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Professor Newt's Contract With Corporations
by Ralph Warner, Publisher
Copyright © 1995 Nolo Press
Newt Gingrich has repeated the words "legal reform" so often in
"Contract With America" that many weary listeners have started to
Contract must contain something good for ordinary folks. What few people
realize is that it speaks almost exclusively to America's corporate
Gingrich's proposals include limiting the amounts that can be recovered
personal injury cases, putting caps on punitive damages and banning
against drug companies for injuries caused by FDA-approved medications.
Contract also seeks to discourage lawsuits by making losing litigants
other side's attorney fees.
Relying on well-publicized horror stories of a few huge jury verdicts
injuries, Gingrich claims that these proposals amount to fundamental
in the broad public interest. To understand why he's wrong, you need to
little about just where these proposals came from.
For at least 30 years, a battle has raged over how much to compensate
injured by defective products, lousy medical care or in other ways.
the many consumer groups they provide major funding for, have supported
current fault-based personal injury system, with its potential for huge
verdicts--of which lawyers typically pocket 30%-50%. Insurance companies
paying these huge judgments) and big corporations (similarly tired of
ever-escalating premiums) have taken the other side, arguing for various
Inside the Beltway, this battle plays out like this: To protect their
trial lawyers have tended to contribute big chunks of money to
politicians. They gave about $31 million from 1989 to 1994, according to
American Tort Reform Association. Big corporations, on the other hand,
mostly financed Republicans, who favor putting limits on product
medical malpractice and other types of personal injury lawsuits. Major
corporations donated $23.5 million to this end in 1993 and 1994,
Citizen Action, a coalition of consumer groups.
Little wonder, then, that the Republicans' Contract With America
number of corporation-friendly proposals. All this would amount to
than special interest politics as usual, with the Republicans rewarding
corporate friends and punishing their trial lawyer enemies, save for one
Gingrich's claim that the Contract espouses true legal reform.
Our crippled legal system needs to be returned to its democratic roots,
one in Washington seems to have a clue about where to begin.
Malarkey. In a worldwide marketplace, it's just plain silly to claim
that a few
less jury verdicts against big corporations will result in lower prices
or me, or make loads of innovative products or services available, once
providers are no longer afraid of lawsuits.
Indeed, looking at the Republican proposals from the perspective of Elm
rather than Wall Street, it's hard not to yawn. Nowhere in the Contract
Gingrich and his conservative think-tank allies deal with middle-class
two biggest legal problems: that 150 million citizens can't afford the
information they need in their day-to-day lives, and that our civil
simply does not work to resolve the average person's disputes.
Take a look for yourself. Where does the Contract try to provide legal
help for a
single mother trying to get a restraining order against a violent
Where does it make it easier for a family, trying to transfer a deceased
property to the kids, to avoid the cost and delay of probate? How does
it help a
divorced father petition a court to increase the time he can spend
The fact that Professor Newt's pro big business proposals do almost
help ordinary Americans doesn't mean that some aren't sensible. Nolo
several similar proposals, including tight restrictions on punitive
making the loser pay the winner's attorney fees makes sense in some
situations--for example, if a plaintiff rejects a compromise settlement
jury subsequently awards the plaintiff less.
These proposals are welcome because the Democratic Party, which has
Congress for so long, has regularly beat back all challenges to their
friends' right to recover multi-million dollar verdicts. Personal injury
have become as arrogant and inflexible in defending their right to milk
system as the National Rifle Association is when it comes to fighting
restrictions on assault weapons.
But the fact that, given his opponents, some of Gingrich's
proposals for change look sensible isn't saying much. Our crippled legal
needs to be returned to its democratic roots, but no one in
both Newt and, for that matter, Bill--seems to have a clue about where
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