Trial lawyers still love Specter

He supports the lawsuit industry, which, in turn, supports him

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In the past year, Pennsylvania Sen. Arlen Specter has shifted from the Republican to the Democratic caucus, but his alignment with one interest group -- trial lawyers -- has been a constant in his political career. A 2005 Manhattan Institute report singled out Mr. Specter as trial lawyers' "favorite senator," and in a new report looking at the political clout of personal injury attorneys, he stands out as the paradigm example of the lawsuit lobby's influence in Washington.

James Copland is director of the Center for Legal Policy at the Manhattan Institute and the author of a new report, "Trial Lawyers, Inc.: K Street -- A Report on the Litigation Lobby 2010."

The share of America's economy devoted to lawsuits is twice as high as Germany's and three times as high as that in Britain or France. Pennsylvania has been particularly hurt by excessive litigation: The state's medical malpractice insurance costs are consistently among the nation's highest, and Philadelphia has been such a bastion of lawsuit abuse that at one point, every maternity ward on the south side of the city shuttered its doors.

Part of the reason the United States has so many lawsuits is that it is so easy to file them. Under loose procedural rules, personal injury attorneys have long profited from legal "fishing expeditions" in which lawyers file cases with no evidence at all, defendants are forced to turn over thousands of documents at their own expense, and the lawyers can determine whether they actually have a case once the documents come in.

In a pair of recent cases, the U.S. Supreme Court has placed outer boundaries on such practices, by forbidding lawyers from alleging conspiracies without pointing to at least some facts suggesting that someone conspired. In response, last July, Mr. Specter introduced Senate Bill 1504, which would not only overturn the court's recent decisions but interfere with legal pleading requirements in many other cases -- enabling yet more fishing-expedition litigation.

Plaintiffs' lawyers also have profited handsomely from class action "strike suits" that they file whenever a company's stock price falls. In these cases, they negotiate a transfer of money from one group of the company's shareholders to another, and take a big cut for themselves.

Because such lawsuits are highly speculative and frighteningly expensive, Congress has acted to limit them and the Supreme Court has allowed lawyers to sue only companies accused of misleading their own shareholders.

Mr. Specter would dramatically expand such litigation: Senate Bill 1551, which he also introduced last July, would allow lawyers to sue any company doing business with another company that had violated any of the vast number of securities rules and regulations.

Last February, two months before switching parties, Mr. Specter sponsored another piece of legislation, Senate Bill 437, which would give the trial bar a $1.6 billion tax break. Under this bill, personal injury lawyers could deduct all litigation costs immediately from their tax bills, as opposed to waiting until their lawsuits are resolved, which is the rule today.

Legal ethics rules traditionally prohibited lawyers from promoting lawsuits by paying their clients' legal expenses, because litigation, while necessary in society, is best avoided. In modern America, lawyers are allowed to front some expenses through contingent-fee arrangements -- the "you only pay if you win" lawsuits commonly advertised on late-night television -- but only because these agreements are considered loans rather than direct sponsorship of the underlying litigation. Loans, unlike general expenses, are not tax deductible for any business in America -- unless Mr. Specter gets his way and enables many more speculative lawsuits in the process.

Mr. Specter has not sponsored three bills beneficial to the plaintiffs' bar because lawsuits are popular. To the contrary, 83 percent of Americans think the legal system makes it too easy to assert invalid claims, and the lawyers' tax-break bill was deemed sufficiently unpopular by the trial lawyers' main lobbyist that she publicly hoped to "tuck it into something" else, such as a bill extending research-and-development tax credits.

But Mr. Specter must fund his campaigns, and lawyers have been generous to the Keystone State's senior senator. In this political cycle, they have donated more than twice as much to Mr. Specter's campaign coffers as has any other industry or profession. One of the senator's top four donors is the plaintiffs firm Kline & Specter, which bears the name of the senator's son, Shanin, one of Philadelphia's top personal injury attorneys. Shanin's friends in the lawsuit industry don't care whether his father is a Democrat or a Republican -- as long as he keeps feathering their nest.


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