Attorneys' Fees and Ethics," here.)

Over the years, various proposals have surfaced to deal with the contingency fee problem. Ten years ago, Professor Brickman co-authored a Manhattan Institute proposal along with Virginia Law School's Jeffrey O'Connell and Michael Horowitz, then with the Manhattan Institute and now with the Hudson Institute (online version of proposal forthcoming). The proposal, in essence, would require contingency fees to be based on "value added" by attorneys, i.e., that above early offers to settle a case by defendants. As our editor noted last week, the proposal has recently attracted support from many highly regarded academics and thinkers.

A few years later, Jim Wootton, then-President of the U.S. Chamber of Commerce's Institute for Legal Reform, offered a different proposal for contingency fee reform, "The New American Rule." His idea, in essence, was to permit attorneys to charge their clients contingency fees only up to a pre-agreed limit (i.e., a fee based on comparable dollars billed per hour, contracted at the outset of the attorney-client relationship), and to force attorneys to disclose prior fees charged to other clients before the agreement was reached. Professor Painter described the attractions of this reform in a Civil Justice Report authored for the Manhattan Institute in 2000.

Thus, each professor we will feature next week has been a strong supporter of contingency fee reform, even though each comes at the problem with a different approach. We look forward to their exchange, and we hope you will join us.

Chicago lead paint case dismissed - PointOfLaw Forum

"A judge has dismissed the City of Chicago's lawsuit seeking hundreds of millions of dollars from lead-based paint manufacturers, saying the city had not proven that the companies created a public nuisance." ("Chicago's lawsuit over lead paint dismissed", AP/Milwaukee Journal Sentinel, Oct. 8). The New York Times recently noticed one complication affecting the diagnosis of an "epidemic" of lead poisoning among inner-city children, namely that a large share of urban kids found to have high lead-blood levels are immigrants from countries where lead exposures are very high (Kirk Johnson, "For a Changing City, New Pieces in a Lead-Poisoning Puzzle", New York Times, Sept. 30 (fee archives); Steven Malanga, "The Lead Paint Scam", New York Post, Jun. 24, 2002, reprinted at Manhattan Institute site (same point); our entry for Oct. 28-29, 2002).

[cross-posted from Overlawyered, where it ran Oct. 13, 2003]

Plaintiffs' lawyers are trying to turn silica into the next asbestos; though government statistics indicate reduced health problems from the critical industrial sand used to make glass, fiberglass, paints, and ceramics, claims are skyrocketing. Insurers are accusing lawyers of bringing claims of silicosis on behalf of people who have already recovered for alleged asbestosis for the same symptoms. (Jonathan Glater, New York Times, Sep. 5). Using a prominent search engine to find silicosis on the web has a strong chance of leading one to one Texas personal injury law firm or another.

(Cross-posted from Overlawyered, where it ran Sept. 13, 2003)

The most recent book from our editor-in-chief, The Rule of Lawyers explores how plaintiffs' lawyers in America have become lawmakers themselves. Typified by the $246 billion tobacco settlement, courtroom assaults have targeted HMOs, gunmakers, lead-paint manufacturers and "factory farms." Each massive class-action suit seeks to invent new law, and in the process to ban or tax or regulate something that elected lawmakers had chosen to leave alone. And each time the new process works as intended, the new litigation elite reaps billions in fees--which the lawyers invest in fresh rounds of suits, as well as political contributions. [ed. 5/1/2004]
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