OPINION:
The vast majority of trial lawyers have always been snake oil salesmen. While they claim to fight for victims, trial lawyers abuse the legal system to make a quick buck.
Unlike the pettifoggers of old, today’s trial lawyers are the beneficiaries of a multibillion-dollar industry designed to shake down defendants into paying massive settlements. Lawmakers in both parties are rightly leading the fight to expose the grift behind third-party litigation financing.
In a perfect world, every lawyer practicing in the United States would uphold the Constitution and abide by a sterling ethical code. Unfortunately, the temptation of making Scrooge McDuck money in today’s mass tort litigation sphere is too much for the trial lawyer lobby to resist.
Here is how the grift works.
The first step is identifying a hook for a lawsuit, no matter how spurious the claim may be. Trial lawyers build cases around junk science and, in some cases, products dubiously advertised as “risky” by the Food and Drug Administration. Then, they get to work finding a plaintiff who has used the targeted product and has a condition touted as a side effect, even though correlation does not equal causation.
The second step is launching an advertising campaign to generate more plaintiffs with the eventual goal of aggregating them into a mass tort claim. You have likely seen these advertisements on television — they often contain some variation of “Have you or anyone you know gotten sick by taking [fill in the blank] medicine? Call our firm now!” The firms that produce these advertisements also help bundle junk science used later in court.
Wall Street startups and hedge funds provide the cash for these litigation campaigns upfront, expecting a percentage of the recovered amount in turn. This model has proved quite lucrative. Third-party litigation funding witnessed a more than twofold increase between 2017 and 2020. Wall Street financiers spend between $2.3 billion and $5 billion annually on litigation campaigns, giving the trial lawyer lobby virtually unlimited ammunition to hammer away at defendants. And 70% of this funding is concentrated in “portfolio” litigation, where trial lawyers consolidate a number of cases for the prospect of a substantial settlement.
The third step is to file the suit and take the defendant to court. Often, the defendant is pressured into settling for a large sum even if there is a possibility to prove that the defendant is not at fault. After trial lawyers and their financial backers take their sizable cut, plaintiffs receive whatever is left over.
This grift has real-world consequences as defendants file for bankruptcy or pull effective products off the market. A 2019 FDA study showed 66 adverse events occurred after patients stopped taking blood thinner medication after a trial lawyer media campaign, including 33 strokes, 24 serious injuries, and seven deaths.
A recent hearing by the House Oversight and Accountability Committee gave Americans a look under the hood of the trial lawyer lobby’s multibillion-dollar racket. Committee Chairman James Comer, Kentucky Republican, correctly pointed out the ultimate here — abusing the legal system to impose a progressive policy agenda that could never be implemented through legislation.
In the hearing, Mr. Comer and other Republicans highlighted that these lawsuits affect “the mining of critical minerals, development of new medications, energy production, and national security.” One witness spoke to the significant delays that litigation can impose on project development in the energy sector, an industry that supports over 350,000 American jobs.
There is a bipartisan appetite for dismantling the trial lawyer grift through legislation and oversight. Sens. John Kennedy, Louisiana Republican, and Joe Manchin III, West Virginia Democrat, have introduced the Protecting Our Courts From Foreign Manipulation Act, which would ban sovereign wealth funds and foreign governments from funding third-party litigation directly or indirectly. House Speaker Mike Johnson, Louisiana Republican, has introduced companion legislation in his chamber.
Despite its wealth, power and influence, the trial lawyer lobby knows that its days are numbered. Congress should continue its efforts to dismantle the multibillion-dollar trial lawyer grift.
• Tom Hebert is director of competition and regulatory policy at Americans for Tax Reform and executive director of the Open Competition Center.
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