Attorneys, Insurance Interests Renew War : Politics: A shaky five-year alliance ends with a proposed 1994 ballot initiative to limit the amount lawyers can charge in personal injury cases.

A five-year truce between trial lawyers and insurance interests collapsed Tuesday with the filing of a proposed 1994 ballot initiative designed to limit the fees personal injury attorneys can earn for winning lawsuits.

The action appeared certain to renew the bruising and expensive political wars that until 1987 had dominated relations for decades between insurance companies and plaintiffs’ attorneys.

“California is the victim of lawsuit lunacy,” said Barry Keene, president of the Assn. for California Tort Reform. “It’s far too common today that lawyers with a financial interest in the outcome are filing unfair and excessive personal injury lawsuits.”

Typically, personal injury attorneys, who handle everything from product liability cases to sexual harassment complaints, are paid a percentage of the settlements they win for clients. The range is commonly from 30% to 40%.

The initiative, which requires 384,974 voter signatures to qualify for next year’s general election ballot, would limit attorney fees to 25% of the first $100,000 of an award, 15% of the next $100,000 and 10% of any amount over $200,000.

In addition, it would require attorneys at the outset of a case to estimate its cost to a prospective client and toughen penalties for unprofessional conduct such as ambulance chasing.

At a news conference, Keene, an attorney and former Senate Democratic floor leader who retired midterm last year to head up the tort reform group, argued that unnecessary lawsuits are an extra burden to California businesses struggling to recover from the recession.

Noting that lawyers generally rank near the bottom in public opinion polls, Keene said four out of five Californians sampled by a pollster supported the concepts of his proposed initiative.

He estimated that the newly formed campaign organization Californians for a Fair Legal System would have to raise about $5 million to conduct a winning campaign. He said potential supporters were being solicited but refused to identify any by name.

However, representatives of the politically influential California Trial Lawyers Assn., Consumers Union and the newly created Foundation for Taxpayer and Consumer Rights said they believed insurance companies would underwrite the effort.

Bob Forsyth of the trial lawyers group said: “I think the trial lawyers will spend whatever it takes to defeat this thing.”

Forsyth and state Sen. Bill Lockyer (D-Hayward), chairman of the Senate Judiciary Committee, speculated that the existence of the proposed initiative might encourage the Legislature to enact some of its provisions.

Keene said he believed that Gov. Pete Wilson would be inclined to support parts of the proposed measure. Last year, Wilson had been expected to offer a legislative package on tort reform but did not.

A spokesman for Wilson said Tuesday that it was unclear if the governor would propose a legislative plan next year but “people have been talking about it.”

In 1987, after years of battle, insurance companies and other business interests reached a five-year “peace treaty” with plaintiffs’ attorneys in which both sides agreed to cease hostile actions in the Legislature or in ballot propositions.

The agreement concluded a yearlong effort in the Legislature to enact limited changes in the civil liability system. They included restricting punitive damages, limiting exposure in certain product liability cases and providing local governments with additional protections.

The agreement was formally inscribed on a linen napkin at a Sacramento restaurant where a celebration was held to celebrate the compromise. The pact expired Jan. 1. Since then, each side has been preparing its strategy in case the other pushed ahead with hostile legislation or ballot initiatives.

In a confidential Sept. 14 memo to potential supporters, Keene outlined campaign tactics for the proposed initiative. One “talking point” in the memo, which has been distributed by insurance industry critics, suggested that trial lawyers’ campaign contributions would be used to defeat the measure instead of to help elect favorable gubernatorial and legislative candidates.

Asked whether he believed such use of a ballot initiative was proper, Keene said: “It certainly has been happening for many generations. I’m not qualified to speak on propriety.”