September 11: Here Come the Trial Lawyers

Efforts to limit litigation are pitting Bush against the bar--again

As a shocked nation linked arms after September 11, conservatives and trial lawyers seemed to forge an uneasy truce. Congress created a government-supported victims' compensation fund for people who opt not to sue in the wake of the terror attacks, and the Association of Trial Lawyers of America stepped in to provide free counsel for them. What's more, ATLA urged its members to suppress their ambulance-chasing impulses and adopt a 45-day moratorium on soliciting terror-victim clients. For a fleeting moment, it looked as though mass litigation might be avoided.

If anyone expected an enduring peace, though, they failed to check with the likes of New York lawyer Lee S. Kreindler. A veteran of lawsuits filed after the crashes of Pan Am Flight 103 and TWA 800, Kreindler has already lined up September 11 clients and is talking to dozens more. Why wouldn't we sue, asks Kreindler. "This is our livelihood."

Attitudes like Kreindler's are a big reason why the Bush Administration is stepping up its campaign against trial lawyers. In legislation adopted in September, the Administration was able to shield United Airlines Inc. (UAL ) and American Airlines Inc. (AMR ) from any liability above the $6 billion in insurance carried by the four planes crashed in the attacks--a paltry sum when measured against the thousands of dead and injured and the tens of billions of dollars in property losses and damage to commerce.

Now, President Bush is actively seeking legislation to shield other companies. The Administration would like first to protect two other likely targets of litigation, World Trade Center property manager Larry Silverstein and Boeing Co. (BA ), maker of all four planes. Silverstein, a big Democratic donor, also has the support of Senator Hillary Clinton. Eventually, the White House may seek limits on liability for all companies vulnerable to litigation. Bush economic adviser Larry Lindsey says that without caps, property and casualty insurance companies will balk at issuing policies, causing major disruptions in an already shaky economy. "Unless there is some limit on proportionality of damages caused by terrorism, the [insurance] market can't function," Lindsey says.

Nor does the anti-litigation campaign stop with victims of September 11. The President has signed an executive order giving Health & Human Services Secretary Tommy G. Thompson greater powers to indemnify drugmakers called upon to make vaccines--such as the ones for anthrax and smallpox--known to cause adverse reactions in some patients. Bush's aides, meanwhile, are negotiating with key lawmakers, including Senate Majority Leader Tom Daschle (D-S.D.) and Senator Edward M. Kennedy (D-Mass.), to come up with legislation that places caps on vaccine liability. The early handicapping is that broad limits will be adopted. Without such protection, says Lindsey, "rapacious" trial lawyers will keep essential vaccines off the market.

OTHER AGENDAS? Tough language like that has many legal experts wondering if conservatives are using the tragedy for their own agenda. "The pro-tort reform forces are clearly jumping at the opportunity," says Joanne Martin, associate director of the American Bar Foundation, an independent organization that monitors legal trends.

ATLA President Leo Boyle insists the vast majority of lawyers have been proceeding "very thoughtfully." By lobbying for the compensation fund and providing more than 1,000 pro bono lawyers, he says, ATLA is cutting off its own members from what could be billions in contingency fees. And for this, he says, he's getting nothing but grief from the Administration.

Boyle may have a hard time keeping his troops in line. Kreindler, for one, is rushing to sign up families of passengers on the plane that crashed in Pennsylvania: They won't have to compete with anyone on the ground for $1.5 billion in insurance. Also of interest are those who lost loved ones in the Pentagon crash and relatives of anyone who had a large life insurance policy--which will be counted against any compensation they might receive from the fund.

The likely first targets of Kreindler and his fellows: United, American, the World Trade Center managers, and Boeing. But the litigation won't stop there, lawyers predict. "They'll sue the federal government, the building engineers, the property managers," says critic Victor E. Schwartz, a partner with the Washington firm of Shook Hardy & Bacon. If the drugmakers aren't shielded from liability, they'll go after them as well, he predicts. "In the Oklahoma City bombing, they even sued fertilizer makers," Schwartz says.

Ironically, another reason for a barrage of lawsuits is the fund itself. The fund can take care of the majority of victims while allowing the trial lawyers to cherry-pick the best cases, says Glenn G. Lammi, chief counsel for the Washington Legal Foundation, a conservative group. In trying to keep litigation to a minimum, Congress may have played right into the trial lawyers' hands.

By Dan Carney, with Lee Walczak, in Washington

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