No secret that I’ve been a big critic of large insurance companies. You don’t have to look too far into the archives to find a combination of snarkiness, outrage, and jaundice over some of their practices.  So this one is in the spirit of calling it fairly. While away on vacation, I missed this report on the outcome of high-flying plaintiffs’ lawyer Dickie Scruggs’ fall from grace.

Back story is that Scruggs is one of the guys who took on the tobacco industry made millions, took on the insurers on Katrina claims, and was poised to make millions more. In between he’s done all manner of injury cases. I have no basis to know the specifics, but I would be willing to bet that he’s earned sums that might shame some small countries’ numbers.  So he falls from grace when the state and maybe a few insurance carriers go after him for attempting to bribe a judge.

And let’s be clear. Allstate, State Farm, The Wall Street Journal and everyone else has a right to call this guy a crook and to be wary of conduct like this.

For that I am eternally thankful to Mr. Scruggs. Not.

It’s a black mark on those who represent injured people. It’s worse than the magic pants guy, as this was an attempt to completely undermine the fairness of the civil justice system.  The problem is that criminals and clowns like this provide major fuel for the efforts of those who would limit consumers’ ability to access the courts.

It was reported that Mr. Scruggs swooned when the judge sentenced him to the maximum.  Good. And I hope the jerk spends each hour of his five years reflecting on how his corruption undermined the civil justice system. I say big props and major thanks to the trial judge. By slamming him, the judge made it clear that the integrity of the civil justice system will not be undermined by criminals.

David Sugerman

The story is coming out that Melvin Weiss, former class action securities lawyer, was sentenced to 30 months and fined $10 million under a plea deal with the U.S. Department of Justice. The Milberg Weiss law firm has been a national presence for years, handling some of the largest securities class actions in U.S. history.

I would be a hypocrite if I failed to write about this and say the obvious. As I’ve noted before, getting rid of the cheaters is critical to a healthy civil justice system. That’s true regardless of which side the cheater operates from. Melvin Weiss did a grave disservice to consumers and investors. I have my doubts that 30 months + $10 million is sufficient, if you think about the harm inflicted. Even so, it’s done.

I imagine that there will be quite the feeeding frenzy on the corruption at the Milberg Weiss firm in the blogosphere,  at the Chamber of Commerce, from the tort reform advocates, and over at FOX news. But let’s remember that the corruption that nurtured Milberg Weiss operated heavily on the investment firms, as well. If that’s not readily apparent, here’s a quick list for the consideration: Bear Stearns, mortgage lending, Enron.

All of that is beside the point. As one who handles class actions, I’m strongly in favor of getting rid of the corrupt. Good news in the end.

David Sugerman

It sounds like a set up in search of a punch line: What’s the difference between an Oregon lawyer and a Texas lawyer? If you’re an Oregon consumer, you can have a laugh, and if you live in Texas, well, shed another tear.

Oregon requires that each Oregon lawyer carry liability insurance, as a way to protect consumers in case the Oregon lawyer mishandles the client’s matter.  The Professional Liability Fund provides the first level of insurance to all Oregon lawyers. And that’s part of the secret to its success. There’s a lot of purchasing power when you have a large group buying insurance. As a result, the annual premiums are affordable.

Texas takes a different approach. A commission set up by the Texas Supreme Court recently rejected a rule that would require all Texas lawyers to inform clients about whether they have liability insurance.  The proposed rule was fairly straightforward. It simply required all Texas lawyers to disclose whether they had malpractice insurance. The commission rejected the rule. I guess it’s there own special version of, “Don’t ask; don’t tell.”

According to the news report, the commission rejected the rule because…gasp!…it could lead to mandatory insurance.  Oregon lawyers and consumers have got to be ridiculing Texas over this one. Lord knows that mandatory liability insurance could lead to actual protection of the public interest.

This one is a no brainer.  As an ex-Texan, I can say with the certainty of one who was born and raised there, no one ever accused the mighty Lonestar State of being long on brains. (And of course, I feel compelled to explain that it was a long time ago, I had no say in the matter, and…and…and….)

Having insurance is actually one of those comforts for both me and my clients. I’ve handled multiple lawyer malpractice cases over the years, and I’ve learned that lawyers sometimes make mistakes that can do great damage to our clients.

So why would anyone go without?  The Texas commission really missed the boat on this one.  Mandatory insurance has protects the public in Oregon.  And even if Texas won’t insist on insurance, the Texas commission chose to sow more seeds of distrust by blowing past the chance to provide Texas consumers with a small bit of protection. Bad call.

David Sugerman

There are generally sharp divisions between those of us who work in the civil justice system. Most lawyers who do this kind of work represent one side, more or less exclusively. After all, Allstate, the lead paint manufacturers, and CNA–the physician insurance company–don’t want to hire lawyers who routinely pursue claims against their interests.

But the latest round of criminal convictions against some big name plaintiffs lawyers are leading me to re-think some of this. Dickie Scruggs has been in the news of late. He’s handled lots of big-time cases, including tobacco cases and–most recently–post-Katrina insurance claim cases. He recently pleaded guilty to attempting to bribe a judge.  Sorry, but we just downloaded a new version of wordpress, and I’m having problems with the link function. However, there’s a nice news report at www.natchezdemocrat.com..  Article date is March 14, 2008.

For those of us who play by the rules, the revelations of misconduct raise a combination of responses. Immediately, there’s a sense of outrage that these people not only violated the trust placed in us but also let their greed pollute a system that is so important to a functioning democracy. If we can’t trust the integrity of the civil justice system, I’m truly worried about our collective future.

I suppose for those of us who never aspired to be the world’s greatest or richest trial lawyers, there is also some sense of smug self-satisfaction in watching those who overreach fall. That’s wrong, of course, but I would be less than honest if I didn’t cop to the reaction.

The good news for Oregon consumers and businesses is that our state civil justice seems to operate cleanly. We’re small enough that all the players know each other, and I think that all sides of Oregon’s civil justice bar remain committed to clean justice.

Scruggs and the bad guys at Milberg Weiss are bad news. They’ve done significant damage, I fear. But don’t lose sight that greed and misconduct run on both sides. If you have any doubt about this, go back and learn about the greed-driven misconduct of a number of a large corporations like some of the oil companies, the asbestos manufacturers, tobacco, or some of our casualty insurers.

When I started out in this profession, I committed myself to working on the side of people. I naively viewed the civil justice system through a narrow prism that put all who represented people on the side of good. And I suppose I still cling to the notion that if you’re willing to take the hard road and stand up for middle- and low-income people against big institutions, you’re doing good on this planet. That commitment hasn’t waned. But I now realize that I feel a tighter affinity with those who are committed to a clean system, regardless of which side they represent.

David Sugerman