Legal reform was the topic of discussion when Dan Pero, President of the American Justice Partnership, joined the Center’s Corporate Counsel, Renee Giachino, on “Your Turn — Meeting Nonsense with Common Sense,” which airs on 1330 AM WEBY, Northwest Florida’s Talk Radio.
Excerpts from the interview follow.
GIACHINO: My first guest this afternoon is Dan Pero, President of the American Justice Partnership, which is a nationwide coalition that advocates for legal reform at the state level. Dan joins us this afternoon to talk about the new organization that he heads up, the American Justice Partnership, and the work that they are taking on state-by-state-by-state. Dan is actually here in the sunny — or not-so-sunny, I guess, because it is raining right now — State of Florida to help kick-off some activities here that we hope will bring well needed legal reform to the State of Florida.
Thank you for joining us. Dan, are you there?
PERO: Yes, I am, Renee, and thank you for having me on the program today. It is great to be with you.
GIACHINO: Thank you very much. Before we talk about your activities today in Tallahassee, can you please give us some information about the American Justice Partnership? What was the impetus behind the launch of the organization, and who is credited with putting it together?
PERO: Let me first of all give you an overview from about 40,000 feet about what the AJP is and the history of how it all came about. The American Justice Partnership is a true partnership approach to state legal reform. And what it does is something really no organization is doing, and that is it brings together the most effective state and national reform organizations that have been working on their own, perhaps a little bit together for years, really for the first time in an integrated plan to achieve legal reform.
We are doing it with three goals in mind. The first, working through our state partners and our national partners consistent with their missions, is to help create an environment state-by-state where pro-reform candidates seeking the offices of governor, state legislator, state court and state attorney general can be supported by the public.
The second goal, again in working in alliance with our state and national partners consistent with their missions, is to help enact legislation and court rules that will substantially reduce if not eliminate what we call these perverse incentives for junk lawsuits over what we have heard called — and I think you have used it on your show and it is used quite frequently — this term called “jackpot justice.”
And the third goal of the program is, and again working with our partners, is to engage in selected education programs that will enable us to inform the public, as you talked about in your introduction, about the need to be involved in legal reform. We want to help educate them about the costs to them as an individual and the costs to them as a business about why they need to come off the sidelines and be engaged in this particular effort.
That is what the AJP does. It is an exciting program for me because I think I am the only person involved with this on a day-to-day basis who is not a lawyer. And so this is giving me a great opportunity to bring my background, which is a lot like many of your listeners, an individual who sort of looks at our legal system and sees what’s going on and asks “why is that happening?” It doesn’t make sense — it is nonsense and not common sense.
We are hoping to bring some real common sense to the law. In fact, at the kick-off today in Tallahassee there were many people with signs saying “let’s restore common sense to our courts.”
How all this started was — back about six years ago, it began as a concerned effort by entrepreneurs — that there was not enough being done state-by-state to affect change in the legal system as it pertained to their particular businesses. They felt the system was out of kilter or out of whack or upside down — just about any adjective you can think of, and they were not getting any satisfaction out of the U.S. Congress. It was not the kind of effort that they felt was effective. And they felt that going state-by-state, that that would be the best way to go and it has proven to be quite an effective strategy.
I am a former chief of staff to a governor in Michigan, Governor Engler, who is now the President of the National Association of Manufacturers, who serves as the directorate of the AJP. I saw first hand that if you want to get things done, you get them done at the state and local level and that it is pretty hard to get things done at the Congressional level. So that is sort of an overview at 40,000 feet.
GIACHINO: You mention that you are not a lawyer. Dan Pero, who is the President of the American Justice Partnership, has done everything but lawyer. You mentioned very briefly that you served as chief of staff and campaign manager for former Michigan Governor John Engler. I have your bio in front of me and it references that you are a founding partner of the Sterling Group, a public affairs group; you ran a presidential campaign for former Tennessee Governor Lamar Alexander. You certainly bring a lot to the table. One of the things that you mentioned early on when you were talking about the organization is that it is a partnership — that these entities are fed up with what is happening in our legal system and what is happening with court rules, and they are looking to get some effective legislation finally in place to get some pro-reform candidates.
I applaud you and your organization because I think we are finally taking a page from the tort lawyers’ books and we are joining forces. I think that is something that business entities have needed to do for a long time. I think they have sat on the sidelines in some respects. And I don’t mean this unfairly, but do you think that some of these American companies do shoulder some of the blame for what has happened in our lawsuit-happy culture? And if so, what more should they be doing to end this abuse?
PERO: In our culture, in the legislative process where a lot of these laws have been passed that have not been particularly helpful, or in the election of judges who have been more activist in their decisions and believe that their job is to write law and not interpret law, business has sat on the sidelines and they do deserve to shoulder a good part of the blame. If you abdicate the playing field to one side, then you are going to lose and this is a political battle. I have a great respect for those on the other side; they have taken the system and figured out how to use it to their ends, and they have done the job so well that it has turned it upside down against big business, small business and job providers, however you want to phrase it.
But really it is against families because ultimately families are the ones that are being hurt when skyrocketing malpractice insurance rates, etc., force doctors to leave the business and force hospital emergency rooms to close, clinics to close. The increased cost of business is passed on to consumers. You know there is no tax on business; it is a tax on working people. That is what it always is because business always passes the costs back on to regular folks.
Back to your question. I get very upset when I go and talk to many businesspeople that historically have talked a good game but, when it comes to actually getting something done, they have not gotten it done and they have gotten slapped around — and they have deservedly gotten slapped around. Well, it has taken now this almost crisis to emerge state-by-state for them to finally stand up and say they are not going to take it any more and they are going to set aside their parochial interests and individual personal agendas and work together and we are going to fight.
And we are not asking that the playing field be tilted in our direction. All we want is a level playing field. One thing I will say about business — and again, having been a chief of staff where we were in the regulatory business as a government — all business ever asked of us was to give them some predictability. You know, we can play by the rules, we want to play by the rules, we just don’t want the rules to be changing, and we want to know what the rules are.
That is one of the big problems we have in the legal system today as you go state-by-state — you don’t know what the rules are going to be. For example, the judges don’t interpret the laws as they are written, but rather, in many cases, they interpret them as they believe they should be interpreted. You have juries who for whatever reason engage in litigation lottery. There are so many more problems added on top of this that business says it must get involved in this and work for certainty, for what is fair and balanced, and at the same time we don’t want to deny anybody who has been wronged or hurt through no fault of their own access to the courts so they can get a remedy. At the same time, the business community, the medical community and regular people — you know at the rally today we had police officers, nurses and other individuals there — and they are all saying the same thing, and that is that it is time to fix this system that has gotten out of whack and is hurting people.
I was glad to see business finally begin to step up, and business is part of this partnership. Also part of the partnership is a series of very good groups around the country who have been working at this a very long time. They have been toiling in the vineyards with very little resources and have been outgunned by the $40 billion trial lawyer industry. Groups like the American Tort Reform Institute and Center for Individual Freedom, the Manhattan Institute and other local organizations. One that has just been created for the sole purpose here in Florida for accomplishing legal reform is the Florida Justice Reform Institute and it is all CEO driven. That has come together.
What we are trying to do is leverage all of the assets of these groups together so that we can effectively take on a very powerful and savvy industry of the trial lawyers.
GIACHINO: I am very encouraged. We had Bob Dorego Jones of M-Law on the program not too long ago and he spoke very highly of your work in Michigan and the work of former Michigan Governor John Engler, who now serves as the President of the National Association of Manufacturers, which I know is actively involved in AJP. So I find that very encouraging that
Dan, can you please help the listeners out there understand how this affects them every day. Am I right, Dan, that America’s litigation system is the world’s most expensive and is draining $233 billion dollars from the U.S. economy and costing the average American family of four about $3200 a year in higher prices, higher insurance rates and higher health care costs? Are those figures accurate?
PERO: I think they are pretty close. For every study there is another study — people study studies. But those facts and figures, in our judgment, are pretty reliable. When you take that number of $3400 or $3200 or $3800 and you think about that, it is a year’s tuition at a community college. Imagine what a family can do with that money if it was in their pocket and not tacked on to other goods and services. That is money that could be re-invested back into the economy and it is money that could be re-invested by business in research and development. It could be used to pay additional workers or create more jobs or pay higher salaries.
When that money is not available it begins to put a lid on and stymie economic development, and that’s when you hear businesses say that they need some certainty. And we simply cannot afford to be setting aside the kind of money that we are, almost to practice defensive medicine so to speak. It inhibits entrepreneurs and inventors perhaps from wanting to engage in a particular product or enter into the marketplace for fear of lawsuits. The drug manufacturing companies — we have seen a lot of talk there about what is happening with respect to their enterprise.
You know, I have rheumatoid arthritis and I am very thankful that there is a drug company out there that invested the money and resources to create a drug that has helped to put my disease into remission. What would happen if for fear of lawsuit after lawsuit that company lost its willingness to invest in new research and take a new product to market? There might be other folks out there who have the kind of illness that I have who might not be able to get redress or help. These costs are enormous and they are enormous on every man, woman and child.
Is reform going to make it all go away? No. That is not going to happen. But what it can begin to do is it can begin to slow it down and slowly turn the ship around so we are on an even keel again.
GIACHINO: Dan, we have a caller who would like to ask you a question. Is that okay?
GIACHINO: Go ahead caller, it’s your turn.
CALLER: One of the problems is that big business and small professional corporations and businesses look at this much differently. A large business a lot of times is not careful and they just think of a lawsuit as a necessary cost of doing business. Their personal assets are not at risk and so a lot of times they are not as responsible, whereas a small professional business where personal assets are liable and they don’t have money to be self-insured and have to buy insurance. And so there is not a level playing field there. I think that so long as that is the case, people are going to think that the smaller businesses are like the larger ones and that they are not being careful and we are going to give the victim a lot of money.
GIACHINO: Dan, what I think she is commenting on is her concern that some of the larger corporations don’t have their personal assets at risk, so more often than not they are willing to settle this stuff and they are not going to bat and that unlike a mom-and-pop business that has to get insurance and has to watch their reputation and bottom line a lot closer than some of the big boys, that until the larger organizations and corporations have something much more at stake such as their personal pocketbook and assets, that it is not going to be a level playing field and there is not going to be change.
PERO: That is a very astute observation. We could talk about this for another half-hour just on that topic. There was an individual today by the name of Eddie Hopkins, who is small businessman. He owns a car dealership in Marianna here in Florida. He talked about what happened to him. He sold an automobile to a customer that he had had before and, in the process of finalizing all of the paperwork, this individual was involved in a traffic accident in this brand new car he had just bought from the Hopkins Car Dealership and unfortunately in the accident the other driver died. Despite the fact that the accident was the deceased driver’s fault, the family and the attorneys decided they were going to sue the dealership for wrongful death. The dealership was not driving the car and it was not their car, but there was still some paperwork to be completed. Rather than go after the individual who caused the accident, they went after the individual who had the deepest pocket. And what happened was that the attorneys for Mr. Hopkins decided to settle the lawsuit rather than go into this jackpot jury system where it could have shut him down. So they decided to settle for $750,000. They wrote a check for that amount and they had nothing to do with the accident.
That is happening to big business every day of the week. Particularly with respect to asbestos litigation, which you have heard a lot about. You literally have tens of thousands of individuals who have been recruited by trial lawyers through television advertising saying “if you think you have been exposed to asbestos come to the Holiday Inn on Saturday and we will give you a chest screen and then we will go and determine whether or not you have a case.” And literally across jurisdictions in this country, tens of thousands of people have been compensated — and they are not even sick — just for the fear that they have been exposed. And it is happening right here in Florida, and what it is doing is pushing the legitimate claimants out of the picture by draining resources in the courts to hear these cases that we believe have no merit, and it is spreading the resources around to people who are not sick and have not been sick and those who had been sick are not getting the kind of compensation that they deserve.
The caller is right. That is the reason why business is stepping up now more than ever, because they are feeling the pinch. You have had many of the companies in the asbestos cases go bankrupt. The bigger worry even is small business; that is the backbone of this country and it is the backbone of Florida and they are just one lawsuit away.
GIACHINO: I am joined in the studio by Mike Bates, the owner and manager of the station, and he just raced back from Tallahassee and he has on a T-shirt that says “Florida Justice Reform Institute” and on the back it says “Stop Lawsuit Abuse.” Dan, if you and Mike can please fill us all in on what you did in Tallahassee today.
BATES: As for me, I was not there for this rally but I did attend some of it since I was there. It took place in the courtyard between the old Capitol and the new Capitol. And there were speakers and placards to raise awareness of the problem that exists in Florida.
PERO: You summed it up well. I happened to be one of the speakers, fortunately, and I happened to talk about the AJP and what we want to do to help the folks here in Florida to accomplish legal reform and stop this kind of abuse. What I think was encouraging is that Governor Bush was there and he had the opportunity to speak and lay out his program, but he was also joined by the Senate President Lee and Speaker Bense, and Lt. Governor Jennings was there to present a united front. They were there saying to the people that they will be there, but also saying to the State of Florida that we hear you and we understand and we are going to look for ways to fix this problem because we want to stop lawsuit abuse. Florida is still a magnet, and people are moving here and jobs are being created here and that has a lot to do with the climate that you have created here with your tax climate. But if this legal climate continues to spiral downhill, you will find more and more businesses looking to see whether or not they want to cross that
GIACHINO: Dan, if people want to learn more about your organization, the American Justice Partnership, how can they do that?
PERO: They can visit our terrific website at www.americanjusticepartnership.org and they will have the opportunity to see what is going on with different organizations around the country and with legal reform around the country and learn a little about some of the players involved with the AJP and learn a little more about the National Association of Manufacturers and what the problems are and how it impacts them personally.
GIACHINO: Well, thank you very much, Dan Pero, President of the American Justice Partnership, a nationwide coalition that is advocating for legal reform at the state level. We appreciate your time today.
PERO: Thank you for having me. I do believe the sun will come out in Florida at some point.
GIACHINO: I think it will; I think we will finally put an end to some of this lawsuit abuse with the hard work of many people in your organizations. Thanks, we greatly appreciate it.
PERO: Thank you very much, and thank you for having me on and let’s stop lawsuit abuse.March 22, 2005