Outside Counsel

When we compare systems one of the problems we encounter is that there are fundamental basics that are the foundations of each system, and it is important to keep in mind that these foundations are different. The next thing to keep in mind is that we need to know what these basics are in each system before we can start making comparisons. The third thing to remember is that a country's legal system, as import as it is, is not the same thing as the country-- there are societal fundamentals that underlie the fundamentals of the legal system, and until we have a handle on those basics we may make the mistake of drawing conclusions that seem correct, but are really premised upon incomplete assumptions or inaccurate information. If you compare European products liability law to the law in the US, for example, you will find that many of the concepts seem the same. Why then are products cases comparatively rare in Europe? Why are damages awards so much lower? The conclusion that is eagerly leapt to when these questions are asked is that juries are the difference. Europeans are eager to argue that it is foolish to have unschooled, untrained laypeople make what appear to be judicial decisions, and US lawyers and the insurance industry are prepared to make that argument as well. Europeans believe that contingency fees are unethical, and they are not allowed to accept cases on that basis. The US defense bar and the insurance industry are happy to argue that contingency fees drive up the cost of litigation.

Neither of these arguments is seeing the whole elephant. As we discussed in our last post what drives US damages awards really is, for the most part, the amount of the actual economic damages that injured plaintiffs are able to prove. The reason that awards are lower in Europe is that the actual damages that persons injured in Europe are lower, because social welfare benefits take care of things like future lost earnings and medical expenses.

Contingency fees are irrelevant to damage awards-- the real cost of litigation comes, not from the 1/3 that plaintiff's lawyers get in the 50% of the cases that go to verdict and are successful. The cost of defense on the cases that should be settled and aren't is the problem. I would submit that these fees are also pretty irrelevant to the question of what the costs of litigation amount to in our society, but really the question is, "Why don't we know?" There are a lot of anecdotal attacks out there, but not so many studies employing reliable social science methodologies, and until we have that we are all whistling in the dark.