Marie Gryphon of the Manhattan Institute is a guest on this week’s NAM-sponsored radio program, “America’s Business with Mike Hambrick,” discussing her new paper, “Greater Justice, Lower Cost: How a ‘Loser Pays’ Rule Would Improve the American Legal System.”

From the executive summary:

Loser pays, sometimes called the “English rule” but actually, in essence, the rule in place in the rest of the world, refers to the policy of reimbursement by the parties who lose in litigation of the winners’ legal expenses, including attorneys’ fees. This study argues that loser pays could be an important part of a larger effort to reduce litigation costs, better compensate prevailing litigants, and better align tort law with its goal of deterring socially harmful conduct. A loser-pays rule would discourage meritless lawsuits, but because any such rule should also ensure plaintiffs of modest means but strong legal cases access to justice, our proposal calls for:

1. A robust litigation insurance industry similar to those that now exist in other loser-pays countries; and
2. A cap on recoverable fees to eliminate the incentive that large litigants might have to attempt to “buy a verdict” under loser pays.

This study explores in depth how a loser-pays rule would change litigation in America. It includes key findings about the likely effects of loser-pays reform and evaluates previous experiments with loser pays in America.

We’ve uploaded Marie’s interview into a separate soundfile, which you can listen to or download here.

New to us was the argument that the system has already worked in the United States in two states, Alaska and Florida:

In Alaska, which has always had a loser-pays rule, tort suits constitute only 5 percent of all civil legal matters—half the national average.

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The asbestos litigation machine hit a major obstacle last week thanks to a ruling in Michigan by Wayne County Circuit Judge Robert Colombo. Judge Colombo threw out medical evidence and expert testimony from Dr. Michael Kelly, a Lansing internist and occupational medicine doctor who has diagnosed thousands of patients with asbestos-related ailments.

Acting on a motion by the company, Sure Seal, Colombo’s ruling affects puts into doubt 2,131 asbestos lawsuits on his docket. As reported the Detroit Free Press, it could also have national ramifications, according to asbestos expert Lester Brickman, a law professor at the Benjamin N. Cardozo Law School at Yeshiva University in New York: “It is the first time in the history of the biggest litigation ever that a judge has excluded the diagnoses of a physician on the basis that they did not meet the standards of reliability set by the U.S. Supreme Court for expert testimony.” An earlier Detroit Free Press article covers the arguments, “Asbestos diagnoses defended.”

The Wall Street Journal editorialists also examined the Wayne County litigation involving the asbestos-diagnosing Dr. in a November 10 editorial, “Michigan Malpractice”:

Of the 91 asbestos cases Judge Colombo was set to oversee this month, Dr. Kelly provided a diagnosis in 80. In addition to giving the judge a broad picture of Dr. Kelly’s work, defense attorneys also retained two respected pulmonologists to review specific cases. Jack Parker, who spent years at the Centers for Disease Control, provided the court with a blind study in which independent X-ray readers found an abnormality in only one of 68 (1.5%) X-rays that Dr. Kelly read. Dr. Kelly had found abnormalities in 88% of those X-rays.Judge Colombo, who has been the state’s asbestos judge since the early 1990s, initially balked at diving into this medical evidence — suggesting he preferred a quick and easy settlement. But in the face of evidence that up to 90% of the cases in front of him were fraudulent, he ultimately relented and last week agreed to a hearing on Dr. Kelly. At which point something astonishing happened. Within 24-hours of the judge’s decision, the plaintiffs attorneys voluntarily pulled all but one of the suits. They clearly have no interest in subjecting their “doctor,” and his methods, to judicial scrutiny.

The asbestos litigation machine has long depended on things like mass diagnoses and a few favored doctors to stack up absurd legal claims.

Sometimes, the machine even invents them. The American Justice Partnership’s latest issue of “Legal Shakedowns and Scandals” examines the case of Dr. Oscar Frye, who diagnosed a West Virginia employee of CSX with asbestosis.

The phantom Dr. Frye seems to be the concoction of Chambers, who submitted the fraudulent medical report to his lawyers.5 The attorneys failed to verify the authenticity of the report before filing suit against CSX.

The personal injury firm that filed the Chambers case, Robert Peirce & Associates, reacted to the allegations by claiming no knowledge of the fraudulent acts and by withdrawing from its representation of Chambers.

Highly recommended on this topic: The Manhattan Institute’s “Trial Lawyers Inc. Asbestos” report, “A Report on the Asbestos Litigation Industry, 2008.”

Yes, the asbestos litigation machine has bankrupted scores of companies. But it’s important to remember that all the scams, false diagnoses, billing excesses and plain fraud do a profound disservice to those who have suffered from illness and even death from real cases of asbestos exposure.

Over at Walter Olson’s Point of Law site, we mark the 10th anniversary of the tobacco master settlement agreement, the agreement between the state attorneys general and the tobacco companies to pay the states billions of dollars, limit advertising and otherwise accede to government control in exchange for limits on litigation. The focus of the week’s worth of posts is the vast transfer of wealth and political power the agreement made to the country’s trial lawyers, with a commensurate arrogation of the legislature’s policymaking authority by the attorneys general.

• Master & Settlement: Coughing at the 10th anniversary
• Master & Settlement: The many related issues
• Master & Settlement: General Tobacco sues AGs, competitors
• Master & Settlement: Budgets, bonding and bailouts
• Master & Settlement: Tobacco foes want even more money
• Master & Settlement: Ten years of advocacy and more litigation

Olson, a senior fellow at the Manhattan Institute, makes the tobacco settlement a major theme of his book, The Rule of Lawyers.

In a post Monday, “Buck Up, Lads,” we took note of reports that British manufacturers are discouraged, with their confidence level at the lowest point since 1980.  Back then, unemployment, labor unrest, the lack of even basic provisions following years of radical Labor leadership had driven the productive sectors of the economy into despair and disrepair.

But then Prime Minister Margaret Thatcher, elected in 1979, moved forward with deregulation, privatization and market-oriented reforms, which, when accompanied with a clear vision in foreign affairs, restored not just the British economy but British pride, too. (A rough outline, to be sure.) So much of that progress involved taking back control of the economy from the trade unions. Lessons to be learned, we suggested.

Claire Berlinski, writing at the Manhattan Institute’s City Journal, also recognizes the parallels with today’s financial crisis and describes in more details the steps taken by Thatcher’s government to revive Britain’s economy. From “Here Come the Unions“:

For obvious reasons, Thatcher put reform of the trade union law at the top of her agenda. Among the key provisions of Britain’s 1980 Employment Act was a change in the way government would recognize unions. At the time, workers voted to join unions—or not—in public, by voice vote. Dissenters suffered harassment and physical intimidation. Henceforth, Thatcher decided, new union membership agreements would require approval by means of a secret ballot in order to protect rank-and-file workers from bullying by union organizers. If allowed to vote secretly, she believed, ordinary workers would not vote for policies against their long-term interests—such as pay raises so incommensurate with production as to render British businesses uncompetitive, or strikes so prolonged as to make even the Soviets unwilling to buy British goods.

Thatcher was right. As soon as the secret ballots were introduced, many workers began defying the trade union leadership and rejecting the unions’ ruinous policies. When she had taken power, Britain was the second-poorest nation in Europe. Her reforms led to the longest sustained period of British economic expansion of the postwar era. In the past decade, as a direct consequence of her augmentation of labor-market flexibility—in layman’s terms, her smashing of the trade unions—the Organisation for Economic Co-operation and Development has ranked Britain at the top in both output and inflation stabilization.

And now U.S. organized labor seeks to destroy the secret ballot through enactment of the Employee Free Choice Act, the greatest power grab by labor since the Wagner Act of 1935. The passage of card check legislation is seen as the first of many steps: Expand union membership, used the increased income from membership dues for political purposes, and push for more legislative victories – legalizing secondary strikes, banning right-to-work laws, and more.

It will be hard to undo the damage. Berlinski:

The long-term consequences of EFCA passage are perfectly predictable: some companies will go out of business or relocate overseas. Some of the workers whom the legislation is designed to protect will lose their jobs. Nor will it be easy to undo the law once it’s passed, since no one who acquires power gives it up easily. In Britain, during the 1984 miners’ strike, wresting power from the unions nearly led to civil war. Thatcher ultimately crushed the National Union of Mineworkers, but the human and economic costs of the strike were staggering, and the violence of the conflict stunned the British public.

Coming to the United States if the Employee Free Choice Act is passed.

From the “America’s Health Care at Risk: Finding a Cure” conference last week in Orlando:

On September 17th and 18th, the White House Writers Group and the West Wing Writers hosted a conference entitled “America’s Health Care at Risk: Finding a Cure,” which brought together major stakeholders in the health care debate for a high-level dialogue to generate real and lasting solutions. Paul Howard, Manhattan Institute’s director for its Center for Medical Progress and managing editor of MedicalProgressToday.com, interviewed several of the panelists and speakers who participated in the conference.

The interview with NAM President and CEO John Engler is here.

Many other good interviews at the podcast page:

• David Gratzer, senior fellow, Manhattan Institute
• Regina Herzlinger, professor, Harvard Business School, senior fellow, Manhattan Institute
• Karl Rove, former senior advisor to President George W. Bush
• John Seffrin, CEO, American Cancer Society
• Tommy Thompson, former HHS Secretary
• William Winkenwerder Jr., senior advisor, Deloitte Center for Health Solutions

An analysis by Peter Huber of the Manhattan Institute on the global politics of energy. From Forbes:

To judge by actions, not words, the carbon-warming view hasn’t come close to persuading a political majority even in nations considered far more environmentally enlightened than China and India. Europe’s coal consumption is rising, not falling, and the Continent won’t come close to meeting the Kyoto targets for carbon reduction. Australia is selling coal to all comers.

On the far side of the environmental curtain China already mines and burns more coal than any other country. Together, China and India control more than one-fifth of the planet’s vast coal reserves. Dar predicts–very plausibly, in my view–that the two countries may fire up a new coal plant as often as once a week for the next 25 years, adding about twice as much coal-fired generating capacity as the U.S. has today. Persian Gulf states are planning significant coal imports, because coal generates much cheaper electricity than oil or gas.

In developing countries the political survival of the people at the top depends on providing affordable fuel for kitchens, farms, fertilizer plants, steel mills, highways and power plants. Oil and coal are the only practical fuels at hand.

If the United States decides it wants to doom the developing world to continued poverty, other countries will gladly sell the energy resources to those aspire for a better quality of life.

(Hat tip: Glenn Reynolds at Instapundit.)

James Taranto of the Wall Street Journal attended a Manhattan Institute symposium earlier this week on the federal media shield legislation, i.e., the Free Flow of Information Act. In his “Best of the Web” column, Taranto articulates well the media’s special pleading:

There is something paradoxical, even a tad Orwellian, about the title of the bill, the “Free Flow of Information Act.” The act would not declassify or otherwise release to the public a single shred of information. Its direct effect would be the opposite: It would grant the protection of federal law to a new category of secrets.

If “the free flow of information” were always and everywhere the uppermost value, there would be no reason to object to compelling journalists to testify. Indeed, such testimony would be desirable, since it would add to the flow of information.

Of course, context is crucial. [Former NYT reporter Judith] Miller and other shield-law proponents argue that protecting the identity of confidential sources promotes the free flow of information by allowing “whistleblowers” to come forward without fear of retaliation. That is, journalists justify keeping their secrets by asserting that they are doing so to serve a greater public good. That is the same claim the government makes to justify keeping information confidential.

The Free Flow of Information Act, then, really is an effort to shift control of information from the government to journalists, enhancing the latter’s gatekeeper role at the expense of the former’s. Maybe this is a good idea, but to our mind it is less than axiomatic that journalists can be counted on to act in a more public-spirited way than government officials do.

And did you happen to see our column in the latest issue of Forbes on the media shield? Don’t forget the private property (IPR, for example) implications of a poorly crafted federal media shield bill.