America's litigation crisis

By Bernie Marcus

Excessive litigation has created a crisis in America. The time has come to recognize this crisis and demand that our elected officials work together to achieve a solution.

I am astounded by the extraordinary increase in lawsuits filed in recent years. At one time, we were a people who took pride in our ability to work out solutions among ourselves. Now, the solution of first choice is to sue.

The result is staggering: some 16.5 million lawsuits in a typical year. Class-action lawsuit filings rose more than 1,000 percent in state courts and 300 percent in federal courts during the 1990s.

The costs, too, have been staggering and are reflected in higher prices for products and services — about $233 billion a year, or $3,200 for every family of four.

That's just the tip of the iceberg. Excessive litigation is putting companies out of business. Some 60,000 jobs have been lost due just to bankruptcies caused by asbestos litigation, which ripple through state and local economies. For every 10 jobs directly lost due to these bankruptcies, another eight are lost in local economies.

The crisis is taking its toll at every level of society. Americans are afraid to volunteer for charitable organizations because they have seen charity board members dragged into nuisance suits. Americans are seeing their profits and dividends dry up, and as a result are giving less to charities. Years ago, when you were at fault you accepted responsibility for your actions. Today, we blame someone else. Today we sue and the costs to state and local economies are staggering. Taxpayers end up carrying the burden.

Doctors, meanwhile, have to charge patients more to cover insurance bills that have been driven through the roof by unfair punitive damage awards and settlements. An Institute for Legal Reform study found that 8 out of 10 physicians have ordered unnecessary tests because they fear malpractice lawsuits. It is shocking that 43 percent of doctors have considered leaving their medical practices.

Before we lose more talented doctors, we need to admit that the justice system is broken and fix it.

A big part of the solution is to put fair and reasonable limits on punitive damage awards. Many of these awards are excessive and out of control. In 2002, the top 10 jury awards alone totaled $32.7 billion. Again, that's the take from only 10 lawsuits. Reasonable limits could save as much as $44 billion.

We also have to recognize that trial lawyers have spent millions to stack the deck in favor of abusive lawsuits — $470 million alone on federal campaigns since 1990. They also spend heavily in state and local elections. They're spending tens of millions for one reason only: To thwart meaningful legal reform.

They are against damage limits. They also desperately want to keep laws on the books that help them reap huge jury awards. One example is laws that prevent juries from learning that injured plaintiffs were not wearing seat belts at the time of an accident. Why hide that fact? Because a jury is much less likely to reward people who can't be bothered to fasten their own seat belt, and who is instead blaming someone else — often the company that built their car — for their injuries.

We will not end this litigation crisis until we recognize it exists. We need to get back to the American idea that we, as free and responsible people, can settle our differences without lawyers who will drive doctors out of business and harass people who serve on charity boards.

I must admit that it would have been so much more difficult to start The Home Depot if the legal climate then were as unfair and abusive as it is now. I'm proud that The Home Depot employs more than 300,000 people and contributes greatly to the local economies of thousands of communities. But I shudder to think how many tens of thousands of new jobs have been lost because would-be entrepreneurs have decided against starting companies because of our unfair legal climate.

It's time to tell our elected officials that they need to fix the broken legal system before we lose any more doctors and good jobs. We should not elect politicians who pay lip service to the American dream while accepting contributions from trial lawyers to keep the deck stacked in their favor.

Bernie Marcus is a private investor and a co-founder of The Home Depot. This Commentary first appeared in the San Francisco Examiner.

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