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Trial Lawyers, Inc.: A Report on the Asbestos Litigation Industry

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Trial Lawyers, Inc.: A Report on the Asbestos Litigation Industry

January 1, 2008
Legal ReformOvercriminalizationCivil Justice

When the Manhattan Institute’s Center for Legal Policy released its first Trial Lawyers, Inc. report, in 2003, we called asbestos litigation the “longest-running mass tort in U.S. history and arguably the most unjust.”[1] Even as the incidence of new cases of the serious lung cancers caused by asbestos remained constantfor mesothelioma, at 2,000 to 4,000 per yearnew asbestos claims exploded, nearing 100,000 in 2001 (see graph below).[2]

The overall cost of asbestos litigation is staggering, totaling over $70 billion in direct losses and bankrupting 80 companies. Of that $70 billion, fully $40 billion has gone to lawyers.

This report describes Trial Lawyers, Inc.’s asbestos litigation business line in more detail. A flame retardant originally thought to be a “magic mineral,” asbestos ended up causing the death of thousands of individuals; likewise, litigation that originally sought redress for the truly injured metastasized into a big business that in too many cases recruited sham victims to beef up the plaintiffs’ bar’s bottom line.

The business model underlying such abusive litigation uses sophisticated marketing to attract thousands of claimants, generates cases with flimsy medical diagnoses, and packages claims together to overwhelm defendants and courts. Ultimately, the attorneys bully besieged defendants into settlements that enrich Trial Lawyers, Inc., while leaving genuinely injured claimants high and dry.

The overall cost of asbestos litigation is staggering, totaling over $70 billion in direct losses (see graph below) and bankrupting 80 companies.[3] Of that $70 billion, fully $40 billion has gone to lawyers.[4] And as those bankruptcies have moved corporate defendants out of Trial Lawyers, Inc.’s crosshairs, asbestos lawyers have targeted companies with ever more tenuous ties to asbestos’s manufacture. Ironically, then, much of modern asbestos litigation has involved the filing of lawsuits by individuals who aren’t sick against companies that never made the product alleged to have caused their sickness. Asbestos litigation today is thus exceptionally costly, extremely inefficient, and unfair to defendants and legitimate plaintiffs alike.

In addition, asbestos litigation has threatened the very integrity of the legal system itself. As recently noted by Chief Judge Dennis Jacobs of the Second Circuit U.S. Court of Appeals, judges in asbestos litigation have all too often processed massive caseloads “without regard to whether the claims themselves are based on fraud, corrupt experts, perjury, and other things that would be deplored and persecuted by the legal profession if done within other commercial fields.”[5]

In 2005, as we documented in a Trial Lawyers, Inc. Update,[6] U.S. District Court Judge Janis Graham Jack proved a striking exception to this historical trend. Judge Jack uncovered massive fraud in the asbestos litigation industry: thousands seeking recovery for alleged injuries purported to be caused by silica exposure, 60 percent of whom had already recovered from lung injuries supposedly caused by asbestos.[7]

As well as documenting asbestos-silica “double-dipping,” Judge Jack highlighted how asbestos and silica lawyers were shuffling plaintiffs through bogus medical exams geared toward finding injuries. Recent cases have echoed her findings: in one case last year in West Virginia, defendants said they had discovered claims filed by fictitious plaintiffs and diagnoses conducted by fictitious doctors.[8] Others paint a portrait of even broader corruption: a Miami asbestos lawyer stole millions from his own clients,[9] and a Pennsylvania judge was convicted of soliciting bribes from attorneys with asbestos dockets before him.[10]

How can we fix asbestos litigation? The solution must rely on all three branches of government.

State-level tort reforms and Judge Jack’s documentation of fraud have made trouble for Trial Lawyers, Inc.’s traditional asbestos litigation business model. With judgesand prosecutorswatching more closely, the number of new filings in which plaintiffs have not developed malignancies has plummeted over 96 percent.[11] Large asbestos law firms have had to trim hundreds from their payrolls.[12]

Still, it would be foolish to assume that Trial Lawyers, Inc. will give up its long-running revenue stream without a fight. Lawyers have been shifting cases into new states without tort reform laws. Hundreds of thousands of claims remain outstanding. Many billions of dollars in asbestos bankruptcy trusts are still to be paid out to future claimants. Lawyers have begun developing a new double-dipping strategy in which they try to recover money from both the trusts and in court, in different jurisdictions, without any disclosure or offset. And Trial Lawyers Inc. begun setting up mass asbestos screenings to generate more plaintiffs.

How can we fix asbestos litigation? The solution must rely on all three branches of government. The striking evolution of the trial lawyers’ business model after Judge Jack’s decision shows the importance of strong and continual judicial supervision of the asbestos docket. Judges should not only look to ensure that claims are legitimate but also scrutinize settlements to ensure that they are fair. Prosecutions are needed as well to punish and deter wrongful conduct.

Legislatively, efforts to develop a comprehensive federal solutionafter years of tryinghave proved to be fruitless. Several states have, however, made progress, and a piecemeal state-by-state approach to the problem may be the only feasible way to ameliorate the asbestos litigation climate in the near future. Reforms might include: insisting on real medical standards of evidence; barring lawyers from shopping their cases to lowest-common-denominator jurisdictions; revising joint-andseveral liability laws to protect tertiary defendants from shouldering costs caused principally by others; and adopting transparency rules to ensure that asbestos claimants are not double-dipping into the bankruptcy trusts and multiple jurisdictions.

This latest edition of Trial Lawyers, Inc. is not intended to cover comprehensively the intricacies of asbestos litigation and the various policy remedies being pushed. We do hope that it will help readers understand the business model underlying the asbestos lawsuit machineunfortunately, a paradigm for the litigation industry as a whole.

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