Crooked Lawyers

I have been a plaintiff in at least three class-action lawsuits.  I got nothing from any of them and never really understood what the cases were about. The one I understood best involved a leather coat I bought from Joseph A Banks. “My” lawyers said that I had been deceived by online advertising.  I didn’t feel aggrieved but they make it very hard to get out of the “class.” My lawyers won a pile of money, but their fees took it all, leaving nothing for us victims. 

These kinds of class action cases are shakedown. 

Unscrupulous lawyers cruise around looking for people they can call victims and corral into a class. Sometimes they even create victims if they cannot find any on the free range. The key is to tie the victims to a firm that has money.  The target firms know that they may have done nothing particularly wrong, but they also understand they really cannot win. It might cost more to fight to a righteous victory than to pay the extortion money requested by the pirate leaders … sorry lawyers and there is always the chance with the crap shoot that can come from going before a jury made up mostly of people who had nothing else to do and/or couldn’t think of a good excuse to avoid being there.

BTW – I have not served on a jury and have never even been called up. Where you live makes the difference. Where we live in Fairfax County, they have lots of voters and not too many perps.  Some places the balance is different and voters there get lots more jury opportunities.

Toyota in the shakedown zone

What brought this subject to mind was a program I saw today with a lawyer talking about his plans to shakedown (he didn’t use that word) Toyota. This just makes me sad. We owned a couple of Toyotas.  They were good cars and the company was a good company.  I think they still are.  Nothing is perfect and the demand for perfection usually gets you in big trouble. Toyota may be able to pass through this purgatory but the lawyers will make it that much harder.

That is because they will demonize Toyota in order to make more money. What has the average Toyota owner actually lost? Most have lost nothing. But if clever lawyers can figure out ways to corral enough of people into a class, they can figure out how to shakedown the company. The lawyer on TV was running the gambit that Toyota owners may have lost resale value, since the demand may have declined as Toyota’s reputation has declined and that Toyota should pay them off. The TV host scoffed a little and pointed out that this sum would be nearly impossible to figure out and would not be much money per person. 

Not to worry. If lawyers put all these people into a class, it will be possible to get enough money out of Toyota to pay their legal fees. Of course, the average owner will get less than nothing. Why less than nothing?  Because all these lawyers will distract a good company from making better cars.  Instead of innovation, they will start playing defense.

A few very simple things that can be done to reform this system

First is to force the class-action lawyers get individuals to take the affirmative step of opting into the class. In the three class actions I was part of, they never asked me if I wanted to be in. In fact, they make it very hard to get out once they have herded you into the corral. I would never have opted in. Lawyers know that, which is why they don’t want to give us the choice. The second thing is to make the loser pay the reasonable costs of the winner in any lawsuit. Some people say that we should also get rid of contingency fees (where lawyers get a piece of the action only if they win), but I think the loser-pays system would change the incentives and take care of this too. 

Loser-pays would embolden the victims to take on the lawyer shakedowns. As I mentioned above, sometimes individuals and firms settle because they know that the cost of a successful defense would still be more expensive than just paying off. This would remove that as an obstacle.  

Innovation is great in science and technology, bad in law

It is good to be innovative and entrepreneurial in most things. That is because innovations can create wealth for everybody involved. It is a positive sum proposition, a win-win. When two or more people make a trade, they all get more of what they want.  The law is an exception because it is zero or even negative sum. Law settles disputes.  For every winner, there is a loser and when you count in all the other costs less comes out of a legal case than goes in. And once the lawyers get involved, the warring parties will harden their positions because of the adversarial nature of our law and it is unlikely that they will come up with synergy that makes them both better off. 

Law is also not voluntary. If I buy something you are selling, presumably we both think we got a good deal, since neither could force the other to participate in the transition. Law is all about coercion. One of us would prefer not to take part in the transaction and we both hope to use the coercion of the state to force the other to do something he/she would not do under coercion-free conditions.

Law should be plodding, boring and predictable

Law should be predictable, even if it is plodding, because people have to be able count on it.  It should not change to radically or rapidly that most people cannot keep up with it. In a just society, everybody is reasonably sure when they are acting within the law and when they are not.   Justice suffers when laws are ambiguous. In fact, there is a rough way to recognize a good society by answering a couple of questions.  (1) You have done something you think is wrong.  How afraid are you of suffering proportional consequences?  If the answer is “a lot,” the society is reasonably just.  (2) You have been accused of a doing something you do not believe is a crime.  How afraid are you that you will suffer disproportional consequences?  If you are very afraid, the society is unjust.   To the extent that lawyers blur the lines, they create injustice.

Innovation and entrepreneurial behavior among lawyers tends to dampen those things in other parts of society. A law fare assault on one frightens dozens and makes them less likely to try anything new. 

The coat was a good deal

BTW – the coat was really nice. You can see what it looks like now in the picture above.  I bought it online for $149 in 2003.  It is very comfortable.  Given our local weather, I wear it much of the year and it looks like it will last many more years to come. It was not possible that I could have been significantly harmed by anything Joseph A Banks did, ergo the lawyers who did this to them and used people like me as an offensive weapon, were crooks. I pity the people at Toyota. They will be lawyered for years to come.