BY SAM FRIEDMAN
When insurers and brokers step out of line, Congress always rushes to probe the business, vows to pass sweeping reforms, and threatens to revoke the industry's cherished federal antitrust exemption. Funny, but I don’t sense similar outrage when high-profile plaintiff attorneys are caught corrupting the judicial system they are sworn to serve.
Indeed, despite the outrageous criminal misbehavior of two of the profession's most potent litigators, I don't see Congress rushing to investigate misdeeds by the plaintiffs bar, or pontificating about the need for direct federal oversight.
I imagine Congress is averting its gaze because just about all of our legislators are members of the bar themselves. Let he who is without sin cast the first stone, right?
Still, you’ve got to be appalled at the chutzpah of two of the most notorious lawyers in the business.
First, trial attorney extraordinaire Dickie Scruggs pleaded guilty to bribing a judge. (His son followed suit soon after.) Meanwhile, another king of class actions, Melvyn I. Weiss, copped a plea for his role in a scam to drum up plaintiffs.
The Scruggs case struck close to home for the insurance industry, as the bribery took place in a legal battle among plaintiff attorneys over $26.5 million in contingency fees from a Hurricane Katrina-related claim settlement with State Farm.
Mr. Scruggs simply got greedy, preferring to assure his firm's piece of an already fat pie by paying off the judge. He of all people should respect the integrity of the civil justice system.
As for Mr. Weiss, he pleaded guilty to a federal racketeering charge, for which he’ll pay a $10 million fine and accept a jail sentence of up to 33 months for his illegal plaintiff recruitment activities in connection with hundreds of class-action lawsuits.
“This kickback scheme lasted for more than 25 years and had a severely detrimental effect on the administration of justice across the nation as lies were routinely made to judges,” said U.S. Attorney Thomas P. O’Brien in Los Angeles. “The scheme was based in greed, and it affected the integrity of the courts and the interests of an untold number of absent class members.”
Of course—as I noted when New York’s former crusading attorney general, Eliot Spitzer, had to resign as governor following a prostitution scandal—self-inflicted wounds like these destroying the industry’s harshest foes doesn't mean insurers or brokers weren't guilty of the blatant bid-rigging, book-cooking and contingency fee abuse they were caught committing.
But it must feel good among the vast majority of those who conduct business honestly and honorably in the insurance community to see the shoe on the other foot for a change.
In fact, it would feel even better if Congress was as indignant about the misdeeds of these officers of the court as they were about insurance industry wrongdoing.
As far as I understand the system, lawyers are state-licensed. Perhaps the feds should take over, if the states are not up to the job of policing their renegade lawyers! (Or shall we have an optional federal charter for attorneys?)
Yet all we get out of Washington in the wake of these despicable falls from grace is deafening silence.
At least these cases prove that no matter how rich and powerful the attorney, no one is above the law. Hopefully, this will discourage other plaintiff lawyers from going rogue and abusing the judicial system.
As the TV cop Tony Baretta used to lecture those he busted, “don't do the crime if you can't do the time.”
Sam Friedman is NU’s Editor-In-Chief. To respond to his column, e-mail firstname.lastname@example.org, or go to his blog at www.property-casualty.com.
Friday, April 11, 2008
BY SAM FRIEDMAN