Subject: Less Litigation, More Justice
Date: Published: 8/14/91 (171 lines)
Source: Wall Street Journal. Copyright Dow Jones & Co. Inc.

    Less Litigation, More Justice

    Throughout our history, Americans have cherished our
 system of civil justice as one of the cornerstones of our
 free and democratic society.  In the past 30 years, our legal
 system has become burdened with excessive costs and long
 delays.  Overuse and abuse of the legal system impose
 tremendous costs upon American society:  an estimated $300
 billion a year.
    To address these problems, the President's Council on
 Competitiveness, which I chair, established a working group
 on Federal Civil Justice Reform in January 1991.  The working
 group, led by Solicitor General Kenneth W. Starr, was asked
 to recommend reforms to the federal civil justice process in
 order to decrease the costs and time required to resolve
 legal disputes.  The following is excerpted from the Council's
 Final Report, released yesterday, and entitled "Agenda for
 Civil Justice Reform in America."
    -- Dan Quayle
    In 1989, nearly 18 million new civil cases were filed in
 the state and federal courts.  This amounts to one lawsuit for
 every 10 adults.  In the federal courts alone, the number of
 lawsuits filed each year has almost tripled in the past 30
 years -- from approximately 90,000 in 1960 to more than
 250,000 in 1990.
    This dramatic growth in litigation carries with it very
 high costs for the U. S. economy.  A recent survey by the
 Conference Board, a group of 3,600 organizations in more than
 50 nations, reports that for fear of civil liability:
    -- 47% of U. S. manufacturers have withdrawn products from
 the market;
    -- 25% of U. S. manufacturers have discontinued some forms
 of product research.
    -- Approximately 15% of U. S. companies have laid off
 workers as a direct result of product liability experience.
    According to a 1984 study commissioned by the U. S. 
 Department of Commerce, foreign competitors often have
 product liability insurance costs that are 20 to 50 times
 lower than U. S. companies.  In a survey of more than 250
 American companies, more than three-quarters of the
 executives said they believe that the U. S. will be
 disadvantaged in world markets unless modifications are made
 in the liability system.
    The current common law approach to punitive damages
 frequently distributes awards in a random and capricious
 manner.  In the past, punitive damages were assessed only in
 cases where the defendant was proved to have had a
 quasi-criminal intent to harm the plaintiff.  Today, however,
 plaintiffs in civil lawsuits routinely ask juries to award
 not only compensatory damages, for their economic, or
 out-of-pocket losses, but also punitive damages.  A 1987 study
 by the Institute for Civil Justice, which examined 24,000
 jury trials in Cook County, Ill., found that the average
 punitive damage award increased, in inflation-adjusted
 dollars, from $43,000 in 1965-69 to $729,000 in 1980-84 -- a
 jump of 1,500%.  In personal injury cases, the rise has been
 even more dramatic.
    The Council recommends that punitive damages be awarded in
 a rational and consistent manner.  Plaintiffs seeking punitive
 damages should not be allowed to assign a specific dollar
 amount to their requests.  Where there is evidence of
 outrageous misconduct or where there is clear and convincing
 evidence of the defendant's intent to cause injury, then
 punitive damages may be awarded in a separate proceeding.  In
 any event, however, the amount of punitive damages should not
 exceed the plaintiff's actual damages.
    The Council also recommends a test of a modified two-way
 fee-shifting arrangement, whereby the loser of a lawsuit pays
 the costs incurred by the winner.  Although limitations would
 be built into this system to safeguard equal access to the
 courts, this reform would encourage pretrial settlements and
 impose market discipline on the litigation process.
    The "loser pays" rule (sometimes called the English Rule)
 is grounded in fairness -- in the equitable principle that a
 party who suffers should be made whole.  Because the losing
 party will be obligated to pay the winner's fees, this
 approach will encourage litigants to evaluate carefully the
 merits of their cases before initiating a frivolous claim or
 adopting a spurious defense.
    The Council further proposes a moratorium on the more than
 150 one-way fee shifting statutes under which victorious
 plaintiffs recover their fees from losing defendants, while
 victorious defendants get no such recovery.
    Pretrial discovery is frequently the source of needless
 delay and expense.  Litigants have virtually unlimited ability
 to take sworn depositions of witnesses, request documents and
 submit written questions to witnesses.  More than 80% of the
 time and cost of a typical lawsuit involve pretrial
 examination of facts through discovery.  A 1980 survey found
 that 92% of all attorneys use discovery tactics as an
 economic weapon against their opponents.
    The Council recommends several fundamental reforms to the
 discovery process, including disclosure of basic information
 and an initial round of discovery that would continue to be
 "free" to the requesting party.  Beyond this initial round,
 however, the requesting party would have to pay for
 additional discovery.
    Mandatory early disclosure of core information recognizes
 that in the vast majority of cases there are basic facts that
 should be exchanged by the parties in order to reach a
 satisfactory resolution and that this exchange should be
 accomplished without gamesmanship or expense.  This early
 exchange would increase the opportunity for effective
 discovery planning and early settlement discussions.
    Reform of expert witness practice is also essential if
 trials are to remain fair and rational mechanisms for
 conflict resolution.  "Expert" witnesses regularly offer their
 "scientific" opinions on the connections between automobile
 accidents and breast cancer or environmental pollutants and
 "chemically induced AIDS." As if the ability to fashion
 almost any opinion into expert testimony were not enough,
 there is considerable use of contingency fees to pay expert
 witnesses.
    One of the Council's principal recommendations in this
 regard is to require expert testimony to be based on "widely
 accepted" theories.  This would eliminate testimony
 unsupported by professional practice or scientific knowledge.
    The Council also recommends banning contingency fees for
 expert witnesses.  This should prevent expert witnesses from
 becoming mercenaries or advocates, instead of impartial and
 objective witnesses.
    In addition to these reforms, the Council's
 recommendations include:
    -- Promote voluntary use of Alternative Dispute Resolution
 (ADR) Techniques:  Create a "multi-door courthouse" to permit
 parties to choose between different methods for resolving
 their dispute.
    -- Early trial dates:  Judges should establish an early
 trial date immediately after the pleadings are completed.
 Once established, the trial date should be delayed only for
 compelling reason, or the needs of the court.
    -- Require notice prior to filing a lawsuit:  In most
 cases, the right to sue should be conditioned on a showing
 that the parties have attempted, but failed, to resolve their
 dispute.
    -- Penalize abusive discovery:  Amend the Federal Rules of
 Civil Procedure to establish clear standards for imposing
 sanctions upon attorneys who abuse the system.  The party
 whose conduct necessitated the discovery motion would bear
 the burden of establishing that its position was
 substantially justified.
    -- Strengthen sanctions against false court filings:  The
 present attorney sanctions provision, Federal Rule 11, should
 be retained.  Courts should have the power to penalize those
 responsible for making unfounded assertions in filings, not
 merely the attorney who signs the document.
    -- Reduce poor draftsmanship in legislation and
 regulations:  All proposed laws and regulation should undergo
 a "litigation hazards" review to insure that poor drafting of
 legislation and regulation does not create unnecessary
 litigation.
    The administration will draft legislation to implement
 these recommendations and will work with Congress toward
 reform.  Other changes will require amendment to the Federal
 Rules of Civil Procedure, the Federal Rules of Evidence and
 the Federal Rules of Appellate Procedure.  The administration
 will draft proposed rules changes and submit the proposals to
 the Supreme Court's Rules Advisory Committees.
    The administration is committed to the fair, efficient and
 early resolution of disputes.  To underscore this commitment,
 the administration will apply many of the suggested reforms
 to the conduct of litigation by the federal agencies.

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