Template for Reform
Capping ten years of reform efforts, in 2003 the Texas Legislature enacted the strongest litigation reform legislation in the nation. Two years later it passed the country’s most effective asbestos and silica litigation reforms.
In Texas, as elsewhere, the lawsuit industry is primarily represented by the American Trial Lawyers Association (ATLA) and its state affiliates. Our first task was to understand how this group had achieved practical control of the Texas Legislature on its issues.
The answers were not hard to come by. Generally recognized in Texas as the most powerful special interest group in the state, “the Trials”—as members of the Texas Trial Lawyers Association (TTLA) are locally known—excelled in every area of political action. Their strength was founded on vast wealth, focus, hard work—and ineffective business community opposition. Like ATLA at the national level, the Trials had long been able to defeat or disable fundamental reform in Texas. But they were not invulnerable, as events would prove.
One of TLR’s earliest discoveries was that the Trials faced no effective natural countervailing forces either from the business lobby or from within the legal profession. Inside the profession, the TTLA completely eclipsed its nominal opponent, the “defense bar.” As used in Austin, the term “defense bar” usually refers to insurance defense lawyers—typically litigators who only nominally represent business. Comparing this group of conventionally compensated attorneys to the opulently wealthy plaintiff bar on its face suggests a mismatch. Unsurprisingly, these insurance defense lawyers have neither the political power to make a difference nor the incentive to support reforms that reduce the volume or importance of the lawsuits they defend. Indeed, many insurance defense lawyers oppose reform and quietly lend support to the plaintiff bar.2 Similarly, but less understandably, business trial attorneys from the major law firms who represent corporate America demonstrate little interest in reform.3 The resulting trial attorney mismatch between the powerful Trials and their insurance defense and business litigator opponents was obvious in the 2003 legislative session, as it has been in every session in recent memory.
Likewise, the regular business lobby posed no threat to the Trials for many reasons, most of which are discussed in detail later in this paper. But a simple comparison of focus tells enough: the business lobby must disperse its resources across the legislative spectrum from Agriculture to Zoning, while the lawsuit industry must defend only one point on that spectrum—Lawsuits. The trial lawyer lobby is the most powerful special interest group in the country, thanks to its narrow focus, unlimited funding, and dedicated activist membership that sees millions of dollars riding on every major vote. To win, TLR had to match this opponent in focus, funding, and tenacity.
Legislators, not advocacy groups, are the people who introduce, deliberate, and vote on bills, and they deserve the credit for legislative achievements. The lawmakers who reformed Texas litigation law over the last decade demonstrated an extraordinary level of dedication to the public interest and a willingness to confront and resolve complex, challenging, and controversial issues. But the legislative process is a multidimensional, fast-moving, contentious, and complicated activity under the best of circumstances. Legislators want to know which issues are genuinely important to the people and what the real merits of the issues are, but doing so in an area as difficult as litigation reform would be impossible without the efforts of advocacy groups. The importance of legislative advocacy has been recognized since the adoption of the First Amendment, which mentions the right “to petition the Government for a redress of grievances” in the same breath as freedom of speech and religion.
To defeat an entrenched and formidable advocacy group such as the Trials, a reform group must be prepared to match them in every key forum. In our case, this meant warfare on two main battlefields: electoral politics and legislative advocacy.
A. Electoral Politics. Without political strength, no amount of organization is likely to be effective in the long run. Reform, after all, is an intensely political process. You will derive only limited political strength from the charm and connections of lobbyists and power brokers; the bedrock of political strength is the ballot box. Elected officials learn a lot about public opinion in their electoral campaigns, so a reform group should try to make its issues become a part of the campaign. And if a reform group cannot assist and help finance the campaigns of candidates who believe in its issues and cannot credibly and effectively oppose those who oppose reform, the plaintiff lawyers will win—because they never fail to show up at election time.
Many state reform groups emphasize advocacy, research, and organizational activity but do little in the electoral arena. There are understandable reasons for this: (1) it is very expensive to participate in the electoral process, and (2) corporate money either cannot be used in elections—or, in states where it is permitted, the amounts allowed are so limited as to be of little significance. So even though a competent reform advocacy organization is often able to obtain adequate funding, its affiliated political action committee (PAC) is not. In contrast, because wealthy plaintiff lawyers have their own fortunes, and because most practice law as individuals or in entities treated as partnerships, their law firm money is typically untouched by prohibitions applicable to corporations. The Trials and their PACs are therefore free to make unlimited personal and PAC campaign contributions to support their candidates,4 while pro-reform candidates typically have no comparable source of campaign financing. Where this imbalance remains uncorrected, fewer reformers are elected, and the zeal of those who are elected is frequently dampened in the process. Trumping the Trials’ campaign finance advantage, therefore, became one of TLR’s first strategic goals.
In its first year of existence, 1994, TLR went from a concept to a full-blown organization by Election Day. Most importantly, TLR’s PAC went from zero to one of the largest PACs in Texas in time to support a broad slate of reform candidates, including then-gubernatorial candidate George W. Bush. The victory of those candidates, and the broad recognition of TLR as an effective force in electoral politics, set the stage for the first round of successful litigation reform in 1995. This experience demonstrates that successful participation in electoral politics is both essential and achievable.
By placing heavy emphasis on electoral politics, TLR set itself apart from the older Texas reform group, a business coalition having little visibility in elections. The activity of each group in a recent special election is instructive. Not long after the 2003 legislative session, a surprise special election presented the Trials the unexpected prospect of gaining a crucial seat in the closely divided Senate. They moved quickly to put their money on one of their own, an attractive and well-known plaintiff lawyer, against a divided field of lesser-known conservative businessmen. Without major funding for reform candidates, the limitless instant campaign funding machine of the Trials gave them the power to walk away with this election. To counter the threat, in the seven-week period from the filing deadline through the runoff election, TLR’s PAC raised and spent almost $1 million to help defeat the plaintiff lawyer candidate. Texas’ other tort reform group contributed by giving $1000 ten days after the runoff election.
TLR’s PAC activities position the organization as an independent and potent single-issue political movement. Of course, TLR also built a sophisticated political and legislative advocacy organization, but having a campaign war chest large enough to balance the Trials at the ballot box made all the difference. We both retained and reinforced this model, and in every year since 1994, TLR’s PAC has been the largest, or one of the largest, political action committees in the state and served as a critical resource supporting the election of pro-reform candidates. So when the long-time Texas House Speaker, a fierce trial lawyer ally, was defeated in 2003, the Trials’ stranglehold over civil justice reform ended. Unprecedented reforms followed. The formula is simple to describe but hard to deliver: when reformers earn enough votes, reform bills pass; and getting those votes means working both the ballot box and the lobbies of the legislature.5
B. Legislative Advocacy. Credibility earned in the electoral process must be translated into effective legislative advocacy that can operate in all channels of communication and persuasion. The reform group must be able to conduct legal, economic, and issue research; hire and direct lawyers and lobby teams; organize and deploy grassroots support; build alliances with like-minded groups; and work effectively with the media and other communication channels. And it must bring all of these streams together and convince the lawmakers that its program has merit, for they alone vote to change the law. Unsatisfied with the existing models it saw in the tort reform movement, TLR decided to write its own book.
TLR’s origins were in 1993-94. At that time, Texas remained deeply mired in abusive litigation despite a handful of modest reforms enacted in the 1980s and the ouster of a pro-plaintiff state Supreme Court majority in favor of conservatives. Texas occupied a seemingly permanent place in the bottom rank of every published civil justice evaluation. To make matters worse, conventional wisdom decreed that nothing could be done. The Trials controlled the Legislature, and Austin mandarins dismissed attempts at meaningful reform as wishful thinking. The incumbent civil justice reform organization was limited by its lack of political strength, its dependence on a narrow support base, and an “insider” orientation that structurally compromised its ability to hold out for effective reform legislation.
An informal group of concerned citizens began to meet in 1993 and eventually decided to do something to change things, leading to the founding of TLR the following year. TLR’s organizers had some experience in public affairs, but, for the most part, they were not sophisticated public policy advocates. They entered the public policy arena unencumbered by defeatist conventional wisdom, which they concluded had largely immobilized and demoralized existing reform efforts.6 Notwithstanding these inauspicious beginnings, within its first 18 months TLR was able to achieve its first installment of broad-scale reforms. In the process, the volunteers gained experience relevant to both tort reform and other public policy initiatives.
A. Volunteer Leadership. The keystone of TLR’s entire effort has been its volunteer, rather than professional, leadership. To have the best chance for success, major public policy initiatives should be led by one or more volunteers who are unconcerned about any other issue, client, career, or professional consideration and who are able to focus on successfully implementing the proposed reforms. The leaders cannot be subject to cross-issues that could compromise their position. To lessen the professional leverage of their opponents, it would be helpful for them to have a certain degree of personal financial independence, and it would likewise be advantageous for the leaders not to rely on an income stream from the organization for their livelihood.7
B. Philosophy and Strategy. TLR’s leadership has no interest in gradualism or halfway measures. When it doesn’t have enough legislative support, TLR’s principal response has been to redouble its legislative advocacy rather than to begin deciding how to water down its bills. This fundamental philosophy has led to countless attacks from nominal allies as well as opponents: that such a position is naïve, misguided, ill informed, foolish—and, finally, “arrogant.” We believe a reform group cannot afford to become part of the woodwork in the statehouse. If you intend to make legislative omelets, you had better be prepared to break some eggs.
Developing a clear and cogent strategy is absolutely indispensable to the success of a public policy reform effort. Taking care on this point pays rich dividends across the entire organization and its operations, including such key activities as development of reform agendas and tactical planning.
TLR adopted the assumption that we had unlimited time and unlimited money so as not to constrain our strategic and tactical planning. We then adjusted to reality rather than letting reality dictate our strategy. The process forced us to think big, to shape our own independent organization, and to adopt aggressive but necessary fundraising goals.
We recognized that major reforms would be difficult to achieve in a single legislative session, so we initially committed to three legislative sessions, a six-year organizational time line. It eventually took us twelve years and six legislative sessions. In the process, we were finally forced to recognize that shutting down the organization after a fixed term would simply clear the way for our opponents to undo TLR’s hard-earned reforms.
During the seven lean years between the 1995 and 2003 legislative sessions when House Speaker Laney killed most significant tort reform legislation, TLR continued to build its base of strength. This is the kind of period a reform organization must endure if it is to be taken seriously. When you are trying to get elected officials to support your program, their perception is important: at election time, you must be there to support those officeholders and candidates who are philosophically aligned with you.
- Don’t Settle for Inadequate Resources.
- Plan on a Multi-Year Campaign With No End Point.
- Persistence Pays.
C. Serious Money. Without major funding, the wheels of advocacy will not turn. Though it is burdensome and frequently discouraging, fundraising is crucial.
TLR’s experience suggests that someone in the volunteer leadership group must take ownership of the fundraising responsibilities. This individual must be someone whose prominence opens doors and gets phone calls returned, but this person must also be someone who has the time and dedication to devote to the task. Donors match stripes with fundraisers: a successful entrepreneur will open the doors and the checkbooks of other entrepreneurs in a way that no professional fundraiser or manager can. Similarly, only top CEOs have the stripes to jar real funding from other CEOs. While fundraising duty cannot be effectively delegated to a paid consultant, consultants are helpful in organizing, administering, and following up on the top person’s efforts. In particular, however, the professionals are rarely if ever able to close the “sale.”
The lead volunteer fundraiser must also be someone who can inspire potential supporters by communicating the group’s policy vision and passion for reform.
Do not yield to an early tendency toward funding the effort from within the circle of the founding members. This is hardly an appealing prospect for a program of broad public benefit, and the members will eventually tire of carrying a burden that should be shared by others. It is time consuming and often frustrating to discover how many responsible companies and individuals are willing to take a free ride while someone else does all the work that will benefit their companies and their society. Even more discouraging is the discovery of how many expect reform volunteers to fund the effort out of their own pockets. Count on fundraising to be the biggest potential Achilles’ heel of any reform effort.
- Fundraising Cannot Be Delegated.
- The Fundraiser Must Convey the Vision of Reform.
- Support Must Be Broad-Based.
D. Intellectual Resources. You may know your issue and what reforms should be implemented, but persuading legislators, the media, and the public requires substantial investment in intellectual resources.
Successful public policy initiatives must be founded on accurate, thorough, and comprehensive research. When you are asking a respected businessman or political leader to follow your lead or take your recommendation, your academic, economic, and legal research must be unimpeachable. TLR’s legal research was generally done for internal consumption, but we would also routinely publish white papers explaining proposed legislation in detail. Economic research that quantified the cost of abusive litigation practices was also done in support of legislation. We retained top attorneys and noted university economists to perform this necessary research.8
Once the major outlines of the academic and legal research are known, you must do market research to understand how the public is likely to react to your issues. The results tell you how best to communicate your message and also which of your opponent’s arguments are going to carry the most weight. This is as much science as art, and the message should not be guided by “gut instincts.”
- Issue Research.
- Market Research.
A noteworthy example appeared during the plaintiff lawyer–funded publicity blitz opposing the 2003 malpractice reform constitutional referendum. To improve their appeal to conservative right to life voters, the Trials deployed “pro-life” spokesmen equipped with “statistics” purporting to prove that medical malpractice caps would lead to an increase in abortions. Their ominous message claimed that California’s adoption of medical malpractice caps in 1975 produced an increase in abortions—conveniently failing to mention that abortion had been legalized in Roe v. Wade only two years earlier. This Supreme Court case, of course, caused the abortion rate to increase everywhere in the 1970s. But the magnitude of the Trials’ foray into statistical fakery became apparent when research disclosed that abortions in Texas increased at twice the California rate in the same period, even though Texas had not enacted any version of the supposedly sinister damage caps.
Finally, it is important that the reform group’s communications be accurate and consistent across all of the group’s various constituencies, including individual and organizational supporters, the media, elected officials, and opinion leaders. Key communicators should be press professionals or knowledgeable, well-prepared volunteers who can get your message understood by the media. Media advocacy must be unrelenting and persuasive, leaving no specious claim unanswered. Positive media coverage on both news and editorial pages as well as effective grassroots strategies not only help win campaigns but also maintain legislative gains, which inevitably come under attack in subsequent years.10
You must retain legal experts skilled in the substantive law in question so that your proposed statutes are clear and resistant to being misconstrued or challenged in court. Because our subject is litigation, we retained an outstanding business trial lawyer who was also philosophically attuned to our position.9 Having a real trial veteran develop the legal team helps trump the opponents of tort reform, who have always been adept at proposing innocuous-sounding amendments that will actually gut the proposed reforms. Your legal team must also be vigilant up until the very point that the bill is signed into law so that “minor” and “housekeeping” changes don’t slip in at the last minute to eviscerate your bill. Don’t think this doesn’t happen: it does.
Even though the effort is best led by volunteers, a highly motivated and skilled lobby team is essential to the success of your public policy initiative. They must advise you on such crucial decisions as picking the right sponsor and co-sponsor in each legislative chamber, on how your bill can be assigned to a committee whose chairman and members are opened-minded about your issue, and on a myriad of other strategic and tactical decisions along the way to passage. Your lobby team will guide your overall legislative strategy—but the volunteer leadership must ultimately make the crucial decisions.
The media is an integral part of your strategic plan. During legislative wars, battles are usually under way on two fronts. The first is the obvious legislative battle, where your bill is being fought in committee and on the House and Senate floors. But there is also the media battle, where your opponents are trying to turn public opinion against your proposed reforms or are trying to put out misinformation that labels your proposed reforms as bad for consumers, bad for children, or bad for anything they can dream up to obscure the true merits of the reforms. The ingenuity—and disingenuousness— of the plaintiff bar in conjuring up the supposed evils of litigation reform is a wonder to behold.
There is nothing that impacts legislators more than timely, direct communications (office visits, letters, phone calls, faxes, and e-mails) from their constituents. Business support is important, but to a rural or small-town legislator, his hometown automobile dealer or other respected local businessman is a more significant influence than the head of any major corporation or lobby group. It is hard and very time-consuming work to organize a true grassroots network that will communicate with legislators on your issue. TLR volunteers have been making speeches almost every week, all across Texas, for the last ten years. This has generated a significant organization of solid grassroots supporters in every part of the state. TLR has tried hiring professionals to generate grassroots advocacy, but this generally has not proven successful. Once recruited, grassroots supporters must be kept informed on a regular basis, must be motivated to act, and must be invested in the work of the organization.
It is important to rally various trade associations and other business and citizen groups to support your effort. You cannot expect, however, that most groups will be in a position to dedicate significant resources to your reform program, since each of these groups is understandably focused on its own industry-specific issues. Nevertheless, if your effort is important to the state and has important implications for its economic vitality, you should be able to count on support from many of these organizations. Having their endorsement and assistance is definitely worth the effort, particularly for the credibility and momentum they add to your program.
- The Legal Team.
- The Lobby Team.
- The Media and Communications Team.
- The Grassroots Team.
- Allied Groups.
F. Administration. Three separate types of organizations can be established to help implement public policy initiatives: (a) a Section 501(c)(6) corporation to serve as the operating entity of the reform effort, (b) a political action committee to help elect reform candidates, and (c) a tax-exempt Section 501(c)(3) foundation for independent research and education. The foundation is optional depending upon the initiative. The operations and record keeping of these entities must scrupulously adhere to the law, because your opponents are constantly looking for mistakes to exploit in order to undermine your credibility.
A. Big Business Reform Support Lags Behind Reality. One would think that forty years of drubbing in the courts, both in Texas and nationally, would be sufficient to open eyes and loosen purse strings at all levels of American business. Thankfully there are exceptions, but on the whole Big Business seems to have remembered everything but learned nothing.
While myopia, quarter-to-quarter thinking, and fatalism probably play a major role in their defeatism, the silence of the corporate lambs results only partly from these causes. They have other wolves to fear. In Congress and the legislatures, business must protect its many flanks and must always keep some of its powder dry for the battles of tomorrow. Corporations are never free of anti-business smears in the media and the demagoguery of publicity-driven congressional committees, regulators, and government officials, and most have plenty of scar tissue to prove it. Some of this media and political attention is inspired and fueled by the plaintiff bar and its associated entities, most notably consumer, “watchdog,” and similar groups. There are also internal reasons why litigation reform is not typically high on the corporate priority list, which usually places heaviest emphasis on industry-specific legislation, followed by such perennial bread-and-butter issues as taxation and regulation. It is not hard to recognize the process that leaves lawsuit reform toward the bottom of the list.
The aggregate effect of these business vulnerabilities and priorities goes a long way toward explaining why a politically astute single-issue powerhouse like the trial lawyer lobby is so effective in keeping most of the business community off its turf. Like any single-issue group, trial lawyers have no flanks to guard, which allows them a freedom to act that few major business entities, particularly large public companies, can enjoy. Moreover, the threat they pose seems to grow exponentially with the size of target corporations, with the result that the largest corporations are often the most hesitant to use their power.
All this having been said, it nevertheless remains difficult to comprehend why so few corporations are willing to balance the scales by supporting reform efforts at a level commensurate with their staggering litigation losses. To borrow a page from the plaintiff lawyers, they ought to invest in single-issue activist allies who are ready and able to work effectively in the reform arena. The U.S. Chamber’s Institute for Legal Reform at the national level and a few strong state groups like TLR are fully up and running, and some corporations do support them. More and stronger reform groups would appear should corporate America as a whole stir from its long slumber.
Meanwhile, as the business lambs await slaughter, the plaintiff trial bar continues to dominate the field nationally and remains a dangerous threat in Texas. The Trials can be counted on to continue funding their trade, consumer, and “watchdog” organizations to make sure their industry remains a force in electoral campaigns and among federal and state lawmakers.
B. Big Business Does Not Mean Big Dollars. In even the largest companies, contributions to such business-related entities as litigation reform groups is slotted into the same budgetary category—and management mind-set—as the United Way and the March of Dimes. Doubtless this practice originated in the distant past, when lawsuits rarely occupied the attention of top management. But even now, when litigation routinely intrudes into the boardroom, corporate investment in reform for the most part remains stuck at trivial levels compared to corporate losses in the courts. No United Way problem ever forced a donor corporation into Chapter 11, but lawsuit abuse has consigned hundreds of significant companies to financial ruin.
Even when they begin to invest in reform, many businesses hold back on their funding out of fear that they may be contributing more than their fair share. The scale of support also suffers because companies seem not to scale their reform investment to their exposure. Large target companies such as automobile, pharmaceutical, manufacturing, and other litigation-prone industries so far have not fully accepted the fact that if they do not shoulder most of the reform funding load, less exposed companies are unlikely to do it for them. Reformers can easily make the case that a company averaging $20 million per year in litigation expenses and liability insurance premiums ought to invest two and a half percent—$500,000—per year in reform funding. Yet most companies in that range rarely invest one-twentieth that amount, and many do nothing at all. Of course, the nonparticipant companies might contend that gains from reform enactments are not easily predictable, but the same can be said about the prospects for a new cold remedy, hybrid electric vehicle, or Pet Rock.
C. Corporate PACs Keep a Low Profile in Elections. Readers of typical press stories probably think that major corporate PACs are powerful political players. In TLR’s experience at the state level, the opposite is true. In Texas, corporations that have PACs generally dedicate their funding to maintaining access to high-ranking incumbents, with no regard to whether the officeholder supports any issue favored by the corporation. Myopia is also a problem: for example, some major corporation PACs flatly refuse to make contributions to judicial elections in many states, “on principle.” The only principle that is served, of course, is that these PACs are opting to let the plaintiff lawyers pick the judges for them—which they are all too willing to do. In a similar vein, corporate officers and employees are fond of complaining about lawsuit abuse but balk at the small assessments requested by their employee political action committees, not to mention the occasional appeal for individual donations.
While corporate PAC funds may look impressive in the aggregate, their funding patterns are so scattered that their impact is heavily diluted. Even if substantial corporate PAC funding were focused on reform, it is unlikely that corporate PAC contributions could ever surpass the laser-focused campaign funding of the plaintiff bar. For example, the five Texas tobacco plaintiff lawyers, together with their families and associates, in 1998 alone gave over $2.5 million to the Texas Democratic Party and Democratic candidates for attorney general and lieutenant governor. Their support accounted for about one-third of the political funds raised by the party in that year.
D. Individuals Are the Most Reliable Reform Supporters. Given the chronic weakness of big business in the reform arena, who is writing the checks that keep reform movements alive? There are, of course, exceptional companies among the Fortune 500 who both support and help fund reform. But to an amazing extent, the sources of reform support are civic-minded entrepreneurs and owners of privately held companies who have spent their lives building, rebuilding, and defending their enterprises. These are demanding supporters, but they are also quick to grasp the importance of reform issues and are usually the strongest supporters one can find for any well-planned, effective reform program.
E. Professionals Must Share Your Commitment to Reform. When picking outside professionals, it is critical that they share your commitment to reform. Many professionals who are outstanding in their fields won’t fit this description, so special care in selection is important. You will find that many potential lobbyists and political consultants, for example, are too closely tied to certain legislative leaders, or to other clients, to be of real help to you. But if your professionals are true believers in your cause, their contributions will be immense.
When laid out as a template, TLR’s first decade in the fight for civil justice reform looks much more daunting than it seemed as we went along. But our optimism was buoyed by a deep sense that the justice system was unjust, out of control, and inflicting serious damage on society. At the end of that decade, our original agenda had become law, but the experience in the courts of our 1995 reforms made clear that the original agenda had not gone far enough. That history shows that weakness in the institutions of justice—juries, the judiciary, and the legal profession—can undermine even the most thoroughly drafted reform statutes. These institutional issues must be addressed before we can say that fairness and balance in the Texas civil justice system have been restored.11 Moreover, so long as plaintiff lawyers believe they can exploit the political process to improve their fortunes, every election, legislative session, and judicial appointment represents a potential threat.
While this template has necessarily focused on TLR’s role in the reform process, we must recognize the many individuals and allied groups whose efforts have contributed to the reform effort in Texas. TLR and its statewide volunteers provided leadership, resources, and focus, but passing laws required the courageous and visionary leadership of public officials in all three branches of government. The reform advocacy effort required financial support from individuals, entrepreneurs, and corporations; research and recommendations from lawyers and academics; competent execution by lobbyists, political professionals, and communications experts; and coordinated activities with trade associations, other litigation reform groups, business groups, and corporate government relations officers. Like any successful major public policy activity, tort reform in Texas has been and remains a broad-based effort.
Outside the litigation reform arena, it seems unlikely that the opposition to any reform program will be as well funded, organized, creative, and tenacious as the plaintiff trial lawyers, so not all parts of this template may fit other situations. But for every reform effort there is an opponent. All reformers must overcome apathy, inertia, misinformation, entrenched bureaucracies, partisanship, and media misperceptions, much of it actively promoted by the opposition. Every reformer is going to be told that the status quo will prevail forever and that those who seek change are misguided and naïve. The insiders always say these things, because change is a threat. Have confidence in your mission, and stay on target. Finally, when along the way you feel isolated, underfunded, and outnumbered, recall this insight of the anthropologist Margaret Mead:Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has.
Reform Legislation in Texas, 1995-2003
- Class Actions
- Texas Supreme Court given interlocutory jurisdiction in appeals from trial court certification orders, and trial court proceedings are stayed pending appeal.
- Class actions within the jurisdiction of a state agency must be addressed by that agency before proceeding in court.
- Class action contingency fees abolished in favor of hourly rates with possible multipliers.
- When class actions are settled using coupons, the lawyers must also be paid in coupons in the same proportion as the class.
- The Texas Supreme Court through case law had already imposed strict standards on certification of classes, similar to the limits used in federal practice.
- Punitive Damages
- 1995 reforms limit punitive damages to the greater of: (i) $200,000 or (ii) two times economic damages plus an amount not to exceed $750,000 for non-economic damages.
- See SB 25 (Exemplary Damages)
- 1995 reforms also permit award only upon a showing of “clear and convincing evidence” rather than a mere “preponderance of the evidence.”
- Combination of 1995 and 2003 reforms establishes a rigorous gross negligence standard conceptually similar to a stringent reckless disregard standard.
- 2003 reform requires unanimous 12-0 jury verdict for the award of punitive damages rather than the 10-2 verdict required in other cases.
- Full Proportionate Responsibility
- A defendant is liable for only its own percentage of fault unless it is more than 50 percent responsible. Similarly, plaintiffs found more than 50 percent responsible are barred from any recovery.
- See SB 28 (Proportionate Responsibility)
- Factfinder must assign percentages of fault to all potentially responsible persons, whether actually before the court as a party or not.
- Fault assignments are not limited by the status of the person. Therefore persons such as those who have settled; bankrupts; fugitive criminals; private and governmental entities entitled to immunity or limited liability; employers covered by workers’ compensation; and persons beyond the court’s jurisdiction may all be assigned percentages of fault. Fugitive “John Doe” criminals can be named even if they cannot be identified by name.
- Fault assignments determine what percentage of a judgment the named parties must pay, but fault assignments as to nonparties have no legal effect on them.
- Proportionate responsibility rules apply to cases of all kinds, including economic and business torts in addition to personal injury, death, and other personal tort claims.
- The proportionate responsibility allocation rules permit factfinders to mix negligence, product liability, fraud, or any other kind of fault in a single allocation array.
- Asbestos and Silica Litigation Reform
- Stops the flood of claims by persons not actually impaired by asbestos or silica exposure by imposing strict medical criteria on both pending and future cases.
- Dismisses future unimpaired claims; pending unimpaired cases are transferred to a multidistrict court and do not proceed unless and until medical criteria are met.
- Stops abusive “bundling” of hundreds of cases by allowing only one unrelated plaintiff per trial.
- Limits use of diagnostic materials obtained through abuses such as mass x-ray mobile van screenings sponsored by lawyers.
- Extends statute of limitations, permitting lawsuits to be filed within two years after diagnosis of actual impairment.
- See SB 15 – Asbestos/Silica Litigation
- Health Providers’ Liability
- Comprehensive reform in this statutory area.
- Caps on non-economic damages, such as pain and suffering, imposed in all medical cases. $250,000 per-claimant cap applies to doctors and nurses.
- A separate $250,000 cap applies to each health care institution on a per-defendant basis, subject to a $500,000 aggregate non-economic damages cap in favor of all health care institutions in the case.
- Limitation on personal liability of government employees extended to other health care professionals in government hospitals as well as nonprofit operators of city or hospital district hospitals.
- Provides additional limits under defined circumstances to nonprofit hospitals or systems that provide charity care and community benefits in an amount equal to at least 8 percent of the net patient revenue of the hospital or system, and that provides at least 40 percent of the charity care provided in the county in which the hospital or system is located.
- See HB 4, the Omnibus Tort Reform Act
- 1995 reforms abolish highly permissive venue rules as to corporations, which had fostered the development of abusive plaintiff-oriented venues in certain areas of Texas.
- 2003 further reforms remedied a judicially created loophole in the 1995 statute, which as originally enacted required all plaintiffs to establish venue independently, by allowing an immediate appeal of a trial court’s decision allowing multiple plaintiffs to join a case.
- See SB 32 (Venue Reform)
- Interstate Forum Shopping
- To discourage out of state and foreign forum shopping into Texas, state forum non conveniens rules are modified to give Texas trial judges broad discretion to dismiss cases that should more appropriately be pursued in some other state or country. Texas rules now are consistent with federal forum non conveniens practice.
- See SB 220 (Out of State Suits)
- Offer of Settlement
- Parties who make reasonable pretrial settlement offers can be entitled to attorneys’ fees and other litigation-related costs when the opponent turns the offer down and recovers significantly less in the trial.
- Process may be initiated only on defendant initiative in order to prevent the rule from becoming a one-way “defendant pay” rule because plaintiffs normally are unable to pay—particularly in personal injury cases.
- Product Liability
- In pharmaceutical cases, a rebuttable presumption is established in favor of manufacturers, distributors, or prescribers of pharmaceutical products in cases alleging failure to provide adequate warning about the product’s risk, if the defendant provided the government-approved warnings with the product.
- In other product cases, a rebuttable presumption is established in favor of manufacturers who comply with federal standards or regulatory requirements applicable to a product provided the government standard was (1) mandatory, (2) applicable to the aspect of the product that allegedly caused the harm, and (3) adequate to protect the public from risk.
- Sellers of products are not liable for a product defect if the seller does nothing more than acquire the product from the manufacturer and sell it to the customer in cases where the manufacturer is a domestic company.
- Fifteen-year statute of repose for most product liability claims.
- Repeal of Abusive Components of “DTPA” Consumer Protection Act
- In 1995 reform, the Texas Deceptive Trade Practices-Consumer Protection Act, which had become a vehicle for litigation abuse, is extensively amended to eliminate claims involving matters with a total value of more than $500,000, or more than $100,000 for claims based on a written contract if plaintiff had received independent legal advice prior to signing the contract.
- The DTPA can be used against professionals only when the claim involves misrepresentation, unconscionable conduct, or breach of warranty.
- Generally, DTPA actions are now allowed only for economic damages and are subject to the proportionate responsibility statute.
- Comprehensive detailed changes remove a broad range of one-sided pro-plaintiff provisions.
- Appeal Bonds
- No appeal bond can exceed the lesser of $25 million, one-half of defendant’s net worth, or the total compensatory (not punitive) damages awarded to the plaintiff.
- Savings provision for circumstances where 50 percent of net worth or the total compensatory damages would still produce a bond that could not be paid.
- Limits on Attorney General Contingent Fee Contracting
- Outlaws award of contingent legal fees for representing the state based on a percentage of the recovery. Only hourly “lodestar” fees are permitted, which if subject to contingency may include a premium multiple of up to four times the reasonable hourly rate.
- Attorney General may not award even an hourly-based contingency fee contract without concurrence of either the Legislature or a special committee that includes the lieutenant governor and the speaker of the house when the legislature is not in session.
- Extensive protective provisions incorporated to prevent abuses exemplified by the $3.3 billion Texas tobacco legal fee deal.
- Multidistrict Litigation Panel
- Modeled on federal MDL procedure, a Judicial Panel on Multidistrict Litigation is now authorized under Supreme Court jurisdiction, including power to transfer factually related cases pending in multiple counties to a single court for consolidated or coordinated pre-trial proceedings.
- Remedies former practice, which contained no similar provision.
- Seat Belt Evidence Admissible
- Allows the factfinder to know whether a plaintiff was wearing a seat belt at the time of an accident for the purpose of determining the cause of damages and allocating fault if relevant and otherwise admissible.
- Actual Damages
- Limits recovery of health care expenses to expenses actually incurred by the plaintiff.
- Allows the factfinder to consider a plaintiff’s income taxes when awarding lost future income—most importantly allowing the disclosure that personal injury awards are not taxable.
- Prohibits the assessment of pre-judgment interest on an award of future damages, correcting an anomaly of prior law.
- Lowers prejudgment and post-judgment interest rates to market rates, between 5 and 15 percent, eliminating windfalls.
- Schoolteacher Liability
- Provides protection for teachers against non-meritorious litigation related to actions taken by the teacher at school.
- Successor Liability in Asbestos Cases
- For acquisitions prior to May 13, 1968, successor corporation’s liability in asbestos-related litigation limited to the asset value of the acquired company.
- Volunteer Immunity
- 1995 reform law expands immunity coverage of prior law to state and local elected and appointed officials, volunteers, employees, and board and commission members.
- 1999 reform extends protection to doctors and other health care providers who donate time and skill to treat persons unable to afford medical care.
- 2003 reform provides additional protection from lawsuits for volunteers of charitable organizations and volunteer firefighters.
- Limitation on Claims Against Design Professionals
- In a suit against a registered architect or licensed professional engineer, requires the plaintiff, at the time suit is filed, to provide an affidavit by a third-party registered architect or licensed professional engineer, setting forth the specific acts of negligence allegedly committed by the defendant.
- Air Migration of Particles “Trespass” Claims
- Narrows a loophole being promoted by plaintiffs in environmental and toxic tort cases in which defendant’s molecules are supposedly “trespassing” and therefore creating liability without fault. Limits trespass actions for migration or transport of an air contaminant (other than odors) only on a showing of actual and substantial damage to the plaintiff.
- Judicial Campaign Finance Limitations
- 1995 reforms impose disclosure requirements on the process of judicial fundraising and impose limits on the amount of funds that any individual or any law firm may make to a judicial candidate. All judges in Texas are elected by popular ballot.
- SB 94 (Reform Judicial Fund-Raising)
In addition to the reforms listed, a number of other reforms of lesser significance were passed in the 1995-2003 period. A more detailed summary of reform legislation in Texas during this period can be viewed at the TLR website, www.tortreform.com.
- The details of the 1995-2005 Texas civil justice reforms are summarized in the Appendix.
- The defense bar’s antagonism to litigation reform occasionally slips into print, as when a letter from an officer of the Texas Association of Defense Counsel, their lead bar group, referred to “the misperception that TADC was in favor of tort reform and the flattening of lawyer income in several areas of the state.”
- There have been notable exceptions, of course, among both law firm defense lawyers and corporate litigators. The most exceptional segment of the bar, however, has been in-house counsel. These lawyers, most notably the general counsels, must live with executive management and carry the often painful burden of explaining litigation issues and outcomes to both management and the board of directors. Most inside lawyers eventually come to see litigation from the same viewpoint as their clients, providing these lawyers a level of motivation rarely encountered among outside lawyers. For all of their professionalism, outside counsel do not personally suffer the burden of unjust and abusive litigation. Their careers and prosperity, in fact, depend on the legal status quo. Abusive lawsuits make money for the law firm’s trial department, and a perilous litigation environment enhances the value of wise counsel and tightly drawn transactional instruments. Of course, good lawyers are against bad laws, but without specific fee-paying engagements from a client, most outside lawyers are content to leave reform work to others.
- The Trials of late have also gone to great lengths to conceal their massive contributions by laundering them through a maze of innocuously named but heavily funded PACs. See www.txtriallawyerwatch.org.
- We do not suggest that ours is the only path to effective participation in electoral politics. In some states, for example, reformers have achieved this end by forging alliances with the political campaign of a candidate for governor. This factor was a major element in TLR’s support of the successful gubernatorial campaign of George W. Bush in 1994, which set the stage for TLR’s reform successes in the 1995 session. The same was true in a number of other states, most recently the major litigation reforms enacted in 2004 in Mississippi following the election of Governor Haley Barbour. Other types of reform groups, for example mass movements such as high-profile educational or social reform groups, can deliver campaign workers rather than campaign finance, to equally good effect. Whether alone or in tandem with candidates or other groups, however, strength in the electoral process means greatly enhanced prospects for success in legislation.
- When TLR began to stir the pot in 1994, we received increasingly severe messages from legislative leadership, particularly the Speaker of the House, a long-time plaintiff lawyer ally. In speeches before groups that included significant TLR supporters, Speaker Pete Laney pointedly opined that only glacial gradualism would work in litigation reform—perhaps one reform issue per session. This message was tantamount to saying that no real progress would ever be made. At the same time, word of a sustained whisper campaign came back to us, suggesting that we would do better to stay in Houston and tend to our own business; that Austin insiders knew the score and could handle things, while we were clueless; and that TLR’s leadership consisted of naïve and unruly amateurs who would get nowhere. At first, the political naïveté reports were not entirely incorrect, but we learned. For the most part, this campaign increased our determination to push aggressively for reform.
- TLR began with four lead volunteers who devoted between 10 and 95 percent of their time over the eleven-year period beginning in 1994. Since the Legislature meets for five months every other year, the time demands on these volunteers varied depending on the year and on the pace of operations connected with elections and legislative sessions, with the heaviest engagement occurring during periods in which prospects were brightest—particularly 1994-95 and 2002 through the present. Finding volunteers willing to devote this level of time might prove difficult, and the resulting mix of volunteers and professionals might need to be changed to reflect what can actually be achieved. However, TLR’s experience suggests that dispensing with direct, hands-on, and independent volunteer leadership will substantially weaken the effectiveness of a state reform organization.
- Existing state and national research sources have proven invaluable to the reform effort in Texas. Numerous national groups have published valuable research, including the Manhattan Institute; the RAND Institute for Civil Justice; the Institute for Legal Reform of the U.S. Chamber of Commerce; the AEI-Brookings Joint Center; the American Tort Reform Association; and the Federalist Society. The Texas Public Policy Foundation at the state level likewise performed key studies that materially aided the reform effort. The American Legislative Exchange Council has maintained a valuable resource in its exceptionally well-crafted and practical civil justice model acts.
- TLR found find that many lawyers, including many conservative practitioners who favor reform, are simply uninterested in expending the time and energy to change the system. So you need to pick a lawyer who really believes in your issue to be able to tap into the legal creativity that is needed for the structuring of truly effective reform legislation.
- A 2002 Scripps Howard “Texas Poll” designed by a skeptical reporter asked the question “Is tort reform personally important to you and your family?” Seventy-eight percent of the 1000 Texas respondents answered “Yes.”
- The continued low ranking of the Texas civil justice system in national surveys reflects this institutional problem. Particularly in a number of East Texas, coastal, and Rio Grande Valley counties, judgments rendered by plaintiff-dominated local courts continue to nourish the unsavory reputation Texas earned in the 1980’s. The fact that the Texas Supreme Court and most courts in big cities such as Dallas and Houston are now part of the national judicial mainstream will never be sufficient to muffle the ongoing and justified reports of trial court atrocities committed in the “hell-hole” counties of Texas.
© 2006 Texans for Lawsuit Reform