Lawsuit industry generates billions

Trial lawyers raked in $40 billion last year from lawsuits, according to a reportreleased yesterday by a New York think tank.

Lawsuits over issues such as asbestos, mold and medical malpractice — but not tobacco settlement payments — cost a total of $205.4 billion last year, according to the report by the Manhattan Institute, which promotes free-market economics.

The study surveyed the lawsuit industry’s size, scope and reach in the U.S. economy, reporting that lawsuits from 1975 through 2001 had cost $2.8 trillion.

“Most Americans can point to a wacky lawsuit, but many aren’t aware just how large of a big business” the industry is, said James Copland, director of the institute’s Center for Legal Policy.

Attorney fees at large firms have jumped from $500 an hour to as high as $30,000 in the last decade, according to figures from global management consulting firm Tillinghast-Towers Perrin.

Plaintiffs’ attorneys take home 19 percent of an average settlement, while defense attorneys net 14 percent. Plaintiffs receive 22 percent for economic losses and 24 percent for other injuries. The rest goes toward administrative costs.

The high legal fees and large settlements have turned some lawyers into overnight millionaires.

About 300 lawyers from 86 firms were projected to earn up to $30 billion total over the next 25 years from the 1998 tobacco settlement, in which four big tobacco companies agreed to pay the states $246 billion.

Those lawyers have turned their interests to other industries “with deep pockets,” the report said.

Baltimore trial lawyer Peter Angelos, who claimed $1.1 billion after representing Maryland in the tobacco settlement, led the movement for asbestos lawsuits. He now is suing manufacturers of cell phones for failing to warn consumers about the risks of brain tumors.

Lawyers so far have brought 600,000 asbestos lawsuits, which have bankrupted 67 companies and resulted in $54 billion in settlements. The final price tag is projected to reach $275 billion, the report said.

Congress is considering legislation to limit asbestos-related lawsuits. The plan would establish a trust fund for victims and set defined medical standards for claims.

Medical malpractice awards have risen to an average of $1 million, while insurance premiums have jumped 30 percent to 75 percent nationwide in the last two years.

While Maryland and Virginia have caps on medical malpractice lawsuits, no limits have been set in the District. Maryland limits pain and suffering damages this year to $620,000 per case with an increase of $15,000 per year. Virginia sets a total cap at $1.7 million.

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