Frivolous suits and neckties

One of the wonderful things about living on Saipan as a businessperson is that neckties are not considered necessary attire for businessmen. In fact, the only people you will see on the island wearing the silly pieces of cloth around their necks on a typical workday are LDS missionaries and lawyers. One group seeks to save you from h*ll and the other will drag you through it.

The U.S. has more lawyers per capita than any country on earth. Over 800,000 have graduated from law school. However, according to the Bureau of Labor Statistics there are only 512,070 practicing attorneys in the U.S. earning an average wage of $107,250. That’s about $55 billion in revenue that these legal eagles pocket, and too much of the moola is extorted from frivolous lawsuits that grant humongous settlements. If you look in the Yellow Pages of any metropolitan city in the U.S., you will find full-page ads of law firms trying to lure “victims” to their practice. Some even boast about the multimillion-dollar payments they have garnered for their clients (and themselves).

Loony litigation has spawned the Stella Awards, named in honor of Stella Liebeck, who won a court settlement after she spilled a hot cup of McDonald’s coffee on herself. Publisher Randy Cassingham offers what he calls the True Stella Awards, which are fully researched, true court cases. For example, a student sued the University of Idaho after he fell from a third-floor dorm window. Although he was mooning other students when the window gave way, it was argued that the University failed to provide a safe environment for students or to warn them of the dangers inherent to upper-story windows.

Our overly-litigious society costs everyone more money through a trickle down to consumers in the form of higher prices for insurance, medical and drug costs, taxes (some used to underwrite the judicial system), and through the increased price of goods and services of companies that had to pay exorbitant legal fees from a lawsuit.

Ira and Linda Distenfield have retaliated against the outlandish fees charged by attorneys by starting We The People. Neither of them have legal backgrounds, and none of their 114 stores in 30 states offers legal advice. What they do offer is low-cost preparation of legal documents for civil procedures that are not under dispute. Last year We The People processed 6,300 incorporations, 35,000 divorces, and 16,000 bankruptcies. The company has been popular with everyone except for—guess who? Right…lawyers. They have filed complaints in 13 states, and so far the company has settled most of those lawsuits and has remained in every state they have set up shop. In fact, with the help of former New York City Mayor Rudolph Guiliani and his firm, Giuliani Partners, the company plans to expand nationally.

Fortunately, many lawyers are conscientious individuals who practice law in an ethical manner. Lawyers are consistently rated among the top five professions for prestige; however, a few bad apples are putting a black eye on the profession as a whole. A 2004 Gallup survey asked people which jobs they thought were high on the scale of honesty and ethics. At the top were nurses, with 79 percent of the respondents believing they were honest and ethical. At the bottom were car salespeople, and third from the bottom were lawyers, with only 18 percent of the people believing attorneys act in an honest and ethical manner.

A number of states have enacted measures to reform their civil law system because of frivolous lawsuits and runaway jury awards. Tort reform is aimed at putting a cap on punitive damage awards, and limiting “shopping” by lawyers who want to find the most sympathetic judge and court to hear their case.

Tort reform has both its advocates and adversaries; however, last week the advocates were handed a winning hand when the U.S. Senate approved the most sweeping tort reform measure in a decade. The Class Action Fairness Act passed on a 72-26 vote. The bill has two key provisions: 1) to grab those “neckties” and rein in the multimillion-dollar settlements that lawyers get in such cases, and 2) to direct many large class-action lawsuits from state courts into federal courts. This will help prevent lawyers from “shopping” their cases around the country to find judges and juries that have a reputation for handing out large settlements for their plaintiffs.

Advocates say the bill will limit lawsuit abuse, which causes bankruptcies and job losses, by curbing excessive judgments and ensuring that damage awards benefit plaintiffs more than the lawyers. Adversaries claim that it will make corporations less accountable and it is an erosion of “people’s” legal rights.

Now if the Senate would only outlaw those silly neckties, it would give everyone a reason to cheer.

(Rik is a business instructor at NMC and Janel is the owner of Positively Outrageous Results. They can be contacted at: biz_results@yahoo.com)