Dr. Joseph S. Fulda has been writing for The Freeman since 1981. Lt. Patrick J. Vincent of the U.S. Navy is currently assigned to the U.S.S. Alaska.
It might appear that the question, “Are there too many lawyers?,” reeks of the discontent with the market that still prevails among the elites who support the discredited models of the managed economy. Indeed, given world events, no one should have to answer questions such as “Are there too many shoemakers?” It is simply up to consumers willing to pay certain amounts for shoes, accessories, and repair—the demand schedule—and up to would-be shoemakers willing to offer their services at certain wage rates—the supply schedule—to jointly determine the number of shoemakers.
Closer analysis, however, as well as some startling data suggest that lawyers providing legal services to plaintiffs are in a class of their own. Yes, there is a market for legal services, and yes, a free-market society does have a place for actions at law. Notwithstanding this, however, legal services are fundamentally different from other services, simply because lawyers must use the law—the State—to give plaintiffs the property of defendants. Today’s plaintiffs’ bar is expert at using the law to attain wealth by what Albert Jay Nock called “the political means” rather than “the economic means”—i.e., by redistribution of existing wealth rather than the creation of new wealth. Indeed, it is clear that the very same ethos that informs legislative redistribution is responsible for judicial redistribution: the cultivation of a state of mind which asserts the victimhood of select groups. While legislative redistribution typically focuses on race, gender, ethnicity, poverty, and similar ”victims,” judicial redistribution typically focuses on class interests, among them: tenants, consumers, employees, and those suffering from injury, illness, or loss of function due to unfortunate accidents that are no one’s fault.
Besides the moral point, judicial intervention—like all strictly redistributive processes—results in a far less robust economy, one designed to avoid judicial redistribution rather than one designed to create and produce. Empirical support for this conclusion abounds: (1) The United States has only five percent of the world’s population, but has fully seventy percent of the world’s lawyers. (2) We spend more than $80 billion a year on direct costs of litigation and on insurance premiums and a total of $300 billion on indirect efforts to avoid liability. (3) The threat of litigation has caused 47 percent of manufacturers to withdraw products from the market. (4) The threat of litigation has also discouraged no less than 25 percent of manufacturers from some types of product research. (5) Largely due to the fees brought in by the plaintiffs’ bar, our trial lawyers are the best-paid attorneys in the world. (6) Per capita, we have 30 percent more lawsuits than do the Japanese, one of our main competitors in the creation of wealth. (7) In Japan, the ratio of engineers to lawyers is 20 to 1, but in this country it is 2.5 to 1.[1]
At this point it is well to make some qualifications. First, it is true that the market may decide that the potential harm of a risky good or service outweighs its potential benefits. The market properly both embraces and limits risk, as reflected in the supply and demand schedules for risky goods and services. Second, liability for civil wrongs—torts—remains a powerful disincentive for fault, and one that works. Third, contingency fees do allow access to the courts by those with a genuine complaint who cannot afford to retain counsel.
Unfortunately, however, far too many folks welcome the chance to be plaintiffs, since being a plaintiff is cost-free. The contingency-fee cases that the plaintiffs’ bar handles—principally malpractice and product liability cases—allow any number of lawsuits regardless of the merits of the complaints. Indeed, since there is no effective penalty for frivolous lawsuits, the demand schedule is potentially infinite, restrained only by a vague sense in ordinary citizens on what is properly the subject of a suit at law and what is not. But the statistics above show nothing if not that such sensibilities are rapidly disappearing, and when obstetricians stop delivering babies en masse, it is time to restore some limits on the demand schedule for lawyers.
The most obvious reform, long advocated by many, is to require unsuccessful plaintiffs to pay the defendants’ legal fees. A second reform is to make the system inherently less redistributive, by changing the burden of proof. The present system allows redistribution from defendant to plaintiff when there is “a fair preponderance of the credible evidence,” i.e., with just 51 percent of the merits in the matter. Whatever happened to the old adage, “Possession is nine-tenths of the law?” The standard currently used for some federal suits, “clear and convincing evidence,” is much to be preferred.
It cannot be emphasized enough that the only way to genuinely improve the lot of the masses is by the creation of new wealth rather than the redistribution of existing wealth. As Governor Richard Lamm put it, “No nation in history has ever sued its way to greatness.”[2]
