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Crossposted from DMI Blog

The Pacific Research Institute recently published a report titled "Tort Liability Index: 2006."  This report purports to show that "a poor civil-justice system lowers the standard of living for ordinary citizens" and that "meaningful legal reform on the other hand pays dividends in the form of stronger economic growth and higher personal income."

"A poor civil-justice system lowers the standard of living for ordinary citizens?"

Last time I checked, not so many middle and working class families are talking about how they are really scared of being sued in the civil justice system if an SUV they manufactured in their kitchen rolls over and kills a family of five.

"Meaningful legal reform on the other hand, pays dividends in the form of stronger economic growth and higher personal income?"

Although a dubious assertion without methodologically rigorous support, assume, for the sake of argument, that this statement is true.

The issue then becomes: even if a non-existent or severely weakened civil justice system would make economic growth soar, would you want to live in such a world?

Even if business boomed around you, would you want to live in a world in which you could do nothing if a corporation's negligence, disregard, or indifference damaged human life as part of their business plan?

In a world without the civil justice system, we are left with only highly understaffed administrative agencies to regulate corporations. Some people are left with no protection at all. Indeed, this culture of corporations unregulated is likely all too familiar to many living in the developing world. I wonder if the authors have recently passed through many developing nations and observed their standards of living?

The most "flashy" statement the report makes is that:

"The President's Council of Economic Advisers estimated that the nationwide excessive costs of the tort system were $136 billion in 2000 - the equivalent of more than three months of groceries, six months of utilities, or eight months of health-care costs for the average family."

Where would such a statistic so damning to our civil justice system come from? What is the President's Council of Economic Advisers? This Council is:

"[C]omposed of three members who shall be appointed by the President, by and with the advice and consent of the Senate and...each of whom shall be a person who, as a result of his training, experience, and attainments, is exceptionally qualified to analyze and interpret economic developments, to appraise programs and activities of the Government...and to formulate and recommend national economic policy to promote employment, production, and purchasing power under free competitive enterprise."

What more reputable body could one cite for information about our national economy?

Unfortunately, it appears...just about any. The Council relied heavily on a report done by Tillinghast-Towers Perrin. And who is Tillinghast-Towers Perrin you may ask? Their self-descriptionstates that:

"The Tillinghast business of Towers Perrin provides consulting and software solutions to insurance and financial services companies and advises other organizations on risk financing and self-insurance."

This is a company that focuses on helping insurance companies make money.

The enormous flaws of the Tillinghast study are described in detail in a report by the Economic Policy Institute.  Most discrediting, as found by the Institute:

"Although TTP's estimate is widely cited by journalists, politicians, and business lobbyists, it is impossible to know what the company is actually measuring in its calculation of tort costs, and impossible to verify its figures, because TTP will not share its data or its methodology, which it claims are 'proprietary.'

Indeed, Tillingahst has even  admitted that "the costs tabulated in this study are not a reflection of litigated
claims or of the legal system." (U.S. Tort Costs: 2004 Update, at 4).

It is hard to imagine a less reputable source of statistics than the one relied upon here: a report based on data that an organization holds as the equivalent of government classified information and refuses to release for peer review.

Then again, this appears to be the trend of our present administration, so perhaps Tillinghast is catching up with the times.

But can't you only strengthen support for the conclusion of your report if other people can independently examine your research and the data on which it is based?

At least some people agree. The U.S. Office of Budget and Management  (that agency that has the unimportant job of overseeing the administration of the federal budget) seems to think that the "peer review" of research and data shunned by Tillinghast is a good thing.

In a 2003 release the office stated that:

"Peer review is an effective way to further engage the scientific community in the regulatory process. A more uniform peer review policy promises to make regulatory science more competent and credible, thereby advancing the Administration's 'smart-regulation' agenda. The goal is fewer lawsuits and a more consistent regulatory environment, which is good for consumers and businesses."

Last time I checked, the current administrationand Tillinghast were both complaining about how there are too many lawsuits.

At least the U.S. Office of Budget and Management seems to think that the more peer review of other's research and data, the fewer lawsuits will be filed.

If the current administration and Tillinghast want fewer lawsuits -  and other people want to do a peer review of Tillinghast's data -  and peer review of research creates less lawsuits - what's the problem?

Maybe the U.S. Office of Budget and Management, the President's Council of Economic Advisers, and Tillinghast should have a sit down and work this whole "peer review" thing out.

For additional resources that respond to the Tillinghast report please visit:

Websites
Common Dreams
Civil Justice Resource Group
Center for Justice and Democracy

Publications
The Conservative Nanny State, Chapter 6
The Frivolous Case for Tort Law Change

If you or your organization are interested in learning more about or working on these types of issues, please feel free to contact me at cdugger@drummajorinstitute.org.

Cyrus Dugger
Senior Fellow in Civil Justice
Drum Major Institute for Public Policy

Originally posted to cyrus dugger on Fri Jul 07, 2006 at 07:29 AM PDT.

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Comment Preferences

  •  You are right, but there's more (1+ / 0-)
    Recommended by:
    snakelass

    You are right in your analysis.  But more lawsuits, or status quo to let trial lawyers roam free, is not the answer.  The plaintiff bar is a corrupt business, almost as bad as the corporations who they sue.  

    I suggest you offer an alternative if you argue against tort reform.  The current litigation arms race doesn't work and is not sustainable.  Few victims are fairly compensated for harms done to them, most of them sold out for pennies by plaintiff lawyers trying to settle cases to make quick and easy money.  There are a very small minority of really good lawyers out there willing to put everything on the line for a good cause; most notibly those who have been re-trained by [www.triallawyerscollege.org Gerry Spence].  But most lawyers are greedy and corrupt; and don't really give a shit about their clients.  

    I want to hear about alternatives outiside litigation to hold coporations accountable.  Like [www.tikkun.org Michael Lerner's] corporate accountability amendment to the U.S. Constitutation that requires corporations to earn a charter to do business in the U.S. proving it acts ethically and morally.  

    •  It would be nice. (2+ / 0-)
      Recommended by:
      snakelass, weasel

      I think that alternative solutions that benefit those harmed by corpoations even more, are even better altenatives than the civil justice system. The corporate charter idea that you cite to is excellent, and should be supported. Indeed, the beginnings of the corporate entity required additional public benefit than eventually coalesced in th e law, and so the idea (described here http://www.tikkun.org/... is actually not that radical from a historical perspective.

      However, what we have now is the civil justice system, and it is under severe attack. I would welcome any additinal alternatives as long as focusing on them did not allow the destruction of our imperfect, but currently existing system of civil justice.

      •  it's a decoy, silly (2+ / 0-)
        Recommended by:
        snakelass, weasel

        This tort reform threat has been going on for decades.  It goes like this:  some "non-partisan" organization makes a big deal out of the "out-of-control" tort system which is driving up the costs of insurance.  Then they propose some wacked out solution that basically shuts down the trial lawyers bar.  The trial lawyers bar send out frantic letters and emails to the wealthy trial lawyers to send more money to fight the bad tort reformers. Money talks, so the proposals are shut down before they get to a legislative bill, or are shortly after it's a bill.    

        In the meantime, nothing changes.  Republicans and Democrat lawmakers love the debate because they end up raising lots of money from it, since the trial bar gives to both republicans and democrats, and maybe even to you too.  

        It's sad few on this list seems to care.  But it doesn't surprise me.  

  •  Recommended! (4+ / 0-)
    Recommended by:
    VetGrl, snakelass, weasel, coloradobl

    That "Pacific Research Institute" website is a regular riot. Note the choice Santorum quote topping their Healthcare section. Yeesh.

    I'm sure press releases of this outfit's "findings" end up unchallenged in our newpapers constantly. Thanks for the headsup.

  •  I'm glad this made the Diary Rescue (1+ / 0-)
    Recommended by:
    snakelass

    I missed it the first time around, but it's a great diary. "Tort reform" has been one of the GOP's greatest propoganda success stories. Way too many people have accepted the basic premises of this effort, e.g., the myths and generalizations about lawyers, the costs to society, the frivolous lawsuits and runaway juries, etc.

    But at its core, "tort reform" is about protecting industry from the people it harms and serves the larger republican agenda of denying citizens access to the judicial system.

    "Good things in life take a long time." Chicago

    by VetGrl on Fri Jul 07, 2006 at 10:55:48 PM PDT

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