July 15, 2004,
Fred Baron is a prominent lawyer in Dallas and a former president of the Association of Trial Lawyers of America. He is also a longtime friend of John Edwards and chaired the finance committee for his presidential run. He is now a major fundraiser for John Kerry, the co-chair of Kerry Victory '04. Edwards's selection by Kerry has renewed the debate over tort reform and whether trial lawyers have too much power. Baron casts an interesting light on that story. In a statement attached to a report of the Senate Judiciary Committee, Senator Jon Kyl examined the controversial role that Baron's firm, Baron & Budd, has played in asbestos litigation. (The statement is on pages 81-107.) What Senator Kyl turned up suggests that the worries that people often express about trial lawyers seem to be amply justified in the case of this firm and then some.
The evidence that specious claims are driving asbestos litigation has gotten sporadic attention. At various times the New York Times, Fortune, and columnists Robert Samuelson and Stuart Taylor have run stories on it. Cardozo University law professor Lester Brickman wrote a long article for Pepperdine Law Review this year arguing that "asbestos litigation has become a malignant enterprise." The Dallas Observer has done a terrific series of articles on Baron & Budd's role in that enterprise. Senator Kyl brought some of the evidence together, and added the testimony of witnesses called before the Senate, in a statement added to a committee report on asbestos legislation last year. But it's safe to say that few people are aware of just how badly civil justice has been corrupted in this area.
Kyl began his report by noting that because most exposure to asbestos took place more than 30 years ago, the rate of illness related to asbestos has fallen sharply over the last decade. Asbestosis has been called a "disappearing disease." Yet asbestos claims, Kyl continued, have been increasing. The number of claimants filing tripled between 1999 and 2001, to more than 90,000. The number appears to be rising still: Brickman estimates conservatively that there were 110,000 new claimants in 2003. The number of defendants has increased, too. Asbestos litigation has driven 78 companies to bankruptcy, according to University of California, San Diego, economics professor Michelle White, with a disproportionate number of the bankruptcies occurring in recent years.
Why are the trend-lines going in opposite directions? Professor Brickman concludes that 80-90 percent of recent claims are specious. How have these claims been generated? By coaching witnesses to provide false testimony, Brickman and Kyl argue, and by faking medical tests.
A Rand study found that by 1995, ten law firms accounted for three quarters of the asbestos lawsuits. Kyl's statement quotes an academic who estimates that just two firms account for half of the cases. Baron & Budd is one of them.
The firm suffered some embarrassment seven years ago, when a memo telling clients how to "prepare" for their depositions was accidentally released. The firm has claimed that quotations from the memo are damning only because they have been taken out of context. But Senator Kyl attached the whole memo to the committee report on asbestos, and it is hard to come up with an innocent explanation as an alternative to Sen. Kyl's view that it is a document coaching witnesses to lie. (It's on pages 109-131 of the link above.)
Many defendants with only minor roles in the asbestos industry have wondered how so many plaintiffs were able to identify their products as having caused them harm. A defense lawyer says in Kyl's statement: "We know...of locations where not only was our product not there, but [it] would have had no function there. Yet in case after case, Baron & Budd sues us and gets product ID and comes up with at least three or four co-workers [who identify the product]." The memo solves that mystery. It gives detailed information about which products would be used where, by whom, for what purposes. As Kyl writes, "Each description goes well beyond what one would think necessary to refresh the memory of someone who had actually worked with the product. Instead, the memo appears to anticipate that clients will not have any previous familiarity with the product."
The memo tells clients caught in a discrepancy to blame it on "the 'girl from Baron & Budd.'" It instructs them to say various things that will be legally helpful to them, without regard for whether they are true. ("You will be asked if you ever saw any WARNING labels on containers of asbestos. It is important to maintain that you NEVER saw any labels on asbestos products that said WARNING or DANGER.") It assures them that they will never be found out. ("Keep in mind that [defense] attorneys are very young and WERE NOT PRESENT at the jobsites you worked at. They have NO RECORDS to tell them what products were used on a particular job, even if they act like they do.")
According to Kyl's statement, the Dallas Observer found a former Baron & Budd paralegal who said that when she complained to a partner in the firm that a client had "absolutely no exposure to asbestos," the partner told her to "be creative." Her supervisor told her to "'make up stuff.'" Another former paralegal, who worked to get witnesses to testify about their supposed exposure to specific products between 1940 and 1970, told the Observer, "What I was doing was fraudulent. There was never any doubt in my mind about it." All of this is, again, in Kyl's statement.
Baron has said that the memo was not unethical, that it had not instructed anyone to lie, and that "any lawyer in this country that is worth a damn" works the same way. He has also said, somewhat contradictorily, that the memo was used only in a few cases and was entirely the responsibility of one paralegal.
In any case, local and federal investigations of the politically influential law firm seemed to end before they began. Kyl's statement notes that around this time the firm reportedly started an effort to hire a lobbyist to represent state judges in their campaign for additional funding from the legislature; helped get every civil judge in Dallas County a new computer; and hired a legal-ethics professor, who wrote law-review articles pronouncing the memo ethically unimpeachable without mentioning his relationship to the firm.
Defense lawyers who looked into the memo were handled ruthlessly, according to Sen. Kyl. Litigation against their clients was stepped up. One persistent lawyer found his client bankrupted. Then Baron & Budd initiated contempt procedures against him in multiple courts even threatening him with jail time and tried to keep him from recovering legal fees from his former client. Kyl also mentions that the firm had a hand in defeating the reelection bid of a state judge who had raised questions about the memo.
Brickman presents evidence on the widespread use, within the asbestos-litigation industry, of lung-capacity tests that do not measure up to the standards of the American Thoracic Society. The businesses that conduct these tests charge the plaintiffs' firms more if the test comes out positive for illness, so their incentive is clear. Often, these businesses run advertisements to recruit workers for the lawsuits. Brickman notes the case of one doctor who says he has evaluated the x-rays of 14,000 people for asbestosis. He has, admittedly, no experience in diagnosing asbestosis, but was able to find that all 14,000 people had it. The same doctors seem to have a higher false-positive rate when working for some firms than when working for others.
We should resist sweeping conclusions about trial lawyers here. Some trial lawyers, who represent clients with serious illnesses that resulted from exposure to asbestos, are appalled by the proliferation of false claims. But the questions raised about some of the tactics used in the asbestos litigation deserve answers. There is a federal statute about corrupt enterprises, called RICO. The Department of Justice should open an investigation to find out whether Baron & Budd became one.