California Elections : PROPOSITION 51 : The ‘Deep-Pockets’ Debate : Liability Doctrine Initiative Splits the Ranks of California’s Lawyers; : A Key Issue: A Concern About Clients--or a Concern About Fees?

California’s 90,000 lawyers are finding themselves and their profession increasingly under fire, even as they attempt to promote their clients’ interests in the campaign debate over Proposition 51, the “deep-pockets” initiative on the June 3 ballot.

Aimed at aiding cities, counties and businesses that cannot afford or even obtain liability insurance because of the prospect of large jury verdicts against them, the measure would alter the state’s age-old doctrine of joint and several liability.

Under that doctrine, if a jury awards $100,000 for injuries to a car accident victim and decides that an uninsured drunken driver is 90% responsible and the city is 10% responsible because a stop sign was obscured by brush, the city with its wealth, or “deep pockets,” would be billed for the total $100,000.

Payments Would Be Limited

If Proposition 51 passes, the city would still have to pay all economic damages (medical expenses and lost earnings) but would only be billed 10% of the amount allotted for non-economic damages--the “pain and suffering” that the law also recognizes. Payments of that kind would be limited to each defendant’s amount of liability. (Because the 90% responsible driver had no insurance, the victim would be unable to collect that portion of the damages.)

Could Curb Big Verdicts

Government entities believe that the change would curb huge verdicts, and make insurers more willing to grant them policies at affordable rates.

Lawyers who represent the injury victims who are suing, however, fear that the proposition could clog courts, severely restrict victims’ ability to receive just compensation, and greatly reduce the deterrent factor that verdicts can have against government officials who ignore safety measures or manufacturers who produce defective products.

Advocates of the proposition counter that victims’ lawyers are far more concerned about their own pocketbooks than the “deep pockets” of the defendants or crowded court dockets.

‘They Are Motivated by Money’

“Their primary motivation is money,” said Fred J. Hiestand, a Sacramento attorney and general counsel and lobbyist for the 8-year-old, 70-member Assn. for California Tort Reform, an advocate for Proposition 51.

“I have never believed their stated concern for the consumer would be there if their fees did not come out of what they get for the consumer. They want you to believe they are out there being saintly and looking out for the other guy, but they are motivated by making money.”

Plaintiffs’ lawyers in personal injury and product liability cases--who make up the powerful anti-Proposition 51 California Trial Lawyers’ Assn.--handle suits on a contingency fee basis. They earn a standard one-third of any damages for a settlement, or 40% of a trial verdict for adults and about 20% for child or mentally handicapped clients. (The gamble for lawyers includes advancing an average $50,000 in expenses and being paid nothing if they lose.) A reduction in a settlement award or verdict would mean a reduction in the lawyers’ total fee.

Fees Seen as Center of Fight

“There is no other reason why plaintiffs’ attorneys would fight this except because of their fees,” said Timothy L. Walker, a Los Angeles defense lawyer who is president of the 1,800-member Southern California Defense Counsel Assn.

The plaintiffs’ lawyers vehemently deny that their only concern is their own fees, and even suggest Proposition 51 could increase litigation enough to be considered a lawyers’ employment act of sorts.

“It would reduce victims’ recovery and, since attorneys make their income from a percent of the recovery, it would affect us,” said Walnut Creek attorney Peter J. Hinton, CTLA president. “But I would hope nobody would vote one way or another because of attorney fees.”

‘Pocketbook Issue’

“I do not see this as a lawyers’ pocketbook issue,” said Gerald E. Agnew Jr., president of the Los Angeles Trial Lawyers’ Assn., which makes up 40% of the CTLA membership. “I work only on a contingency basis and I have no shame in saying I work hard, I make a good living and my family lives well. But I care a great deal about this profession, the jury system and the victims. Who else will speak out for people in wheelchairs?”

“You could also say that obstetricians deliver babies because they want to make money,” said Gary Paul, immediate past president of the Los Angeles Trial Lawyers’ Assn. “But the point really is, what is the system going to do to compensate people who have been hurt? I’m opposed because I don’t want to see my clients shortchanged.”

Harvey Rosenfield, an attorney associated with Ralph Nader’s Washington-based consumer organization and who is campaign coordinator for Citizens Against Proposition 51, said the attorney fee issue is a “straw man” set up by advocates of the measure to deflect legitimate criticism.

Increase Litigation

Far more important, Rosenfield said, is what the proposition would mean to already overburdened civil courts and to the injury victims.

The victims’ lawyers believe that the measure would increase litigation by encouraging deep-pocket defendants to file cross-complaints, seeking other defendants with whom to share the burden of paying “pain-and-suffering” jury awards. Initiative opponents also say that its passage would mean fewer out-of-court settlements that now resolve 95% of civil cases, and that the measure would increase the number and length of trials, clogging the courts.

A similar law in Kansas has not lowered insurance rates or increased available insurance coverage, Hinton said, but has increased the number of cross-complaints, including one filed against a squirrel that ran across a road at the time of an accident. (However, Walker said that specific information is not yet available on Kansas’ experience, and that variables can alter the amount of insurance savings).

Look for Co-Defendants

Now, Hinton hypothesized, an insured deep-pockets company whose speeding truck struck a car would settle quickly for $25,000 in suggested damages, knowing it would be held accountable for the total no matter how culpable its driver was.

But under Proposition 51, he said, the company would be encouraged to look for co-defendants by filing cross-complaints, hoping that a jury would decide the trucking company was only, say, a third culpable.

Examples of co-defendants include the gas station that failed to clean the windshield, the state that failed to build a median barrier or construct proper signs, even a phantom third vehicle. Finding the co-defendants and adding them to the case would delay and prolong the trial, Hinton said.

“A plaintiff’s lawyer will never settle under Proposition 51,” said Rosenfield, explaining that a defendant in a trial could prove the bulk of the liability belonged to another defendant who had agreed to a pretrial settlement and therefore could not appear in court to defend himself. “So settling any defendant out before trial could be legal malpractice,” Rosenfield said.

No More Settlements

“You are just not going to see any more settlements,” predicted Michael J. Piuze, a Los Angeles attorney who has won multimillion-dollar verdicts for injury victims and is adamantly opposed to Proposition 51. “Everything is going to go all the way to trial, and that is going to bring the system to a grinding halt.”

Hiestand, however, said that he could not see how Proposition 51 would increase litigation at all. It would only impede settlements by discouraging plaintiffs from settling cheaply with the most culpable defendant, he said.

Defense attorney Walker predicted that Proposition 51 could even reduce litigation by discouraging plaintiffs’ attorneys from pursuing suits against deep-pockets defendants with little culpability. He dismissed as a “total falsehood” the suggestion that the measure might promote more cross-complaints among defendants.

Officials Not Concerned

Walker also said the measure would increase, not decrease, settlements because deep-pockets defendants will be willing to pay a small settlement for a small amount of culpability where, now, they defend themselves in trial to avoid paying the full amount of damages.

The people who match judges and courtrooms to caseload do not appear concerned about the impact of Proposition 51. Frank Zolin, administrator of the nation’s largest trial court, the Los Angeles County Superior Court, and a recognized authority on caseload projections, said he has not yet made any detailed study of the measure’s potential consequences.

“But my gut reaction is that it is hard to accept the argument that it would clog the courts,” Zolin said. “I personally don’t see, and we have no information to show, any significant impact on the court calendars one way or another.”

Plaintiffs’ attorneys are most vociferous about consequences to their prospective clients.

“The people who are going to be hurt most are the victims,” Hinton said.

He said the measure would reduce the amount that victims recover, make litigation longer and more expensive, make it harder to find attorneys to handle their cases because of the risk of smaller payoffs and belittle “human damages” as unimportant.

‘Rotten, Greedy Approach’

“This limits non-economic damages and that is very callous,” said Rosenfield, the consumer spokesman opposing the measure. “When a DES victim has a hysterectomy, the medical expenses are about $150,000. But what about the intangible, non-economic damages of being unable ever to have children?

“The whole idea of our legal system is to make the person whole,” he said. “By denying people full recovery for non-economic damages, you are saying we are not going to make your life any better. That is an ugly, rotten, greedy approach for the (insurance) industry to take.”

The plaintiffs’ lawyers rankle at any inroads on the principle of joint and several liability, which Agnew noted “came over with the boat from England.”

‘Never Mind the Victim’

“The current system is to see that the victim is fully compensated by any defendant in any way responsible for the injury,” said Hinton, noting a defendant only one-fourth liable for an accident requiring amputation of a leg couldn’t say he only caused the victim to lose one quarter of the leg. “This proposition would say our only concern is how guilty are the guilty and never mind the victim.”

Plaintiffs’ lawyers deny suggestions that they would merely shift damage requests under the proposition to amass higher totals in economic damages, for which deep-pockets defendants would remain responsible, to compensate for lost non-economic damages.

“I don’t see how you could do that,” said Agnew. “You have to prove how much salary would be lost and the medical expenses. The damages are what they are.”

The lawyers objecting to the initiative also claim that Proposition 51 would reduce the incentive that major verdicts give manufacturers or governments to put safety first.

“Plaintiffs’ attorneys have made great advances for society with verdicts by getting the Dalkon Shield (a birth control device) taken off the market, redesigning the Pinto and other things,” Paul said. “But this will cut the deterrent effect tremendously. Let’s say a city is 35% liable for an accident mostly caused by a drunk driver because trees covered over a sign. If the city walks from that lawsuit, can the deterrent effect be as great?

Hurting Society

“We may be saving the city money but aren’t we hurting society more in the long run?” he asked. “Who will pay for the maimed? Taxpayers still pay when the injured have to go to the county hospital.”

Agnew said the proposition would also curb incentives that verdicts place on manufacturers, for example, who under present law are more apt to install safety devices on a machine that had cut off an employee’s hands.

Hiestand and the defense lawyers advocating the proposition conceded that victims might obtain smaller damage awards but said the measure is nevertheless fair and would provide adequate compensation. Disagreeing with Agnew and his colleagues, they said expert witnesses would now be asked to justify higher economic damages under a “new math” for victims.

“The thing that appeals to me about the proposition is the fairness idea--that nobody should have to pay more than their proportionate share,” Walker said. “It is hard to refute the fairness involved in it.”

“We said ‘draw the line,’ ” said Hiestand, the leading proponent. “Retain joint and several liability for economic damages and not for non-economic damages. That is a fair compromise.”