WASHINGTON - Love ’em or loathe ’em, class-action lawyers wield enormous — and controversial — influence in business and politics. Critics charge that class-action lawyers often practice a kind of legal extortion, shaking down large and small businesses with threats of litigation and, more often than not, winning generous settlements without even going to trial. According to critics, plaintiffs suing for damages often receive precious little, but their lawyers walk away with multimillion dollar payouts. Companies are put under severe stress, often cutting jobs or even going bankrupt.

Defenders of the class action bar are equally passionate. They say it is an instrument of social justice that holds powerful corporations to account, shines a light on wrongdoing, and brings a measure of recompense to the little guy.

These conflicting views are likely to get a thorough airing in the coming months. In Los Angeles, the influential class-action law firm Milberg Weiss is slated to go on trial in a sweeping fraud and conspiracy scheme; the firm denies the charges. And in Kentucky, The New York Times reported last week, three class-action lawyers are under investigation by a federal grand jury for cheating clients out of millions of dollars in settlements; the lawyers deny the charges.

But what, precisely, is a class-action lawsuit? How are suits brought, and how are they resolved?

Heard about controversies over the asbestos industry, tobacco companies, or the manufacturers of silicone breast implants? All are class-action cases. Class-action lawsuits can be brought over claims of defective products or health hazards, allegations of misconduct or discrimination, or even a decline in a company's share price.

A class-action lawsuit is a civil case brought by a group of people (the class) and their lawyers against a common target. That target is usually a business or industry sector. In the public imagination, big business is often perceived as bad, even evil. Think of Julia Roberts in “Erin Brockovich,” John Travolta in “A Civil Action,” Russell Crowe in “The Insider.” All these movies were based in part on real-life class action cases.

Thus, class action plays to a powerful cultural stereotype — the sinister business executive. That stereotype can exert a significant influence on juries, giving class-action lawyers an edge in the courtroom.

The theory of “class” action, as opposed to individual lawsuits, is that the plaintiffs achieve strength in numbers. Each member of the class believes that the target has caused him or her a wrong — physical harm, emotional suffering, financial loss.

In the real-life Erin Brockovich case, for example, residents of Hinkley, Calif., sued Pacific Gas & Electric, alleging that a toxin in the groundwater came from company and caused serious illnesses. PG&E settled for $333 million.

By coming together as a group, the legal theory goes, the plaintiff class levels the playing field with powerful corporations. In turn, the defendant company gets to deal with one lawsuit instead of hundreds or thousands, and the courts handle one case instead of many.

Nice theory. But how does it play out in the real world?

Class-action cases can be divided into three overlapping types: mass torts, traditional class-action cases and securities suits. Mass torts are the Big Ugly of class action — often involving widespread charges of wrongdoing based on the genuine suffering of the few and, critics charge, turned into the legal version of all-out war by avaricious lawyers.

“Tort” simply means a civil, as opposed to a criminal, wrong. The terms “tort” and “class action” are often used interchangeably. “Tort lawyer” and “trial lawyer” are often used to describe the attorneys who bring class-action suits.

The most spectacular mass torts cut across wide swaths of time and space and can involve millions of plaintiffs. There is no real center in mass torts, no single defining set of “fact patterns.” Asbestos is a good example. Decades ago, the wide use of asbestos in American industries exposed some workers to serious health risks. There’s no doubt that people suffer and die from asbestos-linked mesothelioma, a form of cancer. Statistics suggest that about 4,000 new cases of mesothelioma appear in the U.S. each year.

But the rate of mesothelioma-related claims filed by class-action lawyers dwarfs that figure. According to a 2005 study by the nonpartisan Rand Corp., more than 730,000 claims of health injury due to asbestos have been filed. Even the lawyer-friendly American Bar Association has expressed concern, noting in a recent memo that the claims have “created an enormous backlog in court dockets that delays awards for severely impaired victims of asbestos exposure.”

The reason for the litigation explosion? Critics blame unscrupulous lawyers who search for any connection to asbestos and then go “forum shopping” for jurisdictions noted for huge payouts. Mississippi is a favored forum for tort lawyers. In one Mississippi asbestos case, a jury awarded $25 million each to six former railroad workers, even though none showed any signs of asbestos-related illness.

Class-action lawyers operate on “contingency fees.” If they lose, they get little or nothing. If they win, they win big, usually pocketing about 30 percent of the money collected.

In the Kentucky case now under federal investigation, lawyers were entitled to about 33 percent — $65 million — of the settlement with American Home Products over allegations that the company’s diet drug, phen-fen, caused heart damage. Instead, according to The New York Times report, lawyers pocketed about $126 million.

Victory for class-action lawyers can translate into catastrophe for the losers. Total costs for companies hit by asbestos litigation now top $70 billion, according to the Rand study, with nearly $20 billion going to trial lawyers. Seventy-three companies have filed for bankruptcy.

And that’s just asbestos. According to a study released Tuesday by the Pacific Research Institute, a conservative think tank, total annual “static” costs for class action litigation — fees, settlements, expenses and the like — are $328 billion.

“Lawsuit abuse causes real economic harm,” says Larry Akey, a spokesman for the U.S. Chamber’s Institute of Legal Reform. Facing serious mass litigation, “companies hold back on development and innovation, and divert resources that might go to higher wages or better benefits.”

Examiner