JUSTICE, NOT PLUNDER
Here’s a modest proposal: Let’s put a cap on lawyers’ pay. If you’re an attorney, you can make $1 million a year from lawyering or, perhaps, $2 million. Above that, the tax rate is 100 percent. The ceiling would be high enough to attract bright, hard-working and even greedy people into the law. But the cap would curb predatory lawyering, which uses the law to amass personal fortunes of hundreds of millions of dollars.
This is plunder masquerading as justice, and it’s on the rise. Just recently, Coca-Cola was hit with a $1.5 billion job bias lawsuit on behalf of black workers. Dozens of suits have been filed against Microsoft, claiming huge damages. Health maintenance organizations face countless suits over their practices. And, of course, there’s tobacco. The recent $145 billion award against the industry from a Florida jury comes atop the $246 billion settlement (over 25 years) between cigarette companies and state attorneys general.
Every trial lawyer now dreams of a pot of gold. The aim is to discover some “deep pocket” from which immense damages–and legal fees–can be extracted. Fees awarded to private lawyers who represented states in the tobacco litigation exceed $11 billion, with some fees unsettled. In Maryland, attorney Peter Angelos–owner of the Baltimore Orioles–says he’s entitled to 25 percent of the state’s award, estimated at $4.4 billion over 25 years. Imitation is irresistible. The best way to stop the spread of self-enriching suits is to remove the pot of gold or, at least, reduce it to a small pile.
Generally, Americans have wisely refrained from trying to set the “right” pay for different occupations. We know there are excesses. Corporate executives, athletes and movie celebrities sometimes seem indefensibly overpaid. But we tolerate the excesses, because doing otherwise would compromise freedom and cripple the market–which, despite flaws, works fairly well in rewarding skill and risk-taking.
Why make lawyers an exception? The answer is that they are not creatures of the market. They are not like corporate executives or athletes. They are officers of the court. They support a governmental process–the legal and judicial system–and their private interests rightly yield to a larger public interest.
The court system is not a proper arena for capitalist ambition. Its integrity should not be mortgaged to the quest for personal riches. The defenders of predatory lawyering argue that it’s socially useful. It acts (they say) as a counterweight to widespread corporate wrongdoing. High fees, though sometimes offensive, are worth the price for this policing. Detesting corporations, the defenders bless the process. There are two objections to this argument.
First, corporations are just shells. The ultimate payers are either company shareholders or customers. If, for example, lawsuits impose higher expenses on HMOs, the costs will mainly raise insurance premiums. Similarly, the cost of the tobacco settlement is paid primarily by smokers through higher cigarette prices. (Since year-end 1997, cigarette prices have risen 57 percent, says the Bureau of Labor Statistics.)
None of this excuses corporate wrongdoing. But if companies pay, their wrongdoing ought to be clear and the payments proportionate. This highlights the second objection: With the economic stakes so high, the legal process is increasingly manipulated against corporations to produce large payouts. This is a creeping corruption.
Congress and state legislatures can surely raise cigarette taxes to discourage smoking. But the premise of the state suits against the industry (which created the same result) was that smoking imposed extra health costs, for which states should be reimbursed. The argument remains dubious. Careful studies suggest that smokers, considering their shorter life spans and the cigarette taxes they already paid, more than covered their costs. “If everyone were to stop smoking tomorrow,” Harvard Medical School professor Tom Delbanco recently wrote, “the burden on society from increased longevity could prove enormous” [op-ed, July 9].
Still, the tobacco industry agreed to settle. One reason is that its prospects in court were poor, because the rules were twisted against it. In Florida and Maryland, state legislatures–at the behest of suing lawyers–passed laws that stripped the companies of their main defenses. In Mississippi, the case was filed in an obscure court, where a sympathetic local judge regularly ruled against the industry.
Only a moron won’t glimpse the dangers. Trial lawyers are huge political donors. The larger their legal awards, the more they can subsidize the campaigns of sympathetic local judges (in states where judges are elected), legislators and congressmen. The result: better chances of prevailing in court; more laws making it easier to sue; easier grounds for recovery. Taken to its logical conclusion, this process makes the court system a wholly owned subsidiary of trial lawyers. The costs are born by consumers and shareholders–and shareholders are, increasingly, pension funds or people’s retirement accounts.
Congress could frustrate this subversion by imposing a punitive tax on lawyers’ earnings. This is not as outlandish as it seems. Already, our tax laws regularly discriminate for and against different groups on public policy grounds (the elderly and homeowners get breaks; those without breaks are discriminated against). Why not extend the principle to a profession? Few lawyers would actually suffer. Only 17 major firms have average per-partner profits exceeding $1 million, reports the American Lawyer magazine. The cap could be adjusted annually; if average wages rose 3 percent, so could the lawyers’ cap. If a case took years, rules could permit victorious lawyers to earn up to the cap for each year.
So attorneys could still sue wayward companies and could still ask for huge awards for deserving victims. Lawyers simply couldn’t collect as much for themselves. They could become rich but not stupendously wealthy. There would be ample incentive for justice–and less for plunder.