The Corrosive Effect of the Politicization of Tort Reform
What Newsweek's "Lawsuit Hell" Didn't Tell You

In its December 15 issue, Newsweek published an eleven-page cover story on the American tort system entitled "Lawsuit Hell: How Fear of Litigation is Paralyzing Our Professions." It is part of a series entitled "Civil Wars" which Newsweek produced with NBC and MSNBC, and which includes television and internet stories on the tort system.

It is unusual to see so much attention paid to a relatively esoteric topic such as tort law in the popular press. I think it is a good thing that Newsweek is raising the issue, since the Republican Party clearly has made tort reform part of its agenda and the Bush Administration is attempting to achieve tort reform in many overt and covert ways. Furthermore, the American tort system needs to be reexamined, because it is clear that it is no longer working for all of this nation's citizens.

Unfortunately, the Newsweek article is not going to help us get closer to a solution. In fact, in very specific ways, the Newsweek piece illustrates why it will be so difficult for Americans to have a rational conversation about the tort system.

"Tort reform" was not discussed in the American media until the mid-1970's. Since then, various interest groups have organized themselves into coalitions who have adopted polarized position towards the question of whether there is a "liability crisis" in America.

On one side, there are groups that are associated with corporate America and the Republican Party, such as the American Tort Reform Association, the Manhattan Institute, and the American Medical Association. On the other side, there are groups associated with trial lawyers and the Democratic Party, such as the Naderite Group Public Citizen and the American Trial Lawyers Association. In the middle, there is not very much--just the Rand Institute's Institute for Civil Justice and perhaps a handful of academic commentators.

The politicization of the debate over torts in America has had a corrosive effect. And unfortunately, the Newsweek article largely ignored that effect.

For instance, the authors of the article (one of who, Stuart Taylor, Jr., is a well-known legal journalist) seem unaware that most of the statistics that they cite have been criticized by one side or another as being biased and unreliable. The truth is, as a number of academics have pointed out, we do not know very much about the tort system at all. The proliferation of dicey statistics offered by institutions with something to prove, has obscured the lack of reliable information.

Consider, for example, one source of the statistics used by Newsweek: Jury Verdict Research (JVR), a private company which reports jury verdicts around the country, and whose research was used to calculate the average cost of plaintiffs' verdicts over the past seven years. JVR does a pretty good job, but for the most part it relies on voluntary submissions by lawyers. And it is suspected that lawyers often submit their larger verdicts and neglect to submit small awards. After all, why publicize one's losses, and opposed to one's victories?

Furthermore, even the statistic used by Newsweek is skewed by politics. A visit to the JVR site reveals that they prefer not to report their survey results in terms of average awards. Instead, they report their results in terms of median jury awards. And the difference is very important: the average of all awards is not a measure of the typical value of an award; for that, you must look at the median. And the contrast is tremendous: The average personal injury award in 2001 $1.2 million, but the median award was $51,000.

Unsurprisingly, then, pro-business sources usually cite rely on the huge average award amount, and pro-plaintiff sources usually rely on the very modest median amount.

In sum, even the choice of which type of statistic to use is intensely political, and Newsweek, unfortunately, seems to be ignorant of this fact. A fairer way to present this information would be to offer both statistics, with an explanation that they are based on self-reporting.

In addition to its naive use of highly politicized statistics, the Newsweek article should also be faulted for misunderstanding what the problem is with American tort law is in the first place.

As soon as the article was published, pro-plaintiff groups published critiques of the article. (See, for example, the responses posted at one representative site, and at another site.) Unfortunately, these critiques merely represent the mirror image of the Newsweek article. They present incomplete statistics and heart-rending anecdotes that suggest that the tort system is not getting more expensive, and that most successful plaintiffs are indeed victims of unspeakable medical errors or corporate recklessness.

But the real problem with our tort system, as I have argued here and elsewhere, is not that too many culpable defendants escape liability, as the pro-plaintiff groups would have you believe. Nor is it that too many undeserving plaintiffs win lawsuits, as the pro-business groups would have you believe. Rather, it is that the tort system has become so expensive that we rarely get a chance to find out whether a tort has actually occurred.

Put another way, the real problem with our tort system is that it is, for most litigants, a myth: It is so expensive to litigate that few deserving victims sue, and many blameless defendants settle just so they can escape the expense and uncertainty of the civil justice system. In this sense, our system is both anti-deserving plaintiffs, and anti-innocent defendants.

According to the New York Times, for instance, a recent study done on behalf of the American Bar Association reveals that, although the number of lawsuits filed in the federal system has increased since the 1960's, the number of trials has declined dramatically in the same period of time.

Last year, only 2% of all federal civil cases were decided by a trial. And there is every reason to believe that the state systems would reveal the same story, if only there were enough resources to perform similar survey for the states as well.

The ABA study describes a real problem: The tort system promises each person "their day in court" but that promise is an illusion. The Newsweek article should have focused not on the cost of (increasingly rare) jury verdicts, but on the costs of (entirely typical) settlements.

Furthermore, it should have asked the hard question that no one seems to want to ask: What good is a tort system in which the vast majority of disputes are handled outside of trial? Do plaintiffs feel satisfaction at the end of a process that is essentially bureaucratic? Do culpable defendants come away feeling chastised, and deterred? Do defendants who did nothing wrong feel vindicated? Common sense tells us the answer to all of these questions, sadly, is no.

There was one moment when the Newsweek article almost took up these hard questions -- presenting Philip Howard, head of Common Good, as a tort reformer with new ideas about how to fix the tort system. But even there, the article erred.

Common Good's basic strategies--to develop alternatives to conventional tort litigation in the areas of medicine and education--are very interesting and promising innovations. But the Newsweek article did a disservice to Mr. Howard and his cause by presenting him as hostile to plaintiffs' claims, and by lumping him together with the traditional tort reform coalition, when in fact he and Common Good are quite different.

As I understand Common Good's agenda, they do not deny -- as more traditional tort reformers tend to do -- that many people suffer wrongs that should be redressed by the tort system. On the contrary, they are worried that the current system no longer provides those victims with real redress. And they seek a serious, non-partisan inquiry into why the system has broken down for so many.

The story of our tort system is not the same old story political groups have tried to tell -- the story of blockbuster verdicts and undeserving plaintiffs. Instead, it is largely the story of trials that are so rare as to be aberrant, and settlements that do not truly serve the tort system's -- or society's -- goals. But sadly, the Newsweek article told the same old story once again.

Hopefully Common Good and those who want to find a "third way" out the current crisis in American tort law will, in end, be able to transcend this sort of media coverage.