Burnt Orange Report

Tort Reform: Not working out for business, either

By Jim Dallas

I happened to stumble upon this op-ed in this week's Texas Lawyer, which raises the point that, really, nobody is winning under tort reform, except for insurance companies. So much for the pro-business tort reform agenda (excerpts below the flip)

Does Texas tort reform protect a company? Probably not. Certainly, it is much more difficult to certify a class-action suit in Texas than it once was, but that does not mean that plaintiffs lawyers will not file those suits against a company. They might not file in Texas, but it's entirely possible that they will file them in other, more class-action hospitable jurisdictions....

Does Texas tort reform mean that a company will save money? No. Attorneys who work for Texas-based companies that do business in other states will increasingly find themselves litigating in venues such as California, Mississippi, Alabama, Florida and elsewhere. That means that companies' costs to defend those cases will increase rather than decrease, and that the attorneys involved will have to forge new relationships with lawyers resident in those jurisdictions — attorneys who may not understand the company's business. Inevitably, companies will end up paying for that learning curve.

Although Texas filings are down, most insurers have not reduced their premiums for liability insurance to their commercial customers, so rates to insure against liability remain about the same.

Furthermore, because tort reform has resulted in the exportation of suits to other venues, the costs of defending those suits will likely increase because in-house counsel will have to deal with travel and producing witnesses and documents in other states. In the case of arbitration, companies will pay for the time spent by the arbitrators deciding the merits of their disputes, where judges and juries once did so for free.

Bench trials are unlikely to save companies money. While there may well be some savings during trials, new and different appellate issues will consume the money saved earlier on in the process. Appellate courts are more likely to overturn verdicts by judges than jury verdicts, so the company's in-house and outside lawyers may well get to try more cases twice.

Good people fought and died for the right to trial by jury. Today, many U.S. citizens may take that right for granted. Tort reformers trumpet ridiculous trial verdicts as justification for eliminating jury trials, but they conveniently fail to mention that appellate courts overturned many of those verdicts. The stories get passed on, and the truth gets passed over. Simply stated, the Texas court system worked. Where there have been abuses at the trial court level, the appellate courts have corrected most of them.

Implicit in the myth of the Texas tort-reform movement is the notion that jurors are too stupid to sit in judgment on complicated cases. That argument is untrue and unfortunate. Jurors work hard to do justice. Sometimes something happens, and they do not. But, the justice system has protections for those few instances.

Are some plaintiffs lawyers greedy? Sure. Have there been some abuses in the past? Yes. Is the jury system sometimes inefficient? Perhaps. But, democracy is not always tidy.