Most corporate defendants begin their work on cases when they have received notice of a claim or are served with process, but that is not when personal injury lawyers begin and plan lawsuits in 2002. When modern personal injury lawyers target tobacco companies, pharmaceutical companies, insurers and other so-called "unpopular" industries, they begin by vilifying the company, and sometimes an entire industry, in the media. The planning behind these media campaigns is intense and calculated. Almost like land mines that explode from time to time over a period of months or years, these stories burst into the news. To a casual observer, they are random. To an astute observer, they are planned.
Watch how these stories appear with regard to the fast food industry, which has been targeted as a new deep pocket defendant for litigation. First stories will appear about how children may become "addicted" to fast foods. Then stories are likely to arise that companies who sell such foods knew about health risks, but didn't inform the public. Already plaintiffs in these lawsuits are publicly claiming that they were unaware that years of eating a diet of mostly fatty foods could harm their health. There will, I assure you, be more "news" reports in this area.
The next step, which sometimes takes place simultaneously with the first step, is for the plaintiff lawyers' friends in government help them out, sometimes by turning public perception against the defendant's industry and subtly "educating" the jury pool to find in favor of the plaintiffs. For example, with regard to tobacco, Senator Kennedy, Congressman Waxman and others issued stinging statements about tobacco, held investigative hearings, and changed the perception of the American public about the tobacco industry.
Similar rumblings are going on in government now with respect to fast foods and high fat content. Already, the Internal Revenue Service has classified obesity as a disease for the deduction of medical expenses. This may seem like a minor news item to some, but calling obesity a "disease" suggests that it is not a person's fault if they eat a ton of fast food, and gain a ton of weight.
Some of the most sophisticated members of the plaintiff's bar have added a third element to their campaign prior to filing lawsuits: visiting analysts who are in the institutional investor community. Some personal injury lawyers use these visits as an opportunity to present their case, and frighten industry analysts so that they will lower their evaluation of common stocks. This precise approach was taken in lawsuits brought against health maintenance organizations, and within twenty-four hours after these visits, the industry's stocks dropped twenty-five percent overall. This gives plaintiff's lawyers a new weapon to forge a settlement; "If you settle with us, we will help your stock go up.". Some critics have called this technique legal extortion.
THE IRON TRIANGLE DEFENSE
Traditional legal defenses do not work against these new assaults. By the time the lawsuit is filed, the plaintiff's lawyers are already on third base. A different approach is needed.
Companies need to have a media watch and strategy. First, companies must know when the media assaults are happening, and then know what to do about them. We have counseled clients in this context and find that the earlier one acts, the more likely that a very serious situation can be avoided.
Likewise, government and public relations people need to work in tandem with those who are in corporate legal departments. Unfortunately, in some corporations, as a practical matter, the government and public relations persons and litigation principals do not have regular weekly communications with each other.
Finally, companies need to be upfront with the institutional investor community. A company faced with high-stakes litigation may be reticent to give information in light of concerns about rules dealing with full disclosure, but if the company does not provide appropriate information, the personal injury lawyer will have a free hand in describing a lawsuit and will be able to cement an erroneous perception in the American people that the defendant has committed a grievous public wrong.
We have developed the Iron Triangle Defense to combat the tactics of modern personal injury lawyers. The Iron Triangle Defense pulls together media, government and investor community relations, and strong litigation skills to combat the new-style litigation launched by some clever plaintiffs' lawyers.
REGULATION THROUGH LITIGATION
When strategically bright plaintiff's lawyers make modern assaults, they often choose to pursue regulation through litigation. What is it? Regulation through litigation simply is using the tort system to regulate behavior. This is different than the traditional use of the tort system, which is to compensate a victim. To be certain, victims may be compensated, but the overall thrust of regulation through litigation is to attempt to change the way an industry behaves. For example, regulation through litigation lawsuit may be brought to attempt to require tobacco to change its advertising, or to make a pharmaceutical industry change the way it prices its products.
In a nutshell, the plaintiff's lawyers are using the tort system as a substitute for policymaking by Congress or regulatory agencies. They try to convince a judge that he or she is the only one who can bring about a worthwhile social goal. They argue that Congress or legislators are compromised by political money. Only the Judge, by changing rules of tort law, can accomplish a needed goal.
Plaintiff's lawyers have targeted a number of industries with their regulation through litigation efforts: tobacco, guns, lead paint, health maintenance organizations, latex gloves, and chemicals. The latest is a very serious litigation assault on pharmaceuticals and a nascent attack of fatty foods.
Regulation through litigation can be addressed in the courtroom, but it also needs to be publicly debated. Blue, pink and white collar individuals need to understand that letting the courts decide key political questions is not in their interest. The fundamentals of our democracy require that our legislature and executive branches decide public policy.
The American Legislative Exchange Council has suggested a legislative remedy, The Fairness in Litigation Act. In a nutshell, this model legislation provides that the government cannot have a greater right to sue than an individual. This means that when it brings a claim, the government would stand on equal footing with an individual who has been hurt. If that principle had been used in tobacco cases, there probably would have been no need for a settlement of the cases. The absence of that principle could threaten fast foods, chemicals, pharmaceuticals and a myriad of other industries by giving the government "super plaintiff" powers.
THE STATE LEGAL OFFICIAL/CONTINGENCY FEE LAWYER ALLIANCE
Regulation through litigation is particularly effective when government officials form alliances with private contingency fee lawyers. This tactic started in the state attorneys general lawsuits against tobacco; it has continued with litigation against HMOs, lead paint, and, most recently, pharmaceuticals. It is one thing to be threatened by plaintiff's lawyers. It is another to be threatened by state attorney generals. Being threatened by an alliance of the two can overwhelm the largest industries. The combination also captures media attention, again shaping the perception of potential jurors.
Some have said this alliance is benign and may be helpful, but it has serious shortcomings. Contingency fee lawyers, whatever their motives, are not public officials. Their goal is to make a large profit, not necessarily to act in the best interests of the public. These alliances also create the possibility for fraud and corruption to occur.
The American Legislative Exchange Council has developed model legislation that can help assure that when government officials ally themselves with private contingency fee lawyers, the alliance is done in fair and just manner. The model Private Attorney Retention Sunshine Act would require state attorney generals or other officials to hire personal injury lawyers in the open, under public scrutiny, when there are large fees at stake. Already, Texas, South Dakota, Kansas and Virginia have adopted this law. It represents sound public policy.
JUDICIAL HELLHOLES – LAWLESS JUDGES AND RUNAWAY JURIES
Regulation through litigation and the personal injury lawyer contingency fee alliance finds raw meat in "judicial hellholes" when one has lawless judges and the potential of runaway juries. The American Tort Reform Association has produced a booklet titled "Judicial Hellholes," which is available through its website, www.atra.org. The booklet pinpoints eleven areas in the United States where courts have not adhered to the fundamental principle of "equal justice under law". Like powerful magnets, these courtrooms attract plaintiff's lawyers from all over the country. Loose venue rules (which allow a plaintiff to sue in a jurisdiction simply because a company may do business there) pull thousands and sometimes tens of thousands of cases into these jurisdictions. In one Mississippi town, for example, there are twenty thousand claims, although only ten thousand people live there.
This is unfortunate for the local residents because their legitimate claims may be delayed four, five or six years, while out-of-state claims are brought forward. The out-of-state claimants themselves may not be treated fairly; in resolving mass claims, plaintiffs' lawyers often will favor the in-state plaintiffs. These judicial hellholes also create a "hell" for the local small businesses, which are often not real defendants but have to pay real defense costs. Local businesses often are named in the suits in order to allow plaintiffs' lawyers to manipulate jurisdiction rules and keep the cases out of federal court, often a more appropriate and neutral forum
Judges in judicial hellholes can inflame juries or expose them to prejudicial argument. But that alone does not lead to runaway juries.
Unfortunately, in some jurisdictions, juries do not represent a cross-section of the population, the traditional "jury of one's peers." Wealthy individuals, professionals, and persons who may think they are of importance to society get excused from jury duty. This simply is not right. The state of New York and the city of New York have universal jury service. People must serve; they are not excused because of status or wealth. The American Legislative Exchange Counsel is sponsoring a universal jury service project and is considering model legislation on the subject.
WHAT YOU CAN DO TO KEEP PERSONAL INJURY LAWYERS FROM DESTROYING YOUR VILLAGE
The new tactics of the more sophisticated plaintiff's lawyers, regulation through litigation, and the government official-contingency fee lawyer alliance do not have to destroy your village. You can defense against these new assaults by adopting the Iron Triangle approach. Combine public relations, government relations and litigation; have them work together for your benefit instead of independently.
You also can help achieve fairness and equity in modern litigation by supporting the American Legislative Exchange Council's legislative initiatives, described in this article, and the American Tort Reform's project to shine light on judicial hellholes. We believe with light, comes heat, and with heat comes a self-correction.
The situation is a serious growing cause and needs practical and effective means to address it. It is not a situation where hope is lost. To the contrary, equal justice under law can be restored.