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Sick of Lawsuits Update
March 2008

"In the court's view, Mr. Lerach's conduct is one of the most serious crimes to come before this court. The scope and duration of this conspiracy was breathtaking…The conduct just goes to the core of the judicial system. This whole conspiracy corrupted the law firm and corrupted it in the most evil way. He has to be punished for what he did. It comes down to retribution."

United States District Judge John F. Walter during the sentencing hearing for class action lawyer William Lerach, who has been disbarred and sentenced to two years in prison for a illegally paying people to be on call as plaintiffs in class-action lawsuits. New York Times, February 12, 2008; San Diego Union Tribune, February 12, 2008.

In the News

Leading Class-Action Lawyer Is Sentenced to Two Years in Kickback Scheme

"William S. Lerach, a former partner of the law firm now known as Milberg Weiss, was sentenced Monday to two years in prison and ordered to forfeit $7.75 million for concealing illegal payments to a plaintiff in the class-action lawsuits for which the firm became famous. Mr. Lerach, 61, who pleaded guilty in October to a charge of conspiracy to obstruct justice, appeared contrite before Judge John F. Walter of Federal District Court, and called his conduct ‘felony stupid' in brief comments before he was sentenced. Mr. Lerach added that even at the time, ‘I knew what I did was wrong' but that he lacked the ‘strength of character' to not join with other lawyers in the scheme. Judge Walter said that he would have liked to sentence Mr. Lerach to a ‘substantially' longer prison term, but deferred to a plea agreement with prosecutors that was reached Sept. 18, which called for a maximum of two years. Had the case gone to trial, Mr. Lerach could have faced up to 50 years. The judge said he was particularly concerned that Mr. Lerach and his paid plaintiffs had lied to judges." New York Times, February 12, 2008. READ MORE>>

Lawsuit Inc.

"Should state Attorneys General be able to outsource their legal work to for-profit tort lawyers, who then funnel a share of their winnings back to the AGs? That's become a sleazy practice in many states, and it is finally coming under scrutiny -- notably in Mississippi, home of Dickie Scruggs, Attorney General Jim Hood, and other legal pillars. The Mississippi Senate recently passed a bill requiring Mr. Hood to pursue competitive bidding before signing contracts of more than $500,000 with private lawyers. The legislation also requires a review board to examine contracts, and limits contingency fees to $1 million. Mr. Hood is trying to block the law in the state House, and no wonder considering how sweet this business has been for him and his legal pals. We've recently examined documents from the AG's office detailing which law firms he has retained. We then cross-referenced those names with campaign finance records. The results show that some of Mr. Hood's largest campaign donors are the very firms to which he's awarded the most lucrative state contracts. [...] The real issue is the way this AG-tort bar mutual financial interest creates perverse incentives that skew the cause of justice. A decision to prosecute is an awesome power, and it ought to be motivated by evidence and the law, not by the profit motives of private tort lawyers and the campaign needs of an ambitious Attorney General. Government is supposed to act on behalf of the public interest, not for the personal profit of trial lawyers. The tort bar-AG cabal deserves to be exposed nationwide." Wall Street Journal, February 25, 2008. READ MORE>>

Ethics, rules for lawyers spotlighted

"More than a dozen lawyers and judges will meet over the next year to determine whether Kentucky courts could do more to prevent wrongdoing in light of accusations that three former Lexington-area lawyers stole more than $65 million in a diet-drug settlement. Kentucky is one of several states now looking at how the courts handle class action lawsuits and mass torts that involve hundreds and sometimes thousands of clients and millions of dollars. In June, Shirley Cunningham Jr., Melbourne Mills Jr. and William Gallion were charged by a federal grand jury with taking money that should have gone to their clients. Attorneys in other states have also faced accusations of ethics violations in class action lawsuits. Last week, a California attorney who represented investors in lawsuits against corporations was sentenced to two years in federal prison for paying people to sign on as lead plaintiffs in investor lawsuits. Kentucky's mass tort and class-action litigation committee, which began meeting in September, will look at an assortment of issues including improving case management of mass tort litigation and strengthening ethics rules for lawyers who represent hundreds of clients." Lexington Herald Leader, February 18, 2008. READ MORE >>

Another Outrageous Lawsuit: Here's Your Publicity, but Never Again (Well, Unless . . .)

"Who knew that a year after the $54 million pants suit…the cool thing to do would be to sue folks for $54 million? Heck, a dispute is hardly worth talking about unless you've got a $54 million lawsuit ready to roll behind it. Now comes Raelyn Campbell, a District resident who has slapped Best Buy with a $54 million suit because the store supposedly lost her laptop computer, which she had put in for repairs. (Meanwhile, our good friend Mr. Pearson, who lost his case against the neighborhood dry cleaners after they purportedly lost his pants, has been stripped of his job as a D.C. administrative law judge and is, naturally, appealing his case with his customary zeal.) Campbell lays out her suit in extraordinary detail on, of course, her blog, where she presents the horrifying tale of, yes, ‘the reprehensible state of consumer property and privacy protection practices at America's largest consumer electronics retailer.' The case in two sentences: Campbell alleges that last year, after she left her malfunctioning computer at the Best Buy in Tenleytown for service, it was stolen, or as the aggrieved customer puts it, Best Buy ‘allowed my computer to be stolen,' ‘tried to cover up the theft' and responded to pleas for help ‘with indifference and insults.' Best Buy counters that it's sorry, but bad things happen, and hey, as a company spokesman has been telling reporters, Campbell ‘was offered and collected $1,110.35' as well as ‘a $500 gift card for her inconvenience.' […] The good news here is that Campbell readily concedes that $54 million is an unreasonable demand. The bad news is that the case is in your D.C. Superior Court, where you are paying for this silliness." Washington Post, February 19, 2008. READ MORE>>

Recent Sick of Lawsuits Activities

West Virginia Citizens Against Lawsuit Abuse called upon the West Virginia Legislature to enact a transparency code similar to the sunshine law recently passed in Mississippi – a state currently fraught with legal scandal. Such reform would increase transparency around state contracts between the Attorney General's office and private law firms. WV CALA Executive Director Steve Cohen was quoted in news reports on the issue, saying, "Both houses in the Magnolia State passed a sunshine measure to govern their attorney general's activities, and the House bill passed on a roll call of 119-1. Attorney General Darrell McGraw should be subject to the same accountability." READ MORE>>

Florida Stop Lawsuit Abuse called attention to the impact of lawsuit abuse on health care in an op-ed by FSLA Executive Director Carlos Muletaler, which was printed in the South Florida Sun-Sentinel. The piece, entitled "Broken Legal System Chasing Doctors Away," was written in response to recent data showing a serious and increasing shortage of neurosurgeons in South Florida. "It is bad enough that lawsuit abuse drives up health care costs for us all," Muhletaler said, "but when doctors are so concerned about the liability environment that they flee the state or decide not to enter certain ‘high risk' medical professions, patient care suffers." The piece calls for greater liability protection for doctors. READ MORE>>

Maryland Citizens Against Lawsuit Abuse highlighted the way lawsuit abuse contributes to a serious physician shortage in Maryland despite the prevalence of academic medical centers in the state. The Annapolis Sunday Capital and the Baltimore Examiner published an op-ed by Board Member Dr. Ron Elfenbein about the issue. Elfenbein, a practicing physician in emergency medicine, argued that improving Maryland's liability climate must be part of the solution for retaining and attracting new and experienced doctors to practice in the state. He pointed to Texas as a role model for common-sense legal reform that has improved access to health care. READ MORE>>

Louisiana Lawsuit Abuse Watch Executive Director Fred Shumate authored an op-ed to promote awareness about the costs and consequences of lawsuit abuse in Louisiana. The piece, entitled, "Lawsuit Abuse Costs Us All," was published in the Thibodaux Daily Comet and Houma Courier. Describing Louisiana's struggle to recover from Hurricane Katrina's devastation, Shumate notes that, "New, well-paying jobs may be lost to other states because of employer concerns about lawsuit abuse in Louisiana. This economic reality could stifle our state's recovery efforts and threaten our future." READ MORE>>

Legislative Update

The United States Senate Judiciary Committee is considering S. 2041, the False Claims Act Correction Act of 2007, which would expand opportunities for individuals and their personal injury lawyers to act as bounty hunters by filing lawsuits for "false claims" against anyone who does business with or recieves funding from the federal government. The proposed amendments will greatly expand liability for large and small businesses, not-for-profit institutions, universities, health care providers and other recipients of federal funding while paying so-called whistleblowers as much as 30 percent of any settlement. This legislation extends the False Claims Act so far beyond its original intent, which was to prosecute those who purposefully defraud the U.S. government, that even an innocent paperwork mistake could be cause for a lawsuit.

The California legislature is currently considering two legal reform bills. Senate Bill 1202 would ensure more settlement money goes to injured parties instead of personal injury lawyers, and Assembly Bill 1891 would give courts added power to dismiss frivolous claims.

The Illinois legislature will hold a hearing and vote March 12 for House Bill 5289, which would make it more difficult for personal injury lawyers to abuse Illinois courts by filing out-of-state lawsuits in ‘judicial hellhole’ jurisdictions.

The Stats

1 in 4: The number of physicians who face malpractice lawsuits on an annual basis. National Center for Policy Analysis, December 2007.

33%: The percentage of malpractice claims that are filed but do not involve medical errors. New England Journal of Medicine, May 2006.

$0.46: Amount per dollar that injured plaintiffs receive through settlements or jury verdicts. The rest covers claimants' attorney's fees, court administrative costs and defense costs. New England Journal of Medicine, May 2006.

49: The number of initiatives to expand liability and line personal injury lawyers' pockets already filed in state legislatures in 2008. American Tort Reform Foundation, February 2008.

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www.Sickoflawsuits.org is a nonpartisan, grassroots campaign to educate the public about the negative impact of lawsuit abuse, empower consumers to take action against these abuses, and challenge those who profit from abusing our legal system.

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