Jewish World Review August 3, 2004 /16 Menachem-Av, 5764

Thomas Sowell

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Consumer Reports

Sharing the lawsuit wealth

http://www.NewsAndOpinion.com | My ears picked up when my wife told me that she was one of the beneficiaries of a class-action lawsuit that brought a settlement of more than $100 million.


"How many millions do you get?" I asked. I could envision our retiring to the Riviera or some such place. Here was our chance to become part of "the rich" we hear denounced during election years.


It turned out that this was a lawsuit in behalf of some stockholders, and her few shares of stock would receive 58 cents each — minus various deductions. It probably wouldn't add up to enough to buy a cup of coffee at Starbucks.


What about the lawyers who won this settlement?


They would receive more than $25 million for their services, which is a lot of cups of coffee, even at Starbucks.


This was an all too typical scenario for a big-bucks class action lawsuit. A few years ago, I was also one of a zillion beneficiaries of a class action lawsuit, but I cannot recall how much money — or rather, how little money — I was entitled to.


I am not sure it would have covered the cost of a first-class stamp to write in and claim my share.


Class action lawsuits are seen by some as a wonderful way for high-minded lawyers to come to the rescue of "the little people" who individually do not have a large enough claim to justify hiring their own attorneys, but who in the aggregate have claims running into the millions.


It is a lovely vision — and, like so many other lovely visions — it bears little resemblance to reality.


Another lovely vision in the legal profession is the "pro bono" lawyer — the lawyer who charges his clients nothing but fights the case "pro bono publico," for the good of the public. At first it sounds like these lawyers are selfless crusaders for us all. But there are pro bono lawyers who make more money than you or I are ever likely to see.


When pro bono lawyers win a case against a local, state or federal government agency, they are often awarded attorney's fees far exceeding what any client would be likely to pay them. It is precisely the "publico" — the taxpayers — who get hit with the hefty bills for pro bono lawyers.


Then there are the so-called "trial lawyers" — who seldom actually go to trial. They bring charges against businesses like Wal-Mart and hope that the threat of bad publicity, with falling sales and declining profits, will cause these businesses to settle out of court to the tune of millions of dollars.


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Trial lawyers also sue doctors and hospitals, whose insurance companies are often afraid to go to trial, for fear that a slick lawyer with junk science and a gullible jury can cost them many millions of dollars.


John Edwards was one such trial lawyer before he became a Senator and now a vice-presidential candidate. His specialty was claiming that brain-damaged babies were the fault of doctors who failed to have these babies delivered by Caesarian section.


With a heart-wrenching human tragedy, a lawyer skilled at playing on the jury's emotions, and a well-insured defendant, it was virtually inevitable that millions of dollars in damages would be awarded. John Edwards is estimated to have collected $60 million.


Since then, a massive factual study has been done, and validated by medical authorities here and in countries as far away as Australia, showing no such correlation between Caesarian operations and the prevention of brain-damage in babies.


Such operations have now increased greatly, protecting doctors from lawsuits but not protecting babies from brain damage. The cost of health care is driven up, not only by huge damage awards, but also by costly medical procedures that are unnecessary for the patients' health but imperative to keep doctors from being ruined financially by big damage awards or skyrocketing insurance costs.


Democrats who loudly proclaim a need to "bring down the cost of health care" haven't the slightest interest in stopping trial lawyers from driving up the cost of health care. Every attempt to penalize those whose charges prove to be false is bitterly opposed by Democrats, who receive financial support from trial lawyers.


That support is not chump change like 58 cents.

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JWR contributor Thomas Sowell, a fellow at the Hoover Institution, is author of several books, including his latest, "Applied Economics: Thinking Beyond Stage One." (Click HERE to purchase. Sales help fund JWR.) To comment please click here.

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