|BUSINESSWEEK ONLINE : SEPTEMBER 11, 2000 ISSUE|
|GOVERNMENT: ELECTION 2000
Mr. Class Action Goes to Washington?
Lawyers are spending their damage-award millions running for House and Senate seats
James F. Humphreys seems like your average Democratic candidate for Congress. Running in a working-class district that spans West Virginia's mining and timber country, the slightly overweight, somewhat rumpled Humphreys, 51, rails against HMOs and advocates a hike in the minimum wage. But there is something different about this bespectacled former disciple of Ralph Nader and Robert F. Kennedy. In a state that has never seen a congressional race top $1 million in spending, Humphreys has already raised $5.6 million--almost all of it his own.
Where does an aging '60s liberal get that kind of cash? In a word, asbestos. Humphreys is the state's most successful filer of class actions on behalf of people suffering from asbestos-related illnesses. He rakes in fees that have topped $10 million a year. Now, he's taking some of his fortune and spending it on his own political future. ''I'm financially secure,'' he says unabashedly. ''My family's financially secure. And I think I have something to contribute.''
Contribute is an apt term. This year, trial lawyers such as Humphreys are doing so with a vengeance. By running for office and by opening their checkbooks to others, they are putting more money into the political process than ever before. They're reinvesting litigation winnings in hopes of securing more liberal civil-justice laws so they can win even more lawsuits against Corporate America. And they not only intend to return control of Congress to the Democrats, they hope to keep Texas Governor George W. Bush--an avowed enemy of trial lawyers--out of the White House.
In addition to Humphreys, self-funded trial lawyers are running in Senate races in Nevada and Minnesota. And three others besides Humphreys are seeking House seats. Through June 30, the nation's 10 most politically active trial-lawyer firms had given $6 million to other candidates, or about 21/2 times what they donated in 1996. In the first 18 months of the election cycle, trial lawyers have forked over nearly $11 million, not including the $9 million candidates have given themselves. Given the stakes in this year's election, those figures could easily double.
What may hang in the balance on Nov. 7 is the ease with which individuals can bring civil lawsuits--and the size of the fees their attorneys earn in the process. More than any previous Presidential candidate, Bush has made a priority of clamping down on what he considers nuisance suits. In Texas, he campaigned in 1994 for tort reform and signed a bill that caps punitive damages as his first major accomplishment in the following year. Now, Bush is determined to do the same at the national level. He's pushing a host of provisions that would dampen lawyers' interest in bringing suits, including a ''loser pays'' law and a ''three strikes and you're out'' penalty, which keeps lawyers out of federal court for three years if they've brought three suits deemed to be frivolous. He also wants to limit ''judge shopping'' by steering most major class actions to the federal courts. ''Federal tort reform is the trial lawyers' biggest nightmare,'' says James M. Wootton, president of the U.S. Chamber of Commerce's Institute for Legal Reform, which supports Bush's proposals.
VITRIOL. Bush is clearly Public Enemy No.1 to plaintiffs' lawyers. They generally opposed Bob Dole in '96 and President George Bush in '92, but not with such passion. George W. has trial lawyers positively vitriolic. ''His goal,'' says lawyer and Baltimore Orioles owner Peter G. Angelos, ''is to deprive the average American of his fundamental right to his day in court just so he can please his corporate benefactors.'' Charleston (S.C.) lawyer Ronald L. Motley, instigator of the states' suit against Big Tobacco, says he'll write to every tobacco and asbestos victim in his extensive database, urging them to vote for Gore. ''Don't think we aren't going to reach out to every one of them, says Motley. ''The 'W' in George W. stands for 'wrongdoer.'''
That's frightening to business groups that thought they were making headway on tort reform but now aren't so sure. ''There's all this money that wasn't there before,'' says Bernadette A. Budde, senior vice-president for the Business-Industry Political Action Committee. ''There's this intensity that wasn't there before.'' What's particularly frightening, she says, is that the more money trial lawyers make, the more they pour back into the political system, where it supports candidates who in turn fight to preserve and expand the right to sue. With $20 billion to $25 billion in lawyers' fees from the $242 billion tobacco settlement beginning to be paid out, there's a lot of money to reinvest. This year's five most politically generous firms all played a major role in the tobacco litigation.
If Bush is the enemy, Vice-President Al Gore is the patron saint of the plaintiffs' bar. Not only does he oppose tort reform, he also supports a patients' bill of rights that would let people sue their HMOs. (Bush says he supports a patients' bill of rights but wants only a weak right-to-sue provision.) Gore didn't win a round of kudos in choosing Connecticut Senator Joseph I. Lieberman, who has supported tort reform in the past, as his running mate, but most trial lawyers say they are willing to overlook Gore's Veep choice. They have contributed $776,000 to his campaign, plus $1.9 million in soft money to the Democratic National Committee. Gore's increasingly populist rhetoric is music to their ears, since it could drum up more anticorporate sentiment. That, in turn, could lead to more lawsuits and maybe even to larger jury awards. And his record, from their perspective, is unblemished. ''This is an absolutely crucial election,'' says Fred Baron, a Dallas lawyer and president of the Association of Trial Lawyers of America. ''Vice-President Gore has always been a strong advocate of unfettered access to the civil-justice system.''
LARGESSE. The election's importance goes well beyond the Presidential contest. A few more Republicans, particularly in the House, would add the votes needed to pass tort reform. Such a measure made it out of Congress in 1996 only to be vetoed by President Clinton. A few more Senate Democrats would get a patients' bill of rights to the President's desk.
That's why so much trial-lawyer largesse is pouring into key races. Virginia Democrat Charles S. Robb, who is considered one of the most vulnerable Senators, counts law firms among his biggest benefactors. He has received $497,000 from them so far, or about 12% of his total take. His opponent, ex-Virginia Governor George Allen, is a strong tort-reform advocate.
In Montana, law firms may have succeeded in making a race out of what was a snoozer between incumbent GOP Senator Conrad Burns and a little-known rancher named Brian D. Schweitzer. Some $138,000--more than a third of Schweitzer's total receipts--has come from law firms. What's more, trial lawyers are major backers of an ad campaign highlighting Burns's support for a Senate measure that would cap the amount of money available for asbestos claims. Even if they don't succeed in defeating Burns, trial lawyers can already claim a partial victory: Burns has withdrawn his co-sponsorship of the asbestos bill.
But the biggest dollars are being spent by trial lawyers who are candidates. These candidates have two distinct political assets: To be competitive financially, they can write checks from their own bank accounts, and they can tap the deep pockets of a vast network of fellow lawyers. And because they have spent years arguing cases in front of juries, they have well-honed communications skills. ''These are people who make a living persuading people they are right,'' says Victor Schwartz, general counsel for the American Tort Reform Assn., a business-sponsored group.
For inspiration, a would-be candidate need look no further than John Edwards. Two years ago, Edwards was just another personal-injury lawyer. But now, after investing $6.1 million of his own money, he's the Democratic Senator from North Carolina--and he was on Al Gore's short list for a running mate.
One man who would like to emulate him is Michael V. Ciresi, Minnesota's point man in that state's tobacco case. Now, Ciresi hopes to parlay his wealth and visibility into a Senate seat. He has used $2.6 million of his own money to compete in a four-way Sept. 12 Democratic primary. If he wins, expect him to put a lot more into a bid to unseat GOP incumbent Rod Grams.
MESSAGE MONEY. In Nevada, personal-injury lawyer Ed Bernstein also has his eye on a Senate seat. He has contributed comparatively little--$900,000--of his own money. But he has no substantial opposition in the Sept. 5 Democratic primary. His ability to spend as much money as necessary to take on ex-GOP Representative John Ensign is the main reason he's the likely Democratic nominee.
But for sheer audacity, no one beats Humphreys. He's just running for a lowly House seat, yet he's spending money faster than many Senate candidates. His $5 million in self-funding isn't quite a record for a House contest--that belongs to Michael Huffington, who spent $5.2 million in 1992 to win a seat in California. But Humphreys' spending is a staggering sum in a state with a median household income of less than $21,000 and no major media markets to soak up advertising dollars. To secure the Democratic nomination, he poured $3.5 million into polling and a barrage of ads on Charleston (W.Va.) TV stations. In the end, he spent about $95 per vote. But Humphreys bristles at the notion that he is buying an election. ''Buying an election is difficult, if not impossible,'' he says. But with money, he adds, ''you can get your message out.''
The message that Humphreys and other trial-lawyer candidates want to get out is very similar. They may be in vastly different races, but at times they all sound as if they are running against managed-care and pharmaceutical companies. Attacking Big Business has itself become a big business--and trial lawyers will spend whatever it takes to protect their turf.
By Dan Carney in Washington
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Mr. Class Action Goes to Washington?
TABLE: Big Bucks from Trial Lawyers
TABLE: Trial Lawyers on the Campaign Trail
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