What Lawyers Do

TortsProfBlog has a link to a WSJ article by Dan Slater about whether the U.S. should keep to the “American” rule in litigation mandating that each side pays its own costs or if we should switch to a loser-pays rule such as exists in the U.K.

The reaction of the plaintiffs’ bar is that adopting the “English” rule will prevent low-income people from having access to the courts. On the other side of the fence, advocates of the rule suggest that insurance could be purchased that would end up paying the fees at the end of the day. Plaintiffs’ attorney Mark Lanier, who gained notoriety for winning the first Vioxx trial, said that low-income people would not purchase the insurance, no matter how low the cost.

What is assumed in the article is that insurance companies would not create any problems for policyholders, but those of us who litigate against them regularly know that they would routinely deny coverage and refuse to pay the assessed fees.

Plus, not enough attention is paid to the fact that insurance companies would be the gatekeepers to lawsuits – they could disclaim if they believed a lawsuit would fail. Difficult scenarios would undoubtedly follow. For instance, what if there is definite negligence on the part of the would-be defendant and also comparative negligence by the plaintiff? What would the insurer do then?

Well, you can guess …. in effect, insurers would decide whether or not low-income plaintiffs could file suit to obtain compensation for their injuries. And they would be making profits all the while.

Motivating the entire debate is the frenzy about the supposed glut of frivolous lawsuits that have been filed by plaintiffs in the courts. But frivolous lawsuits almost always get dismissed, and lawyers who file them know they risk having to pay the attorneys’ fees of opposing counsel.

I challenge the reader to ask who has more of a motivation to either file or pursue a frivolous claim – the contingency fee lawyer (which are plaintiffs’ attorneys) who only gets paid if the case settles or wins at trial, or the insurance company lawyer who makes money billing by the hour and thus has the incentive to churn files.