Judiciary
HomepageIn the time it takes me to give this testimony over 100 lawsuits will be filed in this country. That is why we are here! That is why I am here!
MR. CHAIRMAN, my name is John Foster and I am pleased and honored to appear before the Courts and Intellectual Property Subcommittee of the House Judiciary Committee. I want to thank you for giving me the opportunity to testify on the issue of why and how our nation's legal system is badly in need of reform. Service firms, especially engineering companies, are predominately small businesses made up of talented and dedicated professionals who are trying to make people's lives safer and healthier. But the flood of litigation is paralyzing their businesses and tying up scarce resources.
I am here today representing the American Consulting Engineers Council (ACEC) as its past President, and Malcolm Pirnie, Inc., a multidisciplinary firm of engineers, scientists, and planners located in White Plains, New York.
ACEC is a national organization composed of approximately 5,000 private consulting engineering firms with some 190,000 employees. Seventy percent of our member firms are small businesses, with 30 employees or fewer. Reforming our nation's legal system is and has been a high priority for our members. In fact, in 1986, we founded the American Tort Reform Association (ATRA) which has become one of the leading voices on the need to fix our broken legal system.
We also are founding members of Citizens for Civil Justice Reform (CCJR) another broad coalition which, together with ATRA, represents everyone from the Council of Community Blood Centers to the National Federation of Independent Business, from the family doctors to Amway salespeople. For years we have been working hard on the state level, as our state organizations have fought side by side with civil justice reform activists in promoting common sense legal reforms such as pre-trial screening panels laws, statutes of repose, and comparative fault laws, to name a few.
The "Contract with America~ -- contains several provisions that, if signed into law, will help make American businesses more competitive and create more jobs. One of the most important planks of the "Contract" is The Common Sense Legal Reforms Act. Congress must act before more innocent professionals, small business people, consumers and municipalities get hit with "shotgun" litigation. No one is immune. And we all pay the price.I know about it firsthand. My firm got hit with "litigious buckshot" in one particular case and it wasn't pretty. In fact, in this case it stunk -- both literally and figuratively. Several years ago, I was involved in a case involving a skunk. We had designed a waste water treatment facility. One night a night watchman came upon a skunk. Yes a real live skunk. In fleeing from the skunk he injured himself. A minor "slip and fall" case became a million dollar lawsuit in which the night watchman decided to "sue the world." He sued us, as the designer, he sued the contractor, the sub consultants, and the owner, a large municipality.
But I did not come here to merely rattle off a list of outrageous suits. I want to talk to you about the real life economic impact of these suits on consulting engineers and our industry, but also on the entire economy and on the quality of life in America.
LAWSUIT ABUSE HURTS REAL AMERICANS
Over the last 60 years, legal costs have grown almost 400 percent more than the economy. The United States spends two and a half times more than the average industrialized nation. Unreasonably high litigation costs erode our standard of living and hinder our international competitiveness. This impacts both the products and service industry sectors of our economy.
American small business is hurt by the frequency of frivolous lawsuits filed against them. Consulting engineering firms provide a window into the world of what is happening to individuals and small businesses around the country. ACEC's 1994 Liability Survey reported that 41% of the claims brought against engineering firms are resolved without any payment to the plaintiff yet the firms spent an average of 135 hours per case and tens of thousands of dollars. That's an enormous cost, not to mention the firm hours lost - for doing nothing wrong.
American "Know-how" is in jeopardy when 72% of the responding engineering firms said that the threat of liability hampered the use of innovative technology. An amazing 90% of our member firms told us that they have turned down work in the past year because of the threat of liability.
America is losing its competitive edge in certain industries because this is one of many hidden taxes placed on our firms.
ATTORNEY ACCOUNTABILITY
The attorney accountability provision in H.R 10 is the type of law that we need and it should be binding in all states. Just as we have Truth-in-Lending laws when someone buys a car and takes out a car loan, parties to a lawsuit should understand up front what the costs are going to be.
SANCTIONS AGAINST IRRESPONSIBLE TRIAL ATTORNEYS AND THEIR CLIENTS
The small percentage of attorneys who abuse the litigation process and file what they know are completely baseless claims against innocent defendants should be penalized. My attorneys tell me it's called a Rule 11 and not used very often. When it is used it is difficult to obtain from judges who are reluctant to find a violation. However, sometimes it used effectively. In one celebrated case the controversial former Attorney General Ramsey Clark was sanctioned with a Rule 11 after he sued President Reagan, Margaret Thatcher and the government of Great Britain demanding that Libyans who were injured after the 1986 bombing should be reimbursed for their losses. Section 104 of H.R.10 is a good start that "gives teeth" to this provision. However, it does not go far enough. For example, some of the worst abuses by lawyers are the "fishing expeditions" during the discovery process. Rule 11 must apply to discovery and not just conduct during trial.
I have had colleagues tell me that they would have filed Rule 11 sanctions against attorneys but there are some powerful reasons not to. Usually, these involve costs. One consulting engineer wanted to file a Rule 11 suit against an attorney who filed a frivolous lawsuit against him. His insurance company notified him that they would cover more of his costs if settlement were accepted. Part of the settlement, drafted by the opposing counsel, included a provision waiving the right to file a Rule 11 suit against that attorney. By addressing this issue, Congress sends a powerful message to those who would unfairly trample on the rights of the innocent defendant: stop abusing the process for your own gain.
Rule 11 should be used responsibly by parties who are unfairly treated by the small percentage of unscrupulous contingency-fee attorneys. Just as engineers, doctors and widget-makers are held accountable for their actions, so too should lawyers be accountable. My message to everyone is simple accountability is a two-way street.
REAL REFORM IS NEEDED NOW
America has moved into a service and information economy. Litigation costs, both direct and indirect, are one of the biggest hindrances to sustained growth and international leadership. Real legal reform must reduce the frivolous suits that boost all costs from health care to the price of a ladder. And reform is needed to encourage the development of innovative technologies by our most creative minds who often are hindered by the threat of litigation.
The following are a few suggestions to help fulfill the promise of the "Contract with America" which is intended to put reasonable limits on damages, common sense reforms to reduce frivolous lawsuits and standards to streamline the civil justice system. The following are provisions that would establish uniform liability law reform for services, some of which virtually mirror those provisions currently contained in Section 103 on product liability.
Comparative Fault (Joint and Several Liability Reform): First, there is unanimity from groups as diverse as the National-American Wholesale Grocers' Association and accountants, from cities and states to engineers in the desire to replace unfair joint and several liability laws with proportionate fault so that damages are paid in proportion to responsibility. The states are leading the way in changing their joint and several laws and Congress must act to ensure that no one in America has to pay for the misdeeds of others.
Six-year Statute of Repose: We propose a national statute of repose that would help to set reasonable time limits for initiating lawsuits. This reform would help ensure that a defendant cannot be held liable for injuries decades after the service in question was performed, yet still permitting legitimate plaintiffs to bring a suit against those that have control over the circumstances about the time of the injury.
Frivolous Suit Protection: We propose 1) Certification Panel legislation that would help to weed out frivolous lawsuits before they get to court, as well as targeted fee shifting in the case of a litigant who brought a merit less claim and lost, or, a litigant who was offered a settlement, sued anyway, and was finally awarded less than the original settlement.
Service Liability: We support a law where "junk science" shall be reduced by, among other things, a requirement that the scientific and technical information used to establish reasonableness exist at the time and place of the occurrence and that the opinion be based on scientifically valid reasoning. Also, compliance with government specifications should not open door to frivolous suit against professionals.
Alternative Dispute Resolution: Our industry suffers from a great deal of litigation between parties to construction projects. Much progress has been made to promote ADR and when used, I understand from our insurance firms, it cuts down on costs. The use of ADR has been shown to be an effective method of resolving claims before the litigation battle begins.
Collateral Source Benefits: We support full disclosure of benefits to plaintiffs to deter "double-dipping" and reduce any award of damages if plaintiff has received payment from a collateral source in order to eliminate multiple recoveries for a single injury.
These provisions would apply to actions commenced in federal and state courts. This legislation would not supersede any state law that provides to professionals limitations of liability or defenses that are additional to limitations or defenses contained in this Act.
CONCLUSION
As I mentioned at the start of my testimony, over 100 suits have been filed since I began. Before you adjourn for the day more than 50,000 claims will be filed. Most have some merit and are valid claims. But do all of these matters have to be settled with lawyers battling each other. I earnestly believe that we have common sense on our side. Fairness, accountability, openness and greater access to the courts are goals that we can all agree on. Everyone deserves the right to their day in court. And everyone deserves a fair court. But everyone also deserves the right to strive for business success in this country without the constant ominous threat of groundless expensive litigation. I urge you to seriously consider these concerns because they have such far-reaching impacts - impacts that reverberate throughout both the economic and social fabric of America.
If you remember nothing else you hear today, remember these 3 things:
Number 1. Rampant, unbridled misuse of the legal system is hurting entrepreneurial spirit in America - it is paralyzing us, sapping our innovative instincts and costing us big money.
Number 2. We need to make attorneys accountable for their actions, and we need to ensure that complaints litigated in our courts are substantive and valid.
Number 3. Finally, you cannot ignore the critical importance of services when you enact tort reform. Services support and nurture our economy, and they need your special attention.
Thank you for this opportunity to come to Washington and testify before your committee.