December 2, 2004

THE FIRST THING WE DO: A MORE MODEST APPROACH TO TORT REFORM

Tort reformers can be heard daily beating their drums for radical overhaul of the tort system. Doctors and other professionals claim the costs of frivolous lawsuits drive them out of practice. Trial lawyers are blamed because, without any investigation of the facts or law, they file lawsuits that have no merit.

Trial lawyers file frivolous lawsuits with impunity, extorting nuisance settlements from innocent victims. The unchained appetites of these unprincipled attorneys damage the public perception of the legal system, clog overcrowded courts, and victimize innocent parties.

Some may find Shakespeare's tort reform proposal appealing, if only for visceral reasons. Before considering Shakespeare's proposal, I offer a more modest proposal: Allow victims of frivolous lawsuits to sue the opposing lawyers for negligence.

A TORT REFORM PROPOSAL:

TREAT ALL PROFESSIONALS, INCLUDING LAWYERS, EQUALLY

How the Tort System Applies to Other Professionals

Doctors, engineers, accountants, and most other professionals can be sued for negligence not only by their clients, but also by third parties. They can be liable whenever they owe a duty to the injured person. The concept of duty is rooted in public policy, and the determination of whether a duty should be imposed on a professional involves a balancing of public policy considerations.

Courts impose a duty on a professional despite the express contrary direction of the professional's client. An engineer cannot design a building that is unable to withstand expected loads because the client demanded a less costly design. A doctor cannot allow his patient to drive home when the patient is impaired and may injure others. In each of these situations, courts are justified in imposing a duty. The engineer and doctor will be deterred from exercising less than appropriate care. This deterrent effect of the tort system is one of its most important functions.

Many professionals believe that a disciplinary proceeding by a licensing board is a more appropriate deterrent than tort liability. They believe that only those who have mastered the professional body of knowledge are capable of evaluating a professional's performance. Doctors argue that a lay jury is not competent to pass judgment on a doctor because jurors are not qualified by education, training, or experience, and may base their decision upon their emotions. They argue that trial by jury is unfair and harmful to the profession because it usurps the power of the professional boards established to punish professionals who violate the profession's standards.

Trial lawyers respond to this argument by pointing out that the purpose of professional licensing boards is to discipline members. These boards do not redress the wrongs inflicted by professionals against the innocent public. The primary purposes of the tort system are not to discipline professionals, but to redress and deter wrongs. The disciplinary system and the tort system complement each other, and both are necessary.

Trial lawyers argue that disciplinary boards, composed of members of that profession, are more concerned with protecting their colleagues than with protecting the public. Trial attorneys also complain that they are unable to find an expert witness willing to testify against his brother professional because of a "conspiracy of silence." If it is known that the disciplinary boards will protect their colleagues, professionals will not exercise appropriate care as consequences are unlikely. The tort system is needed to deter wrongful behavior.

Unlike other professionals, a lawyer generally cannot be held liable in tort for the harm he causes by filing a lawsuit without merit. A lawyer is liable to a victim of a frivolous lawsuit only if the victim can prove malice. Malice is proven by evidence that the lawyer acted with an improper purpose. Because of the difficulty in proving malice, few lawsuits are brought against lawyers.

Tort law holds other professionals liable without requiring proof of malice. If proof of malice were required, few professionals would ever be held liable, few victims would receive compensation, and the deterrent effect of tort law on professionals would be lost.

The appropriate standard for determining the duty a lawyer owes to an opposing party should be the same standard used for other professionals. Every court that has considered an opposing party's negligence claim against a lawyer has refused to hold the lawyer liable because of public policy justifications. Some of the justifications are narrow-minded, cynical, and unworthy of discussion. The three more plausible arguments for refusing to hold a lawyer liable in negligence to an opposing party are: (1) procedural sanctions and bar disciplinary proceedings are the appropriate means of deterring lawyer negligence, (2) an irreconcilable conflict of interest between the lawyer and his client would arise, and (3) free access to the courts would be restricted. Let us examine these public policy reasons.

Every court that has considered whether a lawyer should be held liable to an opposing party for negligence has concluded that procedural sanctions and bar disciplinary proceedings are the only appropriate means to deter wrongful conduct by a lawyer. Courts state this conclusion without justification, as though the conclusion speaks for itself. The purposes of the tort system are compensation and deterrence. Do procedural sanctions and disciplinary proceedings accomplish these purposes?

Rule 11 of the Federal Rules of Civil Procedure requires a lawyer to conduct a reasonable investigation, and to certify the lawyer's belief that the lawsuit is warranted by law and the facts have evidentiary support. A court may sanction a lawyer who violates this rule.

If a lawyer is sanctioned, the sanction usually does not compensate the victim. The Rule limits any sanction to the amount needed to deter future violations. The sanction usually consists of a reprimand or an order to pay a penalty into the court. A judge will order a lawyer to compensate the opposing party only if needed for effective deterrence. Since the deterrent effect of a fine is rarely affected by the identity of the payee, it is unlikely a judge will ever order payment to the opposing party. Disciplinary proceedings likewise do not compensate a victim of a frivolous lawsuit. Therefore, procedural sanctions and disciplinary proceedings fail to achieve the first of tort system's purposes - redressing harms caused by wrongdoers.

Although the sole purpose of Rule 11 is deterrence, it fails to deter because judges, like the professional disciplinary boards that "protect their own," do not like imposing punishment upon their friends and members of their own profession. The deterrent effect of procedural sanctions and disciplinary proceedings is further eroded because victims of frivolous lawsuits have no incentive to report wrongful conduct. Since judges generally do not order the violating lawyer to compensate the injured party, the injured party is unlikely to file a motion for sanctions since he would be throwing good money after bad.

Just as the tort system is an important complement to other professions' disciplinary boards, the tort system should be used to complement the procedural sanctions and disciplinary proceedings against lawyers who file frivolous lawsuits. The different systems have different purposes, and neither effectively replaces the other.

Courts have held that if a lawyer owed one duty to his client and another duty to his client's adversary, he would be faced with an irreconcilable conflict of interest because it would be in his client's best interest to proceed one way and in the adversary's best interest to proceed in another way. This concern falsely states the problem in order to justify the conclusion. If a lawyer were required to proceed in the opposing party's best interest, no lawsuit would ever be brought. The duty a lawyer owes to his client's adversary is to conduct a reasonable investigation of the law and the facts, and to candidly assess whether the claim has merit before filing a lawsuit.

Imposing even this lesser duty on a lawyer can create a conflict of interest. However, conflicts of interest are inherent in any professional relationship. As the preamble to the lawyer's Rules of Professional Conduct makes clear, lawyers must reconcile numerous conflicting duties. For instance, a lawyer may not reveal his client's confidence or secret (duty to client), but he also may not knowingly use perjured testimony (duty to court). If a client testifies falsely, a lawyer is obligated to inform the court despite the lawyer's duty to his client. Reconciling conflicts is not always easy, but it is a necessary aspect of any profession.

Courts have uniformly held that the public policy of free and unfettered access to the courts by all citizens overrides the need to impose on lawyers any duty to opposing parties. They have justified their decisions with various rationales such as:

• The legitimate interest in reducing frivolous lawsuits is outweighed by the state's interest in having "these disputes" [frivolous lawsuits?] resolved in a court of law.
• Courts must be kept open without fear of prosecution for using the courts.
• A litigant's free access to the courts would be restricted if his lawyer was fearful of being held liable as insurers of the merits of the case, and therefore unwilling to undertake "close or difficult matters."
• The very purpose of a court is to determine whether an action has merit. A lawyer cannot be liable for failing to determine in advance that which, ultimately, only the courts could determine.

These reasons are illogical and parochial. First, it is illogical to deny citizens harmed by a frivolous lawsuit free and unfettered access to the courts because free and unfettered access to the courts must be preserved for all citizens. If free access is an essential privilege of citizenship, it must be a privilege maintained for all citizens, including those harmed by a frivolous lawsuit.

The concern that every citizen have free access to the courts is not undermined by a requirement that attorneys investigate the law and the facts. The state has no interest in having frivolous lawsuits resolved in court. In fact, the public interest is served by a policy that discourages frivolous lawsuits.

If unprincipled lawyers are held liable for filing frivolous lawsuits, responsible lawyers should not be concerned that they will be "prosecuted" for bringing a nonfrivolous but unsuccessful lawsuit. Just as a doctor is not liable simply because his patient dies, a lawyer would not be liable simply because the lawsuit is lost. A lawsuit against a lawyer, like those against other professionals, does not "prosecute" the lawyer, but determines liability, compensates the injured, and discourages negligence. A lawyer's concern that he would become an insurer of his client's case in "close" cases is absurd unless "close" means "close to frivolous" and not "close to successful."

The argument that it is unfair to hold a lawyer liable for failing to determine that which only a court could determine is an abdication of lawyer responsibility and an insult to the legal profession. This argument devolves into a Humpty Dumpty world where everything means just what a court says, neither more nor less. Using this logic, a lawyer is free to disregard all rules, laws, and precedents. For instance, since it is the role of the jury to determine the truthfulness of a witness, a lawyer would be free to put forth a witness that the lawyer knows is lying because it is not the lawyer's role to determine in advance what the jury will determine is truthful. The trial lawyer's sole role would be to throw mud at the wall to see what sticks. This role is not worthy of the title, "profession."

If lawsuits against lawyers who file frivolous lawsuits are allowed, free access to the courts will be expanded, not restricted. With this expanded access, courts need not be concerned about a sustained flood of lawsuits against lawyers with meritorious but unsuccessful lawsuits. First, a lawyer will not be liable unless a jury finds the lawyer negligently filed a frivolous lawsuit. Just as trial lawyers place unwavering faith in the ability of a jury to decide whether a brain surgeon or rocket scientist exercised an appropriate degree of care, trial lawyers should be confident that a jury will competently consider and decide whether a lawyer conducted a reasonable investigation or candidly assessed the merits of the lawsuit. Second, just as lawyers complain about the "conspiracy of silence" when seeking an expert witness, both victims of frivolous lawsuits and revengeful litigants of a meritorious lawsuit will have difficulty finding representation to bring a lawsuit against the lawyer who filed the frivolous lawsuit.

Trial lawyers should welcome allowing the innocent victims of frivolous lawsuits access to the courts. As Trial Lawyers for Public Justice argues on its website, "Our nation was created by people who understood that power unchecked is power abused. That is why we have . . . the right to a day in court." Lawyers have the unchecked power to set into motion the whole legal system against the opposing party. This power can be checked only if victims of frivolous lawsuits have their day in court.

CONCLUSION

Equal Justice Under Law. This simple and compelling concept incised above the entrance to the U.S. Supreme Court has inspired lawyers to fight for the rights of the weak against the strong, to give voice to the silent, to balance the scales of justice. It is ironic and disappointing that lawyers have put themselves above the law. Equal justice compels us to treat lawyers just as we treat any other professional.

If frivolous lawsuits are uncommon, allowing lawsuits against lawyers who file frivolous lawsuits will have little effect on the legal profession. Lawsuits against lawyers will only be filed in the few occasions that a lawyer negligently files a frivolous lawsuit. There should not be any resistance to changing the law.

If, however, frivolous lawsuits are common, allowing lawsuits against lawyers will have an enormous impact upon the legal profession. First, there will be many meritorious lawsuits filed against the lawyers who file frivolous lawsuits. Second, there will be many frivolous lawsuits filed by the lawyers who file frivolous lawsuits against lawyers who file meritorious original lawsuits.

This initial flood of lawsuits should quickly fall to a small but steady stream as the brilliance of the American tort system begins its work. With guidance from juries expressing community values about justice and fairness, lawyers will be enlightened and deterred from negligently filing frivolous lawsuits. When lawyers are held accountable, the standards of the legal profession will rise. These higher standards will benefit the legal profession and all of society.

And if this tort reform proposal does not reduce frivolous lawsuits, then we always have Shakespeare's proposal.

Copyright
Peter Coote
General Counsel
Pennoni Associates Inc.
October 6, 2004