Book contents
- Frontmatter
- Contents
- Foreword: Sorting Out Our National Liability Crisis by Richard A. Epstein
- Acknowledgments
- LAWYER BARONS
- Introduction
- 1 The Origin of the Contingency Fee
- 2 How Profitable Are Contingency Fees?
- 3 Are Contingency Fee Profits “Reasonable”?
- 4 How Tort Lawyers Have Increased Their Profits by Restraining Competition
- 5 Why the Market Has Failed to Correct the Absence of Price Competition
- 6 Impediments Imposed by the Bar to Price Competition
- 7 The Effects of Incentives Created by Contingency Fees
- 8 How the Quest for Profits Influenced the Development of the Tort System
- 9 Lawyers' Role in the Expansion of Tort Liability
- 10 The Role of the Judiciary in Tort System Expansion
- 11 Current and Future Expansions of Tort Liability
- 12 The “Litigation Explosion”
- 13 Measures of the Rate of Expansion of Tort Liability
- 14 The Relationship between Injury Rates and Tort System Costs
- 15 The Impacts of Substantial Increases in Tort Lawyers' Effective Hourly Rates
- 16 Class Actions
- 17 Fees in Class Actions
- 18 How Class Action Lawyers Game Fee Setting
- 19 Securities Class Actions
- 20 Regulation through Litigation
- 21 A New Role for Punitive Damages
- 22 For-Profit Partnerships between State Attorneys General and Contingency Fee Lawyers
- Conclusion
- Appendix A A Critique of Alex Tabarrok
- Appendix B Calculating Tort Lawyers' Effective Hourly Rates in 1960
- Appendix C Electronic Discovery and the Use of Contract Lawyers
- Appendix D The HMO Litigation
- Appendix E The GM “Side Saddle” Truck Litigation
- Appendix F Modern Class Actions Undermine Democratic Precepts
- Appendix G Other Ways Lawyers Game Class Action Fees
- Appendix H Nonrecourse Financing of Tort Litigation
- Appendix I Political Contributions by Tort Lawyers and the U.S. Chamber of Commerce
- Appendix J Special Rules Favoring Lawyers
- Appendix K The Ultimate Medical Expense “Buildup”: Whiplash
- Appendix L The Effect of Punitive Damages on Compensatory Awards
- Index
21 - A New Role for Punitive Damages
Policy Making as a Profit Center
Published online by Cambridge University Press: 05 June 2012
- Frontmatter
- Contents
- Foreword: Sorting Out Our National Liability Crisis by Richard A. Epstein
- Acknowledgments
- LAWYER BARONS
- Introduction
- 1 The Origin of the Contingency Fee
- 2 How Profitable Are Contingency Fees?
- 3 Are Contingency Fee Profits “Reasonable”?
- 4 How Tort Lawyers Have Increased Their Profits by Restraining Competition
- 5 Why the Market Has Failed to Correct the Absence of Price Competition
- 6 Impediments Imposed by the Bar to Price Competition
- 7 The Effects of Incentives Created by Contingency Fees
- 8 How the Quest for Profits Influenced the Development of the Tort System
- 9 Lawyers' Role in the Expansion of Tort Liability
- 10 The Role of the Judiciary in Tort System Expansion
- 11 Current and Future Expansions of Tort Liability
- 12 The “Litigation Explosion”
- 13 Measures of the Rate of Expansion of Tort Liability
- 14 The Relationship between Injury Rates and Tort System Costs
- 15 The Impacts of Substantial Increases in Tort Lawyers' Effective Hourly Rates
- 16 Class Actions
- 17 Fees in Class Actions
- 18 How Class Action Lawyers Game Fee Setting
- 19 Securities Class Actions
- 20 Regulation through Litigation
- 21 A New Role for Punitive Damages
- 22 For-Profit Partnerships between State Attorneys General and Contingency Fee Lawyers
- Conclusion
- Appendix A A Critique of Alex Tabarrok
- Appendix B Calculating Tort Lawyers' Effective Hourly Rates in 1960
- Appendix C Electronic Discovery and the Use of Contract Lawyers
- Appendix D The HMO Litigation
- Appendix E The GM “Side Saddle” Truck Litigation
- Appendix F Modern Class Actions Undermine Democratic Precepts
- Appendix G Other Ways Lawyers Game Class Action Fees
- Appendix H Nonrecourse Financing of Tort Litigation
- Appendix I Political Contributions by Tort Lawyers and the U.S. Chamber of Commerce
- Appendix J Special Rules Favoring Lawyers
- Appendix K The Ultimate Medical Expense “Buildup”: Whiplash
- Appendix L The Effect of Punitive Damages on Compensatory Awards
- Index
Summary
PUNITIVE DAMAGES ARE A UNIQUE FEATURE OF THE American tort system. Punitive damages are not intended to be compensatory but rather, are imposed to advance societal interests by punishing reprehensible conduct and deterring its future occurrence. Continental European countries reject any form of punitive damages, and British tort law allows them sparingly. This distinctive difference between the American and English legal systems has been attributed to the use of contingent fee financing of tort litigation in the United States and to the American rule, which provides that each side pays its own attorney.
Punitive damages have come to play a prominent role in “regulation through litigation” and are a hotly contested issue in the tort reform wars, especially the question of whether such awards have a deterrent effect. For any award of damages to be a deterrent, those to be deterred must be aware that they will face a penalty if they act or fail to act in a certain way. Critics claim, however, that punitive damages awards are randomly assessed and lack predictability. Hence, they do little to promote investment in safer products. W. Kip Viscusi compared the incidents of risky behavior as measured by toxic accidents, toxic chemical releases, accident fatality rates, and insurance premium levels in states with punitive damages to four states that prohibit punitive damages.
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- Chapter
- Information
- Lawyer BaronsWhat Their Contingency Fees Really Cost America, pp. 409 - 422Publisher: Cambridge University PressPrint publication year: 2011