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Trial Lawyers Will Take Their Case To The People

Business lobbyists were a joyous bunch on Feb. 18. With a grand East Room ceremony, President Bush signed into law the Class Action Fairness Act, the most significant piece of tort reform in a generation. But one man's rapture is another man's gloom, and a couple of miles away at the Association of Trial Lawyers of America (ATLA), CEO Jon Haber was marking his first week on the job with an enormous legislative setback for the mighty tort bar.

Haber has a simple mission: Make sure that the class-action defeat is an aberration instead of just the first blow in a victorious Bush crusade against what Republicans portray as an out-of-control system of legal redress. To do that, Haber will have to transform ATLA from a behind-the-scenes player that derives much of its power from campaign donations into a grassroots outfit in which kinder, gentler lawyers deliver a populist message directly to voters.

"Loony" Lawsuits

Haber, a 51-year-old public-relations exec and veteran Democratic political operative, has his work cut out for him. Bush has spent the past four years demonizing trial lawyers, blaming "junk lawsuits" for everything from lost jobs to high health-care costs. A well-funded campaign by the business-backed American Tort Reform Assn. has skewered lawyers as elitist vultures and highlighted "judicial hellholes" across the country that it says welcome "loony" suits.

Such vitriol strikes a raw nerve with trial lawyers, but the pain was bearable as long as ATLA was winning on Capitol Hill. Now class-action reform effectively moves large lawsuits out of the states and into federal courts, where business believes it can win fairer hearings. And the White House has even more ambitious goals. Next up: curbing medical malpractice claims and limiting awards that exceed victims' costs.

So how will the new ATLA boss change the dynamic? For one thing, he'll use PR skills honed representing America Online (TWX), Yahoo! (YHOO), and TechNet to appeal to blue-collar swing voters. "I don't agree [that business interests] have traction with Joe Sixpack," Haber says. "Average Americans don't want a system that's tilted so it works for the rich and powerful." But even with a lobbying budget of over $5 million last year, turning trial lawyers into plain folk may take some doing. "When they walk in with their $5,000 suits and gold cufflinks, they don't look like the downtrodden,"says Tort Reform Assn. General Counsel Victor E. Schwartz.

Haber's approach acknowledges a new political reality: The plaintiff's bar can't keep tort reform at bay simply by writing campaign checks. Trial attorneys, who doled out $2.6 million to candidates in 2004 through ATLA's political action committee and millions more through their own firms, for the first time find themselves outspent and outmaneuvered by business. Says leading plaintiff's lawyer John P. Coale: "Right now we can hold the votes we need in the Senate for really important stuff, but that's getting whittled away."

That's why Haber wants to fight Corporate America and its White House allies for the hearts and minds of Middle America. The new legal lobbyist-in-chief dresses like an average Joe, shunning neckties and power suits. And much like its new leader, ATLA is shedding the gold cufflinks as it laces up the boxing gloves. Trouble is, at this point in the match, most of the crowd is cheering for the other side.

Ranking Senate Finance Committee Democrat Max Baucus is hitting the understaffed Treasury Dept. where it hurts -- in the executive suite. The Montana senator, joined by Committee Chairman Chuck Grassley (R-Iowa), is unhappy with tighter restrictions recently announced by Treasury on the financing of food exports to Cuba. Treasury now says cash payments (sorry, no credit allowed) must be made before shipment, not afterward, as was the case previously. Grassley says he can't "see any legitimate reason" for the new rule, which will hurt Iowa corn farmers by making the transactions even more complicated. Baucus, a big backer of wheat growers, says he will block Treasury nominees from Senate confirmation. So for now, Treasury may have to make do without a deputy secretary and two under secretaries.

Condoleezza Rice may have gotten rave reviews from the cognoscenti on both sides of the Pond after her first trip to Europe as Secretary of State, but most Americans are far less impressed. A Feb. 8-13 Harris Poll found that 52% of the public had a favorable view of Rice, while 40% had a negative impression. Former Secretary of State Colin Powell, consistently the most popular member of President Bush's Cabinet, departed from Foggy Bottom with a 66% approval rating. But Rice can take consolation in the fact that she is viewed more favorably than Bush (48%), Vice-President Dick Cheney (45%), and Defense Secretary Donald Rumsfeld (42%).

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