The Litigation Explosion: What Happened When America Unleashed the Lawsuit

National Review, June 10, 1991 by James H. Andrews

I WISH I'd had this book in law school. Like my fellow students in first-year civil procedure, I spent agonizing hours trying to extract the "rules" from cases on jurisdiction, conflict of laws, discovery, etc. that had utterly irreconcilable outcomes. Now, 15 years too late, comes Walter Olson (a non-lawyer, natch) to pierce the fog. Listen up, law students: Forget about legal "principles." The answer to any exam question on long-arm statutes, forum shopping, choice of law, or fishing expeditions" is: "Whatever facilitates verdicts for plaintiffs and inflates contingency fees for plaintiffs' attorneys."

Of course, Mr. Olson-a senior fellow at the Manhattan Institute-has a bigger purpose than furnishing Cliff Notes for law students. He's out to expose the intellectual and procedural rot in what he aptly calls America's "litigation industry." As it has been said in other contexts, the scandal isn't what lawyers do illegally, it's what they do legally.

The backdrop for Olson's jeremiad is familiar. We all know that America's courts are gridlocked (in 1989 alone a hundred million new suits were filed in state courts). And we've seen reports about the litigation explosion's indirect costs in terms of raised insurance premiums, loss of product innovations owing to liability fears, and doctors who, on their lawyers' advice, either desist from certain practices (like delivering babies) or, conversely, pile on costly and often unnecessary tests and procedures. What's new in this book is the clearest explanation yet of why the legal system went haywire. "Americans" "litigiousness" is often implied to be a vestige of our frontier individualism, the brawling, stick-up-for-your-rights spirit that made the country great. Nonsense, says Olson. He attributes the litigation explosion to "entrepreneurial" lawyers who have turned America's courts into cash

COWS.

Of course, they first had to get rid of a few inconvenient professional rules that discouraged lawsuits except by the implacably aggrieved, such as strictures against attorney advertising, solicitation ("ambulance chasing"), and bankrolling plaintiffs (champerty). Once upon a time the Lawyer's Prayer was: "Stir up great strife amongst Thy people, Lord, lest Thy servant perish." In our more secular age, however, lawyers have devised manifold ways to stir up great strife on their own initiative-such as the all-comers class-action lawsuit. They become, in Olson's phrase, cultivators of discontent.

Next the legal entrepreneurs had to vitiate long-honored procedural and evidentiary rules designed to limit the scope of lawsuits, to give defendants fair notice of the charges against them, and to protect, insofar as possible, the privacy and reputations of litigants. Such rules, because they made litigation somewhat more civilized, impeded the kind of legal warfare that achieves huge damage awards or settlements-the sorts of awards and settlements that make contingency-fee lawyers very, very wealthy.

Now, plaintiffs' lawyers couldn't change all these ancient rules and proscriptions on their own. They required the collaboration of judges and the intellectual firepower of law-school professors to pull off their lucrative revolution. Why were so many judges and legal scholars willing to aid and abet the profit-seeking revolutionaries, whether as "useful idiots" or eager fellow travelers? The reasons, Olson suggests, are sentiment and politics.

Since the 1950s, many judges and law professors have been swept up in a vague sympathy for the "disadvantaged"-i.e., not just the needy, but all employees, tenants, consumers, and, of course, minorities. This has manifested itself in a usually unspoken -though sometimes quite explicitly stated-preference for plaintiffs, especially if, by any stretch of the imagination, the plaintiffs could be portrayed as having less power, influence, or bargaining clout than their adversaries. This sentiment lends itself to a kind of politics of redistribution, but its beneficiaries were individual litigants rather than entire classes.

Where real politics, purposeful and hard-eyed, entered the litigation fray was in the articulation by legal scholars of what Olson calls the invisible fist" theory. Under this theory, lawsuits are not, as was thought afore-time, necessary evils;rather, litigation is a positive force in the regulation of society, a means, through aggressive tactics and huge punitive damages, to right the wrongs of the rich and powerful and deter future depredations against common folk. Lawyers were inspired to become "private attorneys general," and if in the process they made a killing, so be it. It's not surprising that Ralph Nader is a staunch friend of the plaintiffs' bar, even though it aligns him against such consumer-benefiting innovations as no-fault auto insurance.

Olson's principal remedy for the litigation explosion is fee shifting. America is virtually the only country in which victorious litigants cannot recover attorneys' fees from the losers. Full two-way fee shifting would be a disincentive to many of the speculative suits now filed by plaintiffs egged on by lawyers, with nothing to lose. He also lauds recent efforts to sanction lawyers who file frivolous lawsuits.