Sunday, July 5, 2009

Palin Case Highlights Need for Tort Reform

Today's Washington Post has a very fair article about Sarah Palin's resignation from Alaska's office of governor. For the most part, she was sick of the attacks on her and her children. What a shocker: a decent, small-town person gets thrown into the national political spotlight and recoils at the viciousness of the modern political arena.

What jumped out at me though, is that her new-found fame or notoriety (depending on your perspective) has attracted a series of lawsuits that have put her family $500,000 in debt. I can't speculate on the merits of those lawsuits, unfamiliar as I am with the details, but suppose they're all frivolous and the Palins are exonerated in every case. They win, but they're still out hundreds of thousands of dollars in legal fees. Is that justice?

The need for tort reform couldn't be clearer. The answer is for states to switch to a loser-pays rule, where the victor has no liability for his/her legal fees (and the federal government should stay out of it). Alaska has taken steps in this direction. Virtually every other developed nation has rightly adopted this rule. It would discourage frivolous lawsuits, while ensuring that injured parties can still obtain justice.

Some--like the trial lawyers associations--will claim that this would prevent legitimate cases from being undertaken. Not so. Where loser-pays exists, a competitive market for tort insurance is available at premiums that depend on the potential size of the payout and the probability of success. Most of the time, the law firm--not the plaintiff--will cover the premium.

It doesn't make sense to clog the courts with cases that lack merit or to subject innocent parties to ruinous legal fees because someone doesn't like their politics. If the Palins are found to be liable in one or more cases, they should justly pay. But if they are found to have no culpability, for them to be saddled with debt from legal fees will be a miscarriage of justice.