a lawsuit in which the procecuting lawyer represents the interests of the general public. These cases are often labeled People vs. some poor company who sucks. A good example was People vs. the Tobacco Industry

If you sign a contract, is it a legal document? If you accept delivery of a product, even if it is intangible, by signing an acceptance of delivery with big print saying, "You have ten days to look at this product and decide if you will accept delivery. After that time, it is considered your property under the terms of the contract," is it a legal transaction?

Well, not according to our little weasel friends the trial lawyers. There are class action lawsuits going on around this country right now that are so outrageous it boggles a rational human's mind.

Let's take Life Insurance for an example. You might refer to other posts I've done on this topic for reference materials if you like, but the bottom line is this: When you buy life insurance there are several options. No matter what option you choose, you will receive (by law) plenty of material telling you just what the ins and outs of that product are. If you buy life insurance that is tied to some sort of rate of return, that rate is variable. There is a guaranteed minimum, but no guarantee above that.

Since we're in a climate of low interest rates (which is good, if you are borrowing money, but bad if you're living off of interest on invested money; did I need to say that?) there are some folks who are unhappy with the results of insurance policies bought in the 1980's. This was when we had double digit inflation with a Democratic President and a Democratic Congress, before Reagan's tax cuts, which are the reason for the economy you enjoy today.

Some of those folks are now claiming that their life insurance was sold to them as an investment and they are suing all the large life insurance companies in America. Class-action lawsuits, where the ambulance chasers get rich and the plaintiffs get a few bucks.

They are lying. The lawyers are lying, and the plaintiffs are lying. They knew they were buying life insurance; they're just not happy with the way it turned out. It won't be long, and it may already have happened, where investors in the stock market will be filing lawsuits against their brokers because they lost money.

This is no way to do business. And it is costing you and me millions to make these lawyers rich. You are paying for all of this, be it tobacco, SUV's, Firestone tires . . . it all comes out of your pocket every time you make a purchase.

Uh oh. Another write-up on on legal issues by dannye. Yes, an unscrupulous shyster deprived dannye of a lollipop when he was a wee lad, and they've been picking on him ever since, right? Well, sorry to disappoint you liberals, but dannye is right about this one.

Generally, the class-action procedure can actually be less expensive and more efficient. The representative plaintiffs do not bring a claim on behalf of “the general public”, but on behalf of everyone in class of people with something in common: people with asbestos-related illnesses, people with defective pvc pipe installed in their house, people who bought cars and trucks that blow up when they shouldn’t. It’s the only way to legally fight a small but unfair ripoff, like when your phone company puts some totally bogus charge for $2.50 on your bill. That’s too small to fight alone, but for ten million customers adds up to a big wad of cash. Everyone gets represented by the same lawyers and gets one trial.

Class actions, and especially securities litigation class actions, have got way out of hand . To understand why, you have to understand just how expensive big-time litigation can be, and why it might be cheaper to just pay off an extortionate lawyer and his clients, rather than fight it out.

A fool and his money are soon parted. When people offering investments fail to disclose important facts an investor should know, that’s called securities fraud. It happens all the time. Lately it’s been happening with some really big companies: Enron, for example.

Distinguishing a bogus securities fraud case from a real one can, however, be extremely difficult, time consuming and a money pit. Sometimes the legally required disclosures are buried in some damn prospectus that nobody reads and nobody couldn’t understand if they did read it. As investments are made more complicated (to hedge and distribute financial risk) who can say what an investor needs to know? Lots of firms will cave in and settle rather than fight it out. The potential for a quick shake-down settlement has attracted lots of scam artists.

So why not fight? Because it costs too much. Discovery, for example, can be extremely costly. What’s so expensive about discovery? You just have to answer some questions and cough up some documents, right? Well, all this has to be supervised by lawyers. Lawyers aren’t cheap.

I’m reminded of the scene in the Gene Hackman movie, Class Action, where Hackman and his assistants (the plaintiffs' lawyer and his team) are reviewing boxes of documents a car company gave them in a products liability case. Just as they about to begin, a curtain is drawn back in a window, and there in an adjoining room is an entire team of defense lawyers, sitting at a table, just there to watch them look at documents! Half a dozen lawyers are charging at least $100/hour to do essentially nothing. The response of Hackman’s character is to ask his partner for a hundred dollar bill, and light it on fire and taunt the lawyers behind the glass with it, saying “See? We can burn money, too!

And that’s just pre-trial manouvering. You don’t want to know how expensive a full-blown trial can be. In securities litigation, we’re talking about paying financial experts to testify, and if you thought lawyers were expensive, wait until you see these guys’ bills.

There has been some effort to stamp out securities litigation abuse. The federal Private Securities Litigation Reform Act (PSLRA) of 1995 --to my knowledge, the only part of the Republican “Contract with America” legislative initiative which actually became law-- was enacted over a presidential veto. It makes it harder for “professional plaintiffs” and securities lawyers to hold financial institutions hostage. Some of its features included discovery delayed until plaintiffs had made a prima facie case --in other words, you must show the judge you have a real case of securities fraud before the judge will allow discovery.

None of these reforms apply to state law in state courts, so guess where the class-action scam artists are plying their trade now?

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