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David Bergstein

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The Judicial-Industrial Complex

Posted: 12/26/2013 6:14 pm

Companies, organizations and businesses are all similar to people. They are entities shaped by many factors, some not easily detected. There are countless afflictions which can potentially harm the average person, many without a discernible source or cure. Stress, however, is a common denominator among any number of afflictions, often serving as the accelerator, the catalyst, or even the cause of the affliction. Stress is an invisible killer.

The equivalent of stress in an organization or company is litigation. Stress is created as a result of fear -- an emotion on which some might argue the legal profession is based. By creating a fear of the unknown, attorneys are effectively given license to endlessly bill their clients while creating no-win propositions for their opposition. Granted, a small percentage of cases truly require legal intervention. But most disputes could be easily resolved out of court, often with better results for all parties involved.

In many cases, an actual physical plaintiff seeking representation is not necessary -- just a person to act as the anchor of a class action claim, often over a nominal sum, against a company. Despite this pseudo-plaintiff having never sought representation, the law firm can now proceed with seeking to extract a settlement from the opposing side. Said settlement is calculated to be a percentage of the legal fees and other damages which would be incurred by the party defending the matter, regardless of the outcome. Nevertheless, the main beneficiary is, of course, the law firm mounting the case.

An increasingly alarming number of frivolous cases are being filed, both as class action suits and individual claims. Many proceed for years, sometimes for more than a decade. Even if a claim is defeated, the costs involved in defending a claim are exorbitant. Additionally, accusations contained in the lawsuit become public record, and the attorneys often utilize a negative press campaign along with litigation. The fallout from this tactic is only exacerbated by the Internet, with public fixation on the accusation rather than the outcome. Furthermore, the winner of a litigation is not entitled to recovery of fees and cannot recover the damages resulting from the negative effects of the publicity, often forcing a reasonable defendant to settle the claim in order to save money, mitigate reputational damage, and be able to focus on their business. In short, it's open season for attorneys to sue anyone for virtually any reason, particularly in California.

A 2012 survey by the Institute for Legal Reform ranked California 47th out of 50 among the worst states in "lawsuit climate" and Los Angeles and San Francisco as among the "six least fair jurisdictions in the entire nation." California Citizens Against Lawsuit Abuse, a tort reform group, stated, "California is one of the most litigious states in the nation... Nearly 1.4 million lawsuits are filed in California every year."

The increase in the number of litigations is a direct result of there being no disincentive for attorneys to sue, regardless of whether or not the case is winnable. The only obstacle is surviving the pleading stages, which one might presume is difficult if the claim is truly frivolous, but would be incorrect because of what's called "litigation privilege." For a party to sue another party, they need only allege wrongdoing, regardless of the validity of the allegation. In all states, lying is "protected activity" under litigation privilege, and is without consequence for lawyers.

While the meaning can range depending on venue, litigation privilege basically states that attorneys can commit torts and even crimes as long as they do so in pursuit of their client's interests. That "privilege" protects the attorney not only from acts the attorney directs against the opposing side, but acts committed against any innocent victim -- even if they are not part of the dispute -- who is impacted, intentionally or otherwise, along the way. Different venues have varying definitions for "protected activity," but at a minimum, protected activity provides that attorneys are entitled to lie on behalf of their clients. The public policy purpose, which attorneys promoted as the justification for litigation privilege, was to allow attorneys to sue anyone they wished without intimidation. The result however is the ability for attorneys to litigate against anyone without consideration for whether or not a claim is valid. Essentially, attorneys are not accountable for what they do so long as that activity is done under the broad interpretation of "in pursuit of their client's interests."

Attorneys will assert that they self-regulate and provide oversight in the event of litigation privilege abuse or maliciousness. But this is the fox guarding the henhouse, and instances in which Bar Associations actually penalizes their constituents are extremely rare. And with no downside to filing frivolous lawsuits, combined with the protection of litigation privilege with virtually no self-regulation, litigators are spreading like uncontrolled parasites.

In June, The Atlantic released state-by-state figures on the lawyer surplus, with California having two law school graduates for every one available job opening. In an April Slate magazine article, University of Chicago law professor, Eric Posner, noted that law schools are graduating more than 40,000 students per year. So without a job and with the crushing burden of student loan debt, recent law graduates are turning to the one source of income available: frivolous litigation. And since neither a legitimate claim to litigate, nor an actual client is required, the sky is the limit when it comes to frivolous suits, especially when considering the protection afforded by litigation privilege.

Moreover, the potential for defendants to secure a "victory" from a frivolous lawsuit is a loose term when applied within the legal context. This is due to the aforementioned strategy by plaintiffs and their attorneys to make the costs involved in defending oneself -- in terms of time, money and damage to their reputation -- so overwhelming that continued proceedings become untenable. What is more noteworthy, however, is that although such cases may have never been winnable for the plaintiff in the first place -- quintessential examples of frivolous lawsuits -- they inevitably resulted in a massive burden on the opposing individual or company.

The effects of litigation privilege are causing untenable stress to those headquartered or doing business in California. This adds to the already disproportionate tax burden being placed on successful individuals and companies in California, and is contributing to both an exodus of existing business and a deterrent to new businesses which would otherwise locate in the state. Similarly, this is happening on a national scale.

While the protection of plaintiff's rights are important, this duty should remain with the government and court system. Until that legislation is enacted, the California Justice System might as well be declared a police state with attorneys acting as the deputies. Deputizing attorneys with the same power bestowed to law enforcement i s dangerous and detrimental to our country's health. Persons acting illegally against other parties should be held accountable and should not be given a privilege because they graduated from law school.


David Bergstein is the CEO of Cyrano Group. He is a board member of the Sheriff's Youth Foundation, an organization dedicated to providing Los Angeles County youth with safe facilities, planned programs, and the vital tools they need to thrive and succeed in life. He is founder of the Leonard and Sarah Bergstein Learning Center at the Conejo Jewish Academy.

 
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