Trial lawyers seek to recession-proof their practices
Chris Rizo Apr. 1, 2009, 7:17am
WASHINGTON - Even trial attorneys are not immune from the historic economic crisis hammering the United States, legal observers said.
With rising concern over cash flow, firms across the country are increasing their marketing efforts, crafting deals with state attorneys generals and lobbying Congress for plaintiff-friendly legislation.
Following a recent exclusive conference for plaintiffs attorneys, Harlan Schillinger, vice president and director of marketing for Network Affiliates, the nation's largest lawyer advertising agency, said that lawyers are not immune during these troubled times.
"The economy is affecting a lot of practices," he said, noting that cash flow is "an enormous battle" in many plaintiffs' firms, particularly because collecting fees and settlements from insurance companies is "a bit of a struggle because they (too) are having a tough time."
On Capitol Hill, the presence of the powerful trial lawyers lobby coupled with friendly Democratic leaders is raising concern among tort reform professionals.
A bevy of bills pending in Congress contain controversial provisions to allow trial lawyers to pursue civil causes of action on behalf of state attorneys general, and if enacted those provisions could brew a national legal storm, said Theodore Frank, a scholar in the American Enterprise Institute's Legal Center for the Public Interest.
The provisions seek to allow states to appoint outside counsel to represent the state, mostly in consumer protection lawsuits and often on a contingency basis.
Critics say the arrangement encourages cronyism and pay-to-play politics since AGs can tap their high-dollar campaign contributors to represent the state as a reward for their political support.
Frank said the provisions are abundant -- and buried -- in both state and federal legislation this year, and provides trial lawyers with a gift that doesn't draw much attention.
"It's a nice way to hide a giveaway that creates real litigation problems, but just sounds like a good-government kind of maneuver," Frank said.
He added that there is a "broader agenda" by trial lawyers to expand the U.S. False Claims Act and bar the use of mandatory arbitration clauses in consumer contracts.
"A lot of these things are going to pass," he said. "You have economic problems out there. You have Democratic legislators looking for solutions to those problems and you have trial lawyer lobbyists suggesting, 'As long as you are looking for solutions, add a civil cause of action to the bill.'"
Proponents of legal reform say the powerful trial lawyers' lobby has little interest in anything other than trying to help their membership make a better living.
Earlier this month, about 400 plaintiffs' attorneys gathered at the swanky casino-resort Wynn Las Vegas for a "Mass Torts Made Perfect" seminar to learn just how to do that, more perfectly.
The seminar was put on by a company co-founded by noted Florida attorney Mike Papantonio, who won mammoth asbestos-related lawsuits in the 1990s and more recently won significant cases against pharmaceutical companies.
The two-day seminar is closed to members of the defense bar, said Nancy Holston, a spokeswoman for Pensacola, Fla.-based legal seminar brand.
"The type and amount of information that we can give out is much greater (than many other legal conferences) because you don't have any risks involved with the defense being there." Holston said in an interview. "They are very closed meetings, strictly for plaintiffs' attorneys."
One attendee at the event said that just like other types of businesses, law practices too must seek out new markets, whether its potential clients who were allegedly harmed by defective products or by exposure to cancer-causing asbestos.
For some practices, those new markets could be tapped by pursuing lawsuits in state court over federally approved drugs or medical devices, Schillinger said.
Schillinger said the $1,000 conference was well worth the expense to hear analyses of the legal landscape as it relates to the mass tort arena.
He said the "big buzz" at the conference was the recent U.S. Supreme Court federal preemption decision against pharmaceutical company Wyeth, affirming the right to sue in state court over complications from federally-approved medications.
The decision will "open up some torts" against pharmaceutical companies, at a time when the lagging national economy is pinching law practices around the country, Schillinger said.
To help attract potential clients, law firms' advertising and marketing expenditures have increased 11 percent, Schillinger said.
"The group is not necessarily a litigious group. They fight their battles and there are a lot of battles on the table right now," particularly against pharmaceutical companies, he said.
Schillinger said most of the 90 law firms he has as clients work with him to find new, legitimate cases.
"What they are focused on are finding legitimate cases that have meaning," said Schillinger, whose company represents such big name law firms as Jacoby & Meyers, The Cochran Firm and the offices of Fleming & Associates of Houston.
"This is about doing the right things: Taking on injustice and turning it into justice and the dollars will follow," he said.
Tom Scott, executive director of California Citizens Against Lawsuit Abuse, said the trial bar is trying to capitalize on the election of U.S. President Barack Obama and stronger Democratic majorities in Congress.
"You can see that everywhere at the federal level, whether it is the recent Wyeth decision or arbitration. And that does not even touch how they have been moving against the private sector with class actions," he said.
Scott noted that in California, trial lawyers' legislative agenda seems be on hold pending what happens in the District of Columbia.
"The bottom-line is that trial lawyers are about money and profit. It is not about victims. Victims are simply a vehicle for them to attain their financial goals," he said.