Capitalism’s Parasites — Trial Lawyers in Corporate America

An interesting NYTimes Magazine article (quite lengthy but entertaining) takes the judicial battles brought about by BP’s gulf oil spill as a prominent example and has a look at the US practice of „trial lawyers“. They can be seen as an alternative to extensive government regulation — while most European countries regulate in advance, US corporations are regulated by the prospect of huge compensations after accidents. In the complex judicial system, this has attracted a specialized brand of lawyers, the trial lawyers, whose business model is to monitor big corporations and look for opportunities to sue them.

Interestingly, the metaphor of parasites came to my mind even before that analogy was mentioned in the article. And while it is used there with the negative implication it has in everyday language, I immediately had an evolutionary perspective on it as well, where parasites are acknowledged for regulating the growth of their hosts and contributing to a dynamic balance.

Hardly surprising, the public opinion on them is mixed:

Over the last few decades the trial bar has built what amounts to a private-enterprise regulatory machine, compiling an impressive string of victories over — or at least a series of large settlements from — the most powerful corporations in the world. Some call them parasites and label their style of litigation the “American disease.” Others see them as the last truly effective check on corporate power left in the U.S. system.

The negative image is associated in the public memory with cases like the one of a grandma burning herself on McDonalds Coffee and being awarded $640,000 in compensation. (I remember reading somewhere that this case was not as absurd as it may seem, because McDonalds coffee is near boiling when you buy it due to the way they store their coffee, while home-made one is considerably cooler).

The interesting thing is, of course, that this regulatory function is itself a child of the market it helps regulate, and far from being a selfless act:

Make no mistake, Buzbee is an entrepreneur of a certain kind. As do most trial lawyers, he spends money to pry evidence of wrongdoing out of corporations that he can then leverage for a maximum return on investment. When I asked him what his product was, he thought for a moment before responding, “Fairness.” However you react to his answer, lawyers like Buzbee need a big wrong to make their business model a success, which is why his current project revolves around the offshore explosion aboard BP’s Deepwater Horizon, which killed 11 people aboard the floating rig and released an estimated 200 million gallons of crude into the Gulf of Mexico.

They have definitely come a long way, with smoking cases marking a high point:

The BP disaster comes at a pivotal juncture for the American trial bar. In many respects its power and influence hit its zenith in the late 1990s, when a coalition suing the tobacco industry on behalf of 46 states reached a landmark $206 billion settlement in a case that both fundamentally altered the public’s perception of cigarette smoking and made billionaires out of several of the lawyers involved. That settlement led to predictions, both dire and hopeful, that the trial bar would use its newfound financial clout to go after a host of other industries, transforming the face of American capitalism.

It’s hard to tell if this system is working well, and if it provides a viable alternative to stricter government regulation. What’s sure is that corporate interest has worked hard (and successfully) at reducing the pain:

Instead, the past decade has seen a steady diminishment in the trial bar’s influence in American life. In the courts, a series of rulings has limited the size of punitive-damage awards, the trial bar’s most potent weapon when going after corporations. In Congress and state legislatures, the tort-reform movement, spearheaded by the U.S. Chamber of Commerce, has scored a string of legislative victories, capping damage awards and limiting the scope of class-action litigation.

Which might be a partial explanation to an answer I keep asking myself: What do corporations get for spending so much money on elections?

Datum: Sonntag, 7. November 2010 13:23
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