Sten Gazette

The issue of “Tort Reform” has received a lot of play recently, primarily because it has become a political issue: Republicans are for it, and Democrats are agin it. Republicans are for it on the theory that huge judgements (or the risk of incurring them, or the cost of insuring against them) are crippling US industry, especially where we are competing with foreigners. By “reform” they generally mean applying some sort of limits or “caps” to judgements. Democrats are agin it because torts are the last chance for the “common man” to impose any sort of justice on giant corporations.

Few “civilians” of either political persuasion have the faintest idea what a tort is, or what is wrong with the system– all they see is a proposal to limit damages paid in civil suits, which is a good or bad idea depending on which side of the fence you are sitting on.

The need for tort reform is obvious– it is far too difficult to achieve a reasonable judgement, and far too easy to get a ridiculous one. There is a problem, but fortunately it has a simple solution:

1. Where “punitive” or “exemplary” damages are awarded, pay them to the State, as a fine, rather than to the plaintiff, and make them payable by the defendant, not his insurance company.

2. Where “non-economic” damages are awarded, have them determined by the judge, not the jury.

3. Once a suit is filed, make it illegal to settle it privately without the agreement of a judge, and make the settlement terms public.

3. Limit lawyers’ remuneration to a reasonable fee for service rather than a percentage of the judgement.

These are not mutually exclusive solutions, but any one of them would go a long way toward solving “the problem.”

So what is a tort? Literally, it means “a wrong.” It’s a word from an ancient and obscure language called “Law French,” used by English jurists going back to William the Conqueror.

In practical terms, a tort is a wrong which is not a crime. Even more practically, it is a wrong where action (a lawsuit) is brought by the victim (or “plaintiff”) rather than by a government through “prosecution”

As with any legal term with such an ancient lineage, there are gray areas and they are broadening by the minute. For example, a motor vehicle accident is a tort. One person caused harm to another (or to his property) and the victim is entitled to seek redress through the courts, even if the government stays out of it by failing to issue a ticket to anyone. Murder is a crime, “wrongful death” and “personal injury” are torts. The survivors of a murder victim can sue because they have been “wronged,” even if the government declines to prosecute or fails to convict the perpetrator.

Criminal law is all about punishing criminals, but increasingly the courts are considering “victims rights” and ordering restitution or compensation to victims and their survivors.

In civil law, a jury decides whether a plaintiff has been wronged, and attempts to “put matters right” by awarding damages. There are two types of damages that are typically awarded:

a) compensatory damages, which are intended to make good the plaintiffs loss. These include “economic damages” such as the value of lost property, or lost earnings, and the cost of bringing the suit (including the lawyers fees on both sides), and “non-economic damages” such as “pain and suffering,” and

b) punitive or “exemplary” damages, which are intended to punish the defendant, to ensure that the defendant does not repeat the wrong, and to set an example to others who might commit that particular wrong.

Civil courts are supposed to be in the business of righting wrongs, not punishing criminals. Generally, punitive damages are only awarded for egregiously invidious and wilful actions, not for mere carelessness or negligence. But civil juries often see them as a way of expressing sympathy for a plaintiff, and award ridiculously large punitive damages which are almost inevitably reduced or eliminated by a higher court when the defendant appeals.

By treating punitive damages as a fine, two ends are achieved. First, the defendant will have to pay them as it is illegal for an insurance company to insure someone against fines (read the fine print on any insurance policy you happen to have lying around) or losses resulting from the commission of a crime. Second, plaintiff’s lawyers work for a “contingency fee,” typically a third of the damages awarded to the plaintiff. In other words, if punitive damages are paid to the plaintiff, the plaintiff’s lawyer has a vested interest in convincing the jury that the defendant is a real villain who needs to be punished.

Non-economic damages are another area that needs a bit of scrutiny. Typically, the amount awarded for (e.g.) “pain and suffering” will depend on how sympathetic the jury is to the plaintiff’s plight, which again is often manipulated by the plaintiff’s attorneys, who again have a vested interest.

Simple solution 3 would make it illegal to settle a suit privately without the agreement of a judge, and would make the settlement terms public. An argument for tort reform is that there are too many “frivolous” lawsuits. Once a suit is filed, the dispute or allegation of a wrong has become a public record. If it gets to court, it is something of a gamble on the part of both sides. Which side will win? If the plaintiff wins, what sort of damages will be awarded? Most frivolous suits are filed in the expectation that the defendant will find it less expensive to settle than to go to court, regardless of the outcome. In fact most lawsuits are settled out of court, and in most cases the details are not public– it’s just a game played by lawyers. Once the decision is made to file a suit, the issue has become a matter of public record. If a judge is in a position to allow a suit to be settled or insist on a trial, and if any settlement is public, then frivolous lawsuits will disappear overnight.

Another problem with our tort system has already been touched on– contingency fees, or the practice by which lawyers reserve a percentage (typically a third) of a plaintiff’s awarded damages as their “fee.” When considering any particular tort, the plaintiff’s lawyer knows that in the unlikely event that a suit gets to court, he only needs one big win a year to provide a very comfortable living. The jury is not supposed to have any idea of the financial arrangements between the attorneys and their clients, but in fact many jurors have stated after a trial that the damages were so big because they knew the plaintiff would only get two thirds. This is to say nothing of the situation with “class action” lawsuits, where lawyers can get millions of dollars in “contingency fees” while an individual plaintiff gets next to nothing. Lawyers “earned” a whyole bunch of dollars from a recent class action suit against a video rental company, and the plaintiffs got coupons for future rentals.

We don’t lightly recommend works of fiction in support of our arguments, but the best illustration we’ve seen of the need for tort reform is John Grisham’s “The King of Torts.” You don’t have to be a lawyer to see that something is seriously wrong here.

Our simple solutions are going to be unpalatable only to those who are making (or preserving) fortunes from a system that is out of date, overburdened, and morally bankrupt. Any of them could be done at the stroke of a legislative pen, but probably won’t be any time soon. They are all “cost effective,” and they all support a fair and equitable resolution to the disputes that arise from time to time in any complex society.

In the end, it’s all about Justice, isn’t it?

–SG

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This entry was posted on Saturday, January 22nd, 2005 at 9:33 am and is filed under Issues, Law and the Courts, Simple Solutions. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.