The corrupt civil process

This is the 17th extract from Evan Whitton’s Our Corrupt Legal System, available free at netk.net.au/whittonhome.asp. Whitton is a legal historian, a trade almost as rare as the pig-footed bandicoot.

The story so far.

Justice Russell Fox said justice means fairness; fairness and morality require a search for the truth, otherwise the wrong side may win; truth means reality, what actually happened.

The common law in England (and later its colonies) has never sought the truth. It began as an extortion racket in 1166, and went downhill from there. Extorting judges and their lawyer-bagmen formed a cartel to increase profits.

Lawyer-politicians have been able to block change to a truth-seeking system since they formed an oligarchy in Parliament about 1350. (Vote 1: Anyone except a lawyer.)

Trial lawyers have been called serial liars because they are adept at sophistry, a technique of lying by false arguments, trick questions etc.

Judges have never been trained as judges; they are lawyers one day and judges the next. A US lawyer, Alan Dershowitz, said: ‘… lying, distortion, and other forms of intellectual dishonesty are endemic among judges.’

The adversary system is a taxpayer-funded system in which trial lawyers control evidence and question witnesses. That enables them to confuse witnesses with sophistry, spin the process out, and extract more money from clients.

Lawyers and judges say the adversary system is the Rolls Royce of legal systems; Yale law professor Fred Rodell said it is a racket. Both are right: it is the Rolls Royce of rackets.

The civil adversary system dates from 1460; the criminal version from the 18th century. Since then, judges have invented a number of truth-defeating devices which make it relatively easy for rich criminals to escape justice.

Legal academics joined the cartel after a serial liar, Billy Blackstone, began the first law school at Oxford in 1758.

The corrupt civil process

Judge Learned Hand (1872-1961), said in 1921: ‘I must say that as a litigant I should dread a lawsuit beyond almost anything else short of sickness and death.’

Civil litigation is like a cancer; it grows exponentially because lawyers can spin the process out. Trained French and German judges dispose of civil cases in a few hours. Justice Russell Fox wrote in Justice in the 21st Century:

… there is many a crack in the image of the ideal [of justice]. Mostly these arise from the practice of leaving the practitioner in charge of the collection and presentation of the evidence, which means that the judge may only hear incomplete or inaccurate or unreliable evidence; some of what is relevant may be deliberately withheld.

Philip K. Howard, a US lawyer, notes in Life Without Lawyers (Norton, 2009): ‘In 2007, 384,330 cases were filed in federal trial and appellate courts, not including bankruptcy cases. In the state courts there were 47.3 million, not including traffic cases.’

One of the cases Howard noted was Pearson v Chung. In 2005, Judge Roy Pearson had asked South Korean immigrants named Chung, who had a Washington dry cleaning business, to alter his trousers. By mistake, they went to another branch, where they were altered according to Pearson’s instructions and returned some days after the due date, May 5, 2005.

Judge Pearson refused to accept the trousers and sued the Chungs for US$67 million. He claimed inconvenience, mental anguish, and lawyers’ fees of $500,000 for representing himself.

In what must be noted as exceptions to the Barton Hypothesis [that judges look after lawyers’ financial interests], 13 judges ruled against Judge Pearson: Judge Judith Barntoff in June 2007, three appellate judges in December 2008, and nine appellate judges in March 2009. Donors met the Chungs’ lawyers’ fees, $100,000, but the stress of four years of litigation cannot be calculated.

Sir Hugh Laddie QC (b. 1946), a former Justice of the UK High Court, reflected on the length and cost of civil litigation in Legal Week on May 26, 2006. He wrote: ‘Go back to the drawing board and consider the possibility that the adversarial system is past its sell-by date.’

Legal Week polled senior partners at 100 law firms on whether the system had passed its sell-by date. The organ reported on June 8, 2006 that 40% agreed. The other 60% said the adversary system is ‘an essential pillar of British justice’.

On May 22, 2007, Sir Hugh Laddie, now Professor of Intellectual Property Law at University College London, noted in The Times that a small to medium patent case costs three to 10 times more in England than in Germany or the Netherlands.

He wrote: ‘Perhaps it is time to do the unthinkable and start making our system much more like that used by our continental colleagues.’

Interminable pleadings

Edward Jacob KC (d. 1841) was editor of Chancery Reports. Nicholas Mullany noted in Pleadings that Justice Sir William James remarked in Hall v Eve (1877): ‘This case reminds me of a saying of the late Mr Jacob that the importance of questions was in this ratio: first, costs, second, pleadings, and third, very far behind, the merits of the case.’

Written pleadings, the vehicle for the invention of the adversary system, are supposed to narrow the issues but are largely useless: as noted earlier, judges have allowed lawyers to lie in pleadings for five centuries. Speaking on behalf of the West Australian Law Reform Commission in 1998, Mullany said:

The pleading rules ‘stop short’ of requiring the parties [and their lawyers] to be frank about what they allege. There is a tendency of parties to make allegations which they do not believe to be true … and to deny allegations which they know to be true … There is, in other words, a lack of ‘truth’ in pleadings.

Lawyers can go on lying in pleadings interminably in see-saw fashion: statement of claim, defence, reply, rejoinder, surrejoinder, rebutter, surrebutter, counter-claim, defence to counter claim, reply …

Judicature Acts introduced by Lord Chancellor Selborne in 1873 and by Lord Chancellor Cairns in 1875 purported to reform pleadings, but Mullany said ‘they did not introduce a system which operated to define the issues in dispute between the parties’.

A committee chaired by Lord Chief Justice Coleridge in 1881 ‘supposed’ from the statistics for more than 20,000 cases in 1879 that ‘pleadings were of little use’, but all further attempts at reform have been sabotaged.

Mullany quoted Peter Hayes QC, of Melbourne, as stating in a 1998 paper for the Law Institute of Victoria: ‘I think that pleadings are a big heap of crap, essentially … the rules are nonsense, are all an impediment these days to justice.’

In 1998, the WA law reform commissioners – WA Bar Association President Wayne Martin QC, law professor Ralph Simmonds, of Murdoch University, and Crown Counsel Robert Cock QC – reported:

It is our opinion that for so long as the Australian litigation system is based on the adversarial tradition … attempts to bring about substantial reform of the current system of written pleadings with a view to facilitating the more efficient administration of justice will fail. (Their emphasis.)

They recommended a procedure which ‘resembles most closely that prevailing in Germany’. In effect, they recommended a return to the oral method of pleading that obtained before the invention of the adversary system. Lawyers would presumably still lie in oral pleadings, but at least the pleadings would be over in a day.

Martin, Simmonds and Cock said the change could generally be made ‘without the assistance of the legislature’. That is, the judges could make the change themselves. That was in 1998. Simmonds went on to the WA Supreme Court in February 2004, and Martin became Chief Justice in April 2006, but in 2009 the court had not yet ended paper pleadings.

Interminable discovery

Discovery is moving documents from one law office to another. A courier will do it for a few dollars; lawyers can charge millions.

Lawyers for one client ask lawyers for the other to ‘discover’ and hand over documents which might help their side or hinder the other’s. The other side responds with lists of the documents they are prepared to reveal, those no longer available and why, and those they want to conceal on grounds of privilege, e.g. client-lawyer secrecy.

Discovery was originally a monopoly of equity lawyers, i.e. those who worked in the corrupt Chancery Court, but was extended to other lawyers by the Common Law Procedure Act of 1854.

A few words by Lord Justice (of Appeal) William Baliol Brett (1815-99) in the bird shit case, Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Company (1882) has made billions for lawyers.

Brett said any document is discoverable if it might, directly or indirectly, lead to a ‘train of inquiry’ which might help the lawyer’s case or damage his adversary’s. (Emphasis added.)

That made discovery open-ended. Brett became Master of the Rolls in 1883, Baron Esher in 1885, and Viscount Esher on his retirement, aged 82, in 1897. Thanks to him, millions of documents can be discovered, but only a very few are relevant. A UK appellate judge, Lord Justice Johan Steyn said in 1992:

[Discovery] contributes to the tyranny of modern litigation … It is the experience of Commercial judges that usually 95% of the documents contained in the trial bundle are wholly irrelevant and never mentioned by either side.

Justice David Ipp, then of the WA Supreme Court, said, in Part II of Reforms to the Adversarial Process in Civil Litigation (Australian Law Journal, 1995):

… the usual result is that the number of those documents that are critical to the result of the trial are substantially less than 50 [but] sometimes hundreds of thousands [are] discovered.

Lawyers say that if they don’t turn over every stone, they could be done for negligence. The Economist reported in 1992 that discovery accounts for 60% of the time and money spent on US lawsuits, and that in 1988 a Louis Harris survey showed:

… a big majority of litigators for both plaintiffs and defendants said that discovery is used as a weapon to increase a trial’s cost and delay to the other side (nearly half said lawyers use it to drive up their own charges) … In an IBM antitrust [monopoly] suit, discovery took five years and produced 64 million pages of documents … A partner at a big [US] law firm bragged to law school students about a long anti-trust case: ‘My firm’s meter was running all the time – every month for 14 years.’

The admissions indicate that many trial lawyers habitually use discovery to extort from their own clients.

Lawyers also use discovery as a tool of blackmail. Perth barrister Paul Mendelow noted in Discovery: Should the Whistle-blowers Stop the Train of Inquiry? (WA Law Reform Commission, 1998): ‘Parties may attempt to force favourable settlement by driving up costs [of discovery] beyond the value of the case.’

Mendelow quoted a 1994 article, Some Lessons from Santos, by Justice Peter Heerey, concerning Trade Practices Commission v Santos Ltd and Sagasco Holdings Ltd (1993), in which discovery lasted for a year. Mendelow wrote:

Justice Heerey’s focus of criticism … was that it was a mistake to have a general, unqualified order for discovery – in accordance with the test of relevance propounded by the Peruvian Guano case. The circumstances pertaining to discovery in this matter resulted in practitioners being ‘recruited into a burgeoning army engaged in discovering, inspecting, filing, listing, copying, storing, carrying about, and otherwise dealing with 100,000 documents which had been accumulated for the purposes’ of this litigation. An expression that developed amongst junior practitioners who had been ensnared in the discovery process was: ‘I have been Santossed’.

BT [British Telecom Australasia] v the State of NSW and Telstra arose out of a contract signed in 1992 by which BT was to supply certain telecommunications services to NSW. Telstra was also to be a supplier directly or indirectly through BT. NSW terminated the contract in August 1995. BT began proceedings in the Federal Court against NSW and Telstra.

By May 1998, lawyers for the parties estimated that the costs of discovery alone had reached AU$19 million (AU$32 million at 2009 rates), much of it down to taxpayers. Justice Ronnie Sackville (b. 1943) said:

I have repeatedly said that all parties [i.e. their lawyers] in this litigation have given insufficient attention to the need to control their own request for discovery in the interests of keeping the discovery process within manageable bounds. One consequence of the approach taken by the parties is that discovery in this case has assumed mammoth proportions. A second is that the parties are in continuous disputation as fresh discovery issues are raised, each said to require the time of the Court to resolve. Not only is this extraordinarily costly and, in my opinion, wasteful, but it diverts attention from the need, in a case that has now been going on for three years, to prepare for trial. It also imposes a disproportionate burden on the Court.

In what was reported to be ‘a highly unusual move’, Justice Sackville said he wanted to see the principals at the next sitting. In June 1998, he urged three senior executives of the actual ‘parties’ to consider mediation. He said: ‘This is not a case which is incapable of resolution. After all, it only involves money.’

The trial was expected to run for six months, but Sackville’s advice was taken. Former Federal Court Justice Trevor Morling QC (b. 1927) took all concerned to Singapore, presumably to concentrate their minds, and mediated a settlement in a week. On February 15, 1999, a cryptic press release said Morling described the settlement as ‘eminently reasonable’ but the terms were secret.

Unfair bias in favour of plaintiffs

Jurist Brett Dawson says aspects of civil law, notably libel (outside the US) and negligence, are unfairly biased in favour of plaintiffs’ lawyers. He says the bias encourages people to sue, and the sued have to pay lawyers to defend them.

The bias is compounded by the fact that in eight centuries jurors have never had to give reasons. They can thus award unjust sums against defendants in the belief that they are redistributing wealth and punishing rich companies. In reality, they enrich lawyers and punish shareholders.

Negligence

Lord (James) Atkin (1867-1944, Lord of Appeal in Ordinary 1928-44) had a dome as bald and conical as that of Humpty Dumpty or M. Hercule Poirot, and he was as capable of talking drivel as either.

Lord Atkin opened the negligence floodgates in Donoghue v Stevenson (House of Lords, 1932), an appeal concerning an alleged (but unproved) snail in a bottle of Scottish ginger beer. He said:

The rule that you are to love your neighbour becomes in law, you must not injure your neighbour … You must take reasonable care to avoid acts and omissions which you can reasonably foresee would be likely to injure your neighbour. Who then, in law, is my neighbour? The answer seems to be persons who are so closely and directly affected by my acts that I ought reasonably to have them in contemplation. (Emphasis added.)

When lawyers hear the word ‘reasonable’, they rub their hands: it has as many meanings as there are human beings. Atkin did not say the neighbour should exercise common sense and personal responsibility, e.g. in avoiding tobacco or a hole in the road.

Justice Russell Fox demolished Atkin thus: ‘The simple fact is that no one can define negligence, nor in most cases is it possible to form an accurate view of the facts.’ He said Atkin’s ‘principle’:

… sounded good and proved very durable … in theory, one can talk in terms of ‘proximity’ and ‘reasonable foreseeability’, and ‘what a reasonable person would have done’. In practice, these are but shibboleths which offer no obstacle to the inclination of judges and juries to provide compensation for the injured (or damaged) plaintiff…

Many are not worried by this phenomenon, recognising it as a convenient form of injury (and damage) insurance, and governments are saved the necessity of introducing a scheme to achieve a similar result.

It is however a very expensive pseudo-scheme because to each claim are added legal costs and these can be 30, 40 or 50% of the amount recovered, sometimes more. Eventually, the community at large, or a large percentage of it, bears the burden, and insurance companies (if they are cautious) and lawyers profit.

The US system does not always oblige losing litigants to pay the winner’s costs, and it allows lawyers to charge a contingency (speculative) fee of up to 40% of the payout. It also allows jurors to make punitive awards.

The annual Stella Awards for outrageous negligence verdicts are in honour of Stella Liebeck, 79, who spilled coffee on her lap at McDonald’s in 1992, and was initially awarded US$2.86 million by the New Mexico District Court.

Florida plaintiff lawyers traditionally took 40% of the first $1 million in medical liability payouts, 30% of the second $1 million, and 20% of any higher amount.

In November 2004, 63% of Florida voters approved a legislative amendment which capped lawyers’ fees at 30% of awards up to $250,000 and 10% of amounts over $250,000.

The lawyers would thus get $500,000 of a $5 million payout, but Jane Musgrave reported in The Palm Beach Post of July 24, 2005: ‘ … personal injury lawyers quickly found a way around the new limits: They simply ask clients to waive their constitutional right to larger shares of any malpractice award they might get.’

The US Surgeon-General warned against smoking in 1964. Richard Boeken, 57, smoked 40 Marlboro cigarettes a day and got cancer, but swore he did not know smoking was dangerous until 1994. In 2000, Los Angeles jurors ordered Philip Morris shareholders to pay Boeken US$3000 million, of which his lawyers presumably expected to get at least $1000 million. On appeal, the payout was reduced to US$50 million.

Brett Dawson says that even in a small country like Australia, lawyers get $1200 million a year from personal injury litigation, largely from lump sum payouts.

A boy got eight cuts at a Sydney school in 1984. In 2002, a jury gave him $2.5 million, or $312,500 per cut.

Obstetricians, i.e. their patients, pay A$140,000 a year for negligence insurance. Swedish obstetricians pay the equivalent of A$500 a year.

Justice David Ipp, now of the NSW Supreme Court, told a conference of anaesthetists in Perth in May 2004 (Personal Responsibility in Australian Society and Law: Striving for Balance) that, particularly since the 1970s, ‘courts throughout the common law world have awarded damages to plaintiffs without paying any regard to the concept of personal responsibility’. And:

Since ancient times, taking personal responsibility for one’s own behaviour has been regarded as fundamental to what it means to be fully human, to lead an ethical life and, therefore, to participate in a just society. Without a fully realised concept of personal responsibility, society cannot be ordered in a fair way.

It presumably follows that lawyers who do not take personal responsibility for perverting justice are not fully human, do not lead an ethical life, do not participate in a just society; and prevent society from being ordered in a fair way.

Justice Russell Fox said his concern about negligence law stemmed from ‘the waste in cost involved, and court time, and damage to court integrity’. He noted that Justice Rae Else-Mitchell, of the NSW Supreme Court, said in 1972:

… the case for all claims arising out of motor vehicle and industrial accidents being decided on a no-fault basis by an administrative tribunal is unanswerable … more people would be able to go to court and the taxpayer would be better off in the end.

Gough Whitlam QC (b. 1916), Labor Prime Minister of Australia 1972-75, sought to introduce no-fault compensation for injury, but noted in The Curtin Lecture (1985) that his Government was thwarted by the stone-walling tactics of interested parties ‘aided and abetted by Labor lawyers who specialised in work for unions.’ He said:

The basis of their [Labor lawyers’] thriving practices is to charge unions for the expert advice in cases of accidents to unionists at work and on the way to and from work and at the same time to render gratuitous advice to union officials on methods to entrench themselves in office.

A no-fault scheme eliminates lawyers because there is nothing to argue about, and thus eliminates blackmail and increases the money available to care for victims. It also eliminates Santa Claus judges and jurors, but lawyers say it deprives people of basic common law rights. There is more money in rights than justice.

Next. Libel, blackmail, workplace disputes