California shouldn’t allow attorneys to act as vigilantes

The 2010 legislative year opens with state lawmakers being forced to play yet another game of Whack-A-Mole.

The first mole of the season pops up on January 6 when the Assembly Insurance Committee considers a scheme to let private lawyers become self-deputized vigilantes and go after insurance companies to get damages and – no surprise – attorney’s fees.

Policing insurers has long been a task given solely to the attorney general, insurance commissioner, and district and city attorneys. This hasn’t been by accident. Government enforcement is conducted by lawyers who understand complex insurance regulations and whose mission is to protect the public. Policy makers – and the courts – have recognized the folly of pinning a badge on private lawyers whose priorities are understandably based on the prospects of making money on their “enforcement” ventures.

The public sees this too, as emphasized by the overwhelming approval in 2004 of Proposition 64, an initiative that stopped private lawyers from using a state consumer protection law to extort settlements from businesses.

Nevertheless, a handful of legislators ignoring the voters’ legal and political message have from time to time yielded to plaintiffs’ lawyers’ urging to give them new avenues to sue for profit.

This time, the lawyers are using laws governing senior insurance as their jumping off point. The January 6 attempt proposed in Assembly Bill 989 would allow lawsuits against insurance companies by anyone alleging to be harmed – including people who aren’t even policyholders.  

It isn’t the only area in which plaintiffs’ lawyers are trying to expand their “private attorney general” status. They are attacking a long-respected case rule that protects government impartiality by prohibiting public prosecutors from hiring private lawyers on a contingency-fee basis.

 Plaintiffs’ lawyers earlier hoped to team up with public prosecutors to circumvent Proposition 64, the Daily Journal legal paper noted at the time.

It didn’t happen. A spokesman for then-Attorney General Bill Lockyer told the paper that “it’s not a good idea having private lawyers running around with a badge.”

But that won’t stop them from trying. In 2010, lawmakers will no doubt be confronted with various plaintiffs’ lawyer-backed bills that will open up new areas of litigation. Meanwhile, the lawyers’ political machine in Sacramento will keep working to preserve laws that make California a haven for speculative lawsuits and a risky place for businesses to operate and create jobs.

California has enough troubles – a projected deficit of nearly $21 billion and a 12% unemployment rate, for starters – and adding more lawsuits to the mix won’t help improve the state’s economy, nor will it help attract businesses or retain those already here.

State legislators may want to take these facts into consideration when debating reforms that would help to reverse the perception that California is a sue-happy state.

They could start by making California’s class action law more fair and balanced. The state is stuck with vague class action rules that put it near the bottom nationally in a 2008 ranking for fairness and balance.

They could make changes to our state employment rules, which are causing confusion and litigation that businesses experience in no other state.

California’s lawyer-friendly system encourages plaintiffs’ attorneys to go over the top in finding new ways to sue more victims. Some firms are even moving to California to take advantage of our plaintiff-friendly asbestos litigation rules.

Earlier this year, a Los Angeles judge blasted a Texas-based plaintiffs’ firm for filing cases in other states, then dropping them and re-filing in California – a ploy that blocks defendants from getting important deposition information. Under California law, the judge could do nothing about what he called the “grisly game of asbestos litigation” and a “waste of the court’s time.”

Meanwhile, recent articles have been comparing California to Texas. Texas is home to more Fortune 500 companies than any other state, has an unemployment rate two percentage points below the national average, and was named by Chief Executive magazine as the best place to do business in America. One article predicted that other states will adopt legal reform measures pioneered in Texas: “Unlike California and other states, Texas has been aggressive in minimizing the enormous burden of frivolous lawsuits.”

Jobs and the economy suffer when a state’s litigation field tilts toward plaintiffs’ lawyers. State lawmakers should grab a mallet and wallop Assembly Bill 989, then focus on some affirmative ways to rein in abuses of our civil justice system.