The Invisible Fist

The Litigation Explosion, by Walter K. Olson, New York: Truman Talley Books (Dutton), 388 pages, $22.95

In recent years, lawyers have thrown a raucous party for themselves in the courtrooms of America—laughing, drinking, carousing, snuffing out their cigarettes in the carpet, smashing the furniture, and tipping over table lamps. Nonlawyers are invited only to supply the beer and then are quickly shown the door. In the midst of the madness, a fire has started, which has climbed the wood-paneled walls, burst through the windows, and leapt across to the rooftops of factories, hospitals, municipal buildings, and amusement parks across America, threatening to burn them to the ground.

The inferno is on a rampage. Soon Americans will be left jobless, homeless, and funless, but with a hell of a lawsuit against…whom? There won't be anyone left to sue.

Walter K. Olson sounds the tocsin for this holocaust in The Litigation Explosion—with rhetoric admittedly a bit less shrill.

Olson, a member of the free-market Manhattan Institute think tank, departs from the tendency of most books about the litigation crisis to focus on ever-burgeoning state and federal laws. Olson instead focuses on legal procedure. The problem is the rules by which lawyers play when seeking to vindicate their clients' rights, regardless of the number or strength of those clients' rights.

The drawback to this approach, of course, is that legal procedure is extremely boring. Lawyers may care about it because they have to know it, but The Litigation Explosion purportedly is directed at nonlawyers, whose knowledge of such things is tinier only than their desire to know more.

For the plucky few who wish to be informed, however, Olson delivers. Want a full discussion of the expanding constitutional limits of long-arm jurisdiction? Olson gives it. Want to understand how judges have widened the scope of pretrial discovery? See Chapter 6, "The Assault on Privacy." Lax standards for contemporary pleadings? Runaway punitive damages? End to the restraint lawyers once exercised in soliciting clients? It's all here. You can look it up—though not in the index, which is wholly inaccurate and could as well be for another book. (Olson should correct this product defect before it becomes the source of some class-action lawyer's revenge.)

By making changes in these and other areas of legal procedure, Olson argues, judges have hugely expanded the size, number, and invasiveness of lawsuits in the hope that the legal system would become an "invisible fist" for social reform—a more coercive force for social good than Adam Smith's invisible hand. But, Olson warns, "The unleashing of litigation in its full fury has done cruel, grave harm and little lasting good."

The fuse for this explosion was lit when judges loosened the rules of jurisdiction. Previously, the Due Process Clause was thought to protect someone from being dragged across the country to answer a lawsuit in another state unless the dispute arose there. Limits on jurisdiction were not intended just to alleviate a person's inconvenience of traveling to another state. Rather, they avoided the unfairness of submitting someone (and her personal wealth) to a trial in a foreign state's court, where the supposing party is a resident of that state—who perhaps votes in judicial elections—and the defendant is not. At one time, the Constitution was interpreted to forbid this, unless the defendant committed some act within the boundaries of the foreign state that could be deemed an act of "consent" to be tried in its courts.

The end of this limitation sparked a nationwide competition among courts for lawsuits. State courts effectively couldn't limit lawsuits even if they wished to, since the new rules made it possible for lawyers to take their cases to some more-generous state's courts. When states did attempt to show restraint, it led only to wildly varying verdicts across the country for exactly the same legal claim.

Under the invisible-fist theory, legal philosophers reasoned that the increase in litigation was a good thing. It meant more rights were being vindicated. To further encourage this process, more procedural restrictions were laid flat.

Lawyers once were limited in how much they could rummage through a person's files and private matters for evidence to substantiate their claims. If they didn't have at least some evidence of a good claim, they could not expose a person to this nuisance.

That was too confining for the new thinkers, however, as they felt more discovery could only help more claims reach a just resolution. "Many long-suspected sins and scandals," Olson says, summarizing their position, "and others not even suspected, would at last be brought to light, and the reign of the saints would be complete. The human race would walk around with a blush on its face, as perhaps it ought."

Judges, together with the legal experts who write the procedural codes, made other changes to encourage litigation. Huge contingency-fee awards, in which the lawyer takes a cut of the litigant's winnings, have encouraged suits. Class-action procedures were relaxed so lawyers can wage lawsuits, and be paid in full, for grievances too minor for any affected person to care about.

Verdicts became huge. Litigants could win far more than they were harmed, if the lawyers could convince the jury the defendant in a particular case needed punishing. "A curious thing was happening," Olson writes. "Some of the hapless plaintiffs were beginning to attract not sympathy but downright envy; their injuries were the best thing that had ever happened to them."

The problem, of course, is that punishment once was reserved for the criminal courts, where many safeguards apply. Evidence rules are stricter. The prosecutor is expected to seek justice, not simply conviction, and has no personal financial stake in the outcome.

These new thinkers have been knocking down any rule that, when enforced, would occasionally interfere with justice—the rule that you had to get things in writing, for example. Occasionally this rule meant someone who had agreed to something, but who hadn't signed a document, could sneak out of the bargain. That is unfair, but the benefit of a clear and certain rule outweighed the loss of some justice.

The fuzzy new standards, which allow the courts to reconsider everything, sometimes ripping up a willingly entered, signed contract because the judge doesn't think it fair to one of the parties, has created great uncertainty. Uncertainty breeds litigation.

Under the influence of the new thinking, our legal system is evolving toward a benign dictatorship of the judiciary, able to achieve justice in every case since it is not bound by written laws or previous court decisions, but subject to the danger that this absolute power will corrupt judges, and certainly the lawyers and litigants who wield it. The solution to this litigation frenzy, Olson believes, lies where the problem lies: legal procedure.

Limit jurisdiction, he suggests, tighten rules on class actions, raise the standard of proof, strictly require pleadings to be correct in form as well as substance, toss insubstantial claims out of court without endless digging around in defendants' files, and—this is clearly his favorite—employ the so-called English rule on legal fees: The loser of a lawsuit pays the winner's lawyers. This would discipline lawyers into bringing no action unless they legitimately believe it will succeed.

Olson's "steepen the steps to the courthouse" approach would limit the number of lawsuits, though some people with valid claims would not be able to overcome the obstacles and win their just deserts. A little less justice, he figures, if it also means a lot less litigation, might be a net gain. Clearly a balance must be struck between redressing every harm in the world (or, as one judge put it, allowing a legal claim for each of "the thousand natural shocks the flesh is heir to") on the one hand, and on the other hand allowing people to live and work without any threat of being sued. But it seems misguided to say that laws—legislative and judicial—are so far out of control that we must bar the door to keep lawyers from taking advantage of them.

Fix the substantive law, and procedural law will no longer be a problem. Ever-burgeoning state and federal laws such as state workers' compensation systems, federal civil rights laws, the new Americans with Disabilities Act, or any of the countless other recent laws inevitably described as "Lawyers' Full Employment Acts"—have made litigation a boom business. Not to be outdone by legislators, judges have created more reasons to sue, such as their expansion in personal-injury law, which was criticized by Olson's Manhattan Institute colleague Peter Huber in Liability: The Legal Revolution and Its Consequences.

Whether these largely paternalistic efforts by judges and legislators are good policy is another debate—or, more accurately—a thousand other debates. But a good legal system should stand by its government, right or wrong, and carry out public policy as efficiently as possible.

 Each of these thousand debates over policy, however, must consider the costs of achieving its aims through the courts. And only nonlawyers, who bear the cost (financial and otherwise) of the litigation frenzy, can answer this. The lawyers who profit wildly from it can hardly be objective. No one will stop the expansion in laws and legal rights until nonlawyers still, at last count, a majority in America—decide enough is enough.

Perhaps, after all, Olson's book is not just for lawyers. Legal procedure may be too important a topic to be left solely in their hands.

Craig M. Collins, former assistant editor of REASON, is a lawyer in Los Angeles.