Friday, July 18, 2003

The Courts: A Tort Reform Idea

Altria, the cigarette manufacturer, is facing bankruptcy because an Illinois trial court forced the company to post a $12 billion bond just so it can appeal a $10 billion tort verdict. High appeal bonds are one tactic employed by trial lawyers and their allies in state legislatures to effectively deny defendants meaningful recourse for fraudulent trial verdicts.

Which leads me to this suggestion: What if plaintiffs' attorneys were required to personally post bond in order to file litigation? Suppose you're putting together a class-action seeking $100 million in damages. If you win, you get the money, but if you lose, you've still forced the defendant to spend millions defending itself. One common tort reform proposal is to adopt the "loser pays" system used in countries such as Britain. That's a good suggestion, but in order to have a true deterrent effect, I think you need to require the plaintiffs' counsel—not necessarily the plaintiffs themselves—to post a bond that would be forfeit if the Court ultimately rules against them. If it's good enough for defendants to secure appeal rights, it's certainly good enough for plaintiffs' attorneys who view the courts not as a protector of individual rights, but as a playground for social science experiments.

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