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Civil Justice Memo
No. 19 February 1990

The Underside of the Tort Business

by Walter Olson

On January 11 federal prosecutor Andrew J. Maloney announced the indictment of a group of lawyers and others accused of faking personal injury claims. In one case it was alleged that one of the group used a pickax to widen a pothole so it could be blamed for an earlier accident. In another case, Maloney said, "They produced an eyewitness to two automobile accidents. The witness was never at either accident and, at the time of one accident, he was serving time on a forgery charge." Seven of the nineteen lawsuits involved were against New York City.

Pamela Liapakis, the head of New York's powerful association of trial lawyers, was quick to criticize the enforcement action. The idea "that the city is being victimized by people who are bringing lawsuits that are in some ways not legitimate," she said flatly, is "simply not true". Then, seemingly in the next breath, she added that if the charges did pan out, they should be ignored as atypical.

It appears however, that those indicted were by no means peripheral or marginal players in the tort business. According to The Wall Street Journal's report, the Eisen personal injury firm, which is at the center of the investigation, has been known as one of the largest in the city and country, taking in an estimated $20 million in contingency fees in 1986.

The indictments follow in the wake of a string of similar scandals around the United States in recent years. In one of the most outstanding journalistic efforts, reporter Joe Starita of the Miami Herald published a series of articles in October 1988 on a ring of lawyers and doctors who allegedly conspired to create and exaggerate injury claims. Indictments and disciplinary action followed. Another scandal is pending in New Jersey, where members of a law firm have been indicted amid allegations of massive fraud in autoaccident claims.

When editor Jane Berentson of American Lawyer posed as an injury victim and visited thirteen tort lawyers at random some years ago, eight of them honestly told her she had no case, while five advised her to commit perjury by claiming she had fallen on a nearby Con Ed property. Maybe it's too hasty to tar the whole personal injury industry with the alleged excesses of a portion of its members. If so, all the more unfortunate that public leaders of the industry still show so little interest in cleaning up those excesses.


Center for Legal Policy.



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