The Cost of Litigation
posted by Daniel J. Solove
The NY Times has an interesting article about defamation law involving a lawsuit by a judge against a newspaper for libel. The article noted some interesting facts about the nature and cost of defamation litigation:
The [Medial Law Resource Center] said judges win at trial at about the same rate — 60 percent — as anyone else who takes a news organization to court. But of those that are appealed involving public officials, the media win about 68 percent of the time.
The reason, experts said, is that appellate courts tend to be less susceptible to emotional arguments than juries and more attuned to the legal standard of malice as it applies to public officials, including judges.
Still, during the last several years, the center said, the media have appealed a smaller percentage of cases. In the 1980s, news organizations appealed about 87 percent of the verdicts against them; since 2000, they have appealed 76 percent.
“The media tend to win, but it can be expensive to litigate because you aren’t vindicated until appeal,” Mr. Dodell said. He said that 60 percent to 80 percent of the dollars his company paid out went to defense expenses, not awards.
I am one who believes that the media should be responsible when it defames people or invades their privacy, but the last paragraph in the excerpt above is quite alarming. One of the primary problems with our legal system is its extravagent cost, and the problem is only getting worse. The problem is caused in large part by lawyers, who command extremely high hourly rates. Litigating a case is increasingly a big production, almost like producing a small movie.
One possible solution is eliminating the so-called "American rule" for litigation costs, which holds generally that each side bears its own costs. In other countries, the loser pays. Proponents of a loser pays rule argue that it will weed out frivolous lawsuits brought solely to intimidate defendants to settle rather than expend massive litigation costs. Critics of shifting to loser pays argue that such a rule would seriously deter many legitimate tort cases, as large organizations can run up litigation costs and make the risk-to-reward likelihood in a case too unfavorable for anybody to litigate. In other words, a loser pays rule might result in too few worthy cases being brought. In contrast, the American rule doesn't overly discourage litigation, and it forces the parties to try to resolve the case themselves. But the incentive is to settle quickly regardless of who's in the right because of the enormous potential litigation costs. Changing the American rule to loser pays still will not address the problem that we have an extremely overpriced dispute resolution system.
The great value of our legal system is that it allows people the opportunity to present their side of the story and to be heard. But that takes time and often a lot of attorney labor, which is why it is so expensive. I believe that at some point, our legal system must evolve to address the problem of cost, as the litigation process itself is becoming worse than losing the case. Is there a viable solution?
Posted by Daniel J. Solove at November 20, 2006 12:23 PM
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"One of the primary problems with our legal system is its extravagent cost, and the problem is only getting worse. The problem is caused in large part by lawyers, who command extremely high hourly rates."
I agree entirely with the first sentence, but not the second sentence. How is the problem caused by lawyers? If anything, the problem is that there are too *few* qualified lawyers; if there were more, the price would come down.
Posted by: Bruce Boyden at November 20, 2006 03:44 PM
I wonder how anti-SLAPP laws change the discussion? Perhaps now there are enough of them that some empirical comparisons between anti-SLAPP states and others could be made. In any case, anti-SLAPP offers a nice compromise--some loser-pays aspects without changing the attorneys fee rule across-the-board. Eric.
Posted by: Eric Goldman at November 20, 2006 06:06 PM
I would be curious if there is a difference between trial-court success in state court (where the large majority of cases are brought) and federal court (where cases are brought should diversity exist). Are federal juries less susceptible to emotion and more attuned to the concept of malice than state juries? Do defendants prevail more in federal than in state court?
If so, one of the culprits in the high cost borne by media defendants is the "Well-Pleaded Complaint Rule," under which state-law libel cases remain in state court, even though the media has a strong First Amendment defense.
Posted by: Howard Wasserman at November 20, 2006 07:47 PM
If we wish to reduce the costs of seeking justice in the courts, could I suggest that we examine the current system of legal training? I'm not a lawyer, but my impression speaking to lawyers is that for most, the process of becoming a lawyer has little to do with acquiring the practical skills of lawyering.
I am told that the LSAT has little to do with practice. The law classes themselves are mostly focused on the academic aspects of the law, and often not so applicable to the day-in and day-out of being a lawyer.
I am told that the bar exam is similar to practicing a whole week of law with multiple clients across multiple issues, without ever cracking open a book to make sure that you understanding of the law is correct (something that most attorneys wouldn't do until they are much more experienced - if at all).
Finally, I have heard some lawyers complain thatthe real education of the young lawyer comes during their first few years on the job - and guess what? It is their clients that foot the bill and subsidize the hands-on training that the lawyers receive.
I'm all for affordable justice, however, it seems to me that lawyers' high hourly fees are the symptom of a greater problem, which is a training process that does not encourage people who wish to master the practical skills of being a lawyer.
Posted by: conrad erb at November 21, 2006 01:24 AM
Anti-SLAPP statutes, especially in the California courts, are horribly abused by large corporate defendants to protect themselves from tortious misconduct. In the name of protecting the corporation's right to petition for redress of grievances, the intent of the statute to protect the little guy is turned upside down to totally deprive him of any right to petition for redress of grievances via lawsuit. Before discovery can even be commenced, without benefit of any trial, the lawsuit is thrown out for infringing upon the constitutional rights of corporate wrongdoers. Insult is added to injury by awarding costs and attorney fees to miscreant corporations, whose litigation expenses are funded by their insurance companies (and who employ expensive big law firm counsel). Everyone should be entitled to his day in court. Anti-SLAPP statutes are abused in California courts shamefully, and strategically.
Posted by: ray fuller at November 21, 2006 08:11 AM
So what exactly was the problem with settling affairs of honor by personal duels?
Or is it just that ink-stained newspaper-scribbling wretches are not gentlemen?
Posted by: Ned Ulbricht at November 21, 2006 10:17 AM
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Clash of a Judge and a Small Paper Underlines the Tangled History of Defamation
By KATHARINE Q. SEELYE
Published: November 20, 2006
It was like a scene out of “Bleak House,” in which Dickens chronicled an interminable court case. In 1983, a Supreme Court justice in Pennsylvania sued The Philadelphia Inquirer for defamation. The case was finally dismissed this summer — a full 23 years after it began.
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John Dziekan/Chicago Tribune
Bill Page, above, wrote a column in The Kane County Chronicle about the actions of the state’s chief justice, Robert Thomas, who sued over the assertions.
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John Dziekan/Chicago Tribune
Last week Justice Thomas, above, was awarded $7 million in the suit.
Now another case of a judge suing a newspaper for defamation has started moving up the legal chain. Three years ago, the chief justice of the Supreme Court in Illinois sued The Kane County Chronicle, a 14,000-circulation daily serving an area about one hour west of Chicago.
Last week, the justice won the first round, with a jury finding that a former Chronicle columnist, Bill Page, had written falsely and acted with malice in accusing the justice of trading a vote for a political favor. The jury awarded the justice $7 million. The Chronicle said it would appeal.
Joseph A. Power Jr., who represented the chief justice, Robert R. Thomas, said the finding of actual malice would weed out “renegade” journalists and might make newspapers more responsible. If the paper had printed a retraction, he said, Justice Thomas would not have brought the suit. “The First Amendment does not protect lies and liars,” he said.
Others said that lawsuits brought by judges could have a corrosive effect on journalism and the legal system.
“It’s obviously troubling when a sitting state Supreme Court justice can use his own court to secure a multimillion-dollar judgment against a local paper,” said Leib Dodell, president and chief executive of Media/Professional Insurance, which insures several newspapers, including The Chronicle. “To be sure, there’s a chilling effect on small papers and reporting on local political matters.”
Steven P. Mandell, part of the defense team, said those who testified against The Chronicle were beholden to Justice Thomas, who oversees the state’s entire legal system, and those who declined to testify for the defense were afraid of retaliation.
Mr. Mandell also said Justice Thomas’s involvement would muddy the route to a fair appeal, in that most of his fellow Supreme Court justices had testified on his behalf. That would most likely deny The Chronicle a level of appeal available to others, perhaps forcing the case to be heard by out-of-state judges or moved to a federal court.
Despite the hurdles, Thomas D. Shaw, president of the family-owned Shaw Newspapers, which owns The Chronicle and other papers in northern Illinois and Iowa, said the paper would proceed with its appeal. “We pride ourselves on being a watchdog for the community,” he said. “This is too important for us to roll over.”
The appeal sets the paper on a course that could take several more years. But even when such appeals are successful, as they were in the case of The Inquirer, they can be expensive and daunting, and exact a Dickensian toll.
Daniel R. Biddle, the reporter in The Inquirer suit, said he had marked several milestones as his case ran its course over more than two decades. His daughter was born, grew up and graduated from college. His father died while Mr. Biddle had what he called an “asterisk hanging over my work” because of doubts cast on him by the justice, James T. McDermott.
Eventually, Mr. McDermott died. His lawyer died. So did the lawyer representing The Inquirer. Still, the case wore on.
At the trial level, 16 years ago, a jury said the paper’s series, which was about the entire state Supreme Court, had not libeled Mr. McDermott. But in a seemingly inconsistent verdict, it awarded him $6 million anyway after deciding that a reprint based on the series was false.
In June, after years of appeals, a judge dismissed the case at the request of both sides, wiping out the $6 million judgment.
The fact that the suit has been brought by a Supreme Court justice complicated the case. Mr. Biddle, who is now an editor at The Inquirer, said he had learned through lawyers that some of the biggest law firms in Philadelphia declined to represent the paper, in part “because they were afraid” that fighting a Supreme Court justice might jeopardize their other clients.
It is not clear yet what effect last week’s verdict or the intended appeal will have on The Kane County Chronicle.
Mr. Dodell of the insurance company said he was “not shaken” by the $7 million judgment, and noted that another client, The Wall Street Journal Europe, won a landmark case last month on appeal in London. Nonetheless, he added of the verdict against The Chronicle: “Could it affect premiums? Absolutely. That’s a matter of actuarial analysis. Could it make it difficult for small papers to afford insurance? Possibly.”
Media lawyers often cite the experience of another small newspaper in Illinois, The Telegraph, in Alton, as a cautionary tale about the costs of big verdicts on small papers.
The Telegraph, twice the size of The Chronicle, lost a libel case in 1980. A judgment of $9.2 million, still the largest libel award in the state, forced The Telegraph into bankruptcy proceedings before it negotiated a $1.4 million settlement.
An article three years later in The Wall Street Journal said the suit had crushed the paper’s crusading spirit. When The Telegraph got a tip about possible official misconduct, for example, The Journal said, the editor declined to pursue it, saying, “Let someone else stick their neck out this time.”
While many people, including judges, sue the media, not all the cases result in a trial and verdict. Since 1980, according to the Media Law Resource Center, there have been about a dozen cases in which suits by judges have led to a trial and verdict. The judges won seven of those cases (one of those, won by a judge in Boston against The Boston Herald, is still being appealed).
The center said judges win at trial at about the same rate — 60 percent — as anyone else who takes a news organization to court. But of those that are appealed involving public officials, the media win about 68 percent of the time.
The reason, experts said, is that appellate courts tend to be less susceptible to emotional arguments than juries and more attuned to the legal standard of malice as it applies to public officials, including judges.
Still, during the last several years, the center said, the media have appealed a smaller percentage of cases. In the 1980s, news organizations appealed about 87 percent of the verdicts against them; since 2000, they have appealed 76 percent.
“The media tend to win, but it can be expensive to litigate because you aren’t vindicated until appeal,” Mr. Dodell said. He said that 60 percent to 80 percent of the dollars his company paid out went to defense expenses, not awards.
Mr. Biddle in Philadelphia said the saving grace for him over the years was that The Inquirer stood by him. He continued to investigate the legal system and was part of a team that went on to win a Pulitzer Prize for articles about the judiciary.
“They never flinched,” he said of The Inquirer. “It’s the little papers where the First Amendment is in grave peril.”
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