The cost of crooked lawyers

Recent wave of legal malfeasance affects us all, even reform-minded Texas

Former Secretary of State Henry Kissinger once wryly observed that “10 percent of the politicians go around giving the other 90 percent a bad name.”

These days, the same could be said for the growing ranks of disgraced personal injury trial lawyers who over just the last year have been fined, convicted and imprisoned for fraud, bribery, perjury and other corruptions of our system of civil justice.

Earlier this month, Richard “Dickie” Scruggs, of Mississippi, the so-called “Tort King,” who made his name in asbestos and tobacco litigation, was sentenced to five years after pleading guilty to a criminal conspiracy charge that included a scheme to bribe a judge in a case over legal fees stemming from Hurricane Katrina.

Consider just a few high-profile examples:

• Last September, Houston trial lawyer John O’Quinn was required to pay $41.4 million when an independent arbitration panel ruled he improperly charged expenses to his former breast implant litigation clients.
• A criminal trial is currently under way in federal court in Kentucky in which three personal injury trial lawyers face allegations they misappropriated about $65 million of a $200 million settlement on behalf of plaintiffs who claimed they were injured by the diet drug Fen-Phen.
• Perhaps most notably, prominent class-action attorney Melvyn Weiss of New York was recently sentenced to 30 months in a federal prison for his role in concealing illegal kickbacks to plaintiffs. Along the way, Weiss obstructed justice and committed perjury, bribery and fraud while collecting about $250 million in fees from about 250 cases using paid plaintiffs, which is illegal.
Weiss will follow his former partner, Bill Lerach, who is currently imprisoned for a multimillion dollar kickback scheme. Weiss’ firm recently paid a $75 million fine to avoid a criminal trial. As The New York Times observed, “the guilty pleas and the firm’s agreement represent a stunning change of fortune not just for the convicted lawyers, but also for a certain legal culture of braggadocio and excess — always in the name of justice for the investors that they represented. The image of Mr. Lerach brandishing shredded documents from Enron, taking a stand against corporate corruption, has been eclipsed by sordid revelations of these lawyers’ conspiracies to fool the courts and by confessions of criminal misconduct.”

The sad fact is there are too many personal injury trial lawyers whose sole motivation is not justice or their clients’ interests, but naked greed. As others have noted, they view lawsuits as “products to be manufactured, like widgets on an assembly line.”

Unless you have been a party to one of the lawsuits in question, you might think that this wave of legal malfeasance is a series of isolated, unrelated incidents that do not affect you. If so, you would be wrong.

For example, law firms dedicated just to representing asbestos plaintiffs have bankrupted 70 American companies, displacing tens of thousands of American workers.

A 2006 study by the Pacific Research Institute found that excessive tort costs resulting from meritless lawsuits exceeded $198 billion annually. The lawsuit industry generates more revenue each year than Microsoft or Intel and twice as much as Coca-Cola.

We have made dramatic strides in Texas reforming our system of civil justice in ways that have limited meritless lawsuits and improved the competitive environment for business and industry.

A report by the nationally recognized economist Ray Perryman, released earlier this year, found that annual impact of lawsuit reforms implemented by the Texas Legislature since 1995 includes gains of $112.5 billion in spending each year, $2.6 billion in annual tax revenue and 499,000 permanent, new jobs in our state.

These are important gains, but as the recent scandals among personal injury trial lawyers tell us, our efforts to preserve, protect and defend our system of civil justice from manipulation must continue.

Famed attorney Clarence Darrow once said: “The trouble with law is lawyers.”

I will not paint with so broad a brush, but simply note that the price we pay for crooked lawyers and their rotten deeds goes beyond jobs lost, companies ruined and dreams lost. Worst of all, the collective impact of their devious actions serves to undermine a common belief in justice and respect for the law.

And that affects us all.

Weekley, a Houston businessman, is chairman of the advocacy group Texans for Lawsuit Reform.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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