Home / Personal Finance / You don’t have to worry about lawsuits, do you?

You don’t have to worry about lawsuits, do you?

By Scott Keffer

Am I paralyzed?, Dr. Wilbur “Burr” Johansen wondered right before he lost consciousness.

“Ohhhh,” he groaned, trying to catch his breath from the wave of pain as he scanned the hospital room to discover where he was. Burr was very proud, maybe too proud, of how young he looked for a surgeon in his early sixties. He would often compete in sports with men half his age, so the idea that he fell down two flights of porch stairs onto his neighbor’s concrete patio was harder to bear than the pain.

Although not paralyzed, Burr wondered whether he would make it to the upcoming family reunion that he had spearheaded.

This is embarrassing, Burr thought as he was wheeled into his little sister Jenny’s back yard for the family reunion. He had tried everything he could to walk in on his own power. Burr liked attention, but not this kind. The thought of having to tell the story over and over again annoyed him.

He didn’t know that his time at the party was about to get worse.

Jenny wheeled him right beside her favorite son, Timmy. Not only was he a litigating attorney, but his recent successes had translated into a lavish lifestyle and an over-inflated confidence.

“Uncle Burr, what happened?” Timmy inquired.

Burr recalled the incident in machine gun fashion, hoping to move on quickly. Then he heard something that took his breath away, almost like the fall.

“Why don’t you sue your neighbors, Uncle Burr?” Timmy asked. “I can help you.”

Jimmy assumed Burr’s silence was a request for more information.

“Do you remember when you ran into me a few years ago? Remember how I was struggling? I don’t know whether Mom has told what has happened, but everything has turned around in my practice.” Jimmy didn’t need an answer to continue. “I learned the game, Uncle Burr. OK, OK. Let me explain. First of all, there is way too much competition. Every lawyer like me dreams about the Perfect Case. You know, a serious injury with clear negligence and deep pockets. Deep pockets could be a company or a successful individual who has failed to protect their money.”

“But, the Perfect Case never comes. Here’s why.” Timmy rolled on. “Every contingency lawyer works for the same fee. So, if you are the Perfect Plaintiff with the Perfect Case, why wouldn’t you hire the very best, since it doesn’t cost you any more? The very best have a record of large awards. They are well-established attorneys with a history of multi-million dollar verdicts and a reputation for large jury awards. They have that particular skill to spellbind a jury and pull at their heart strings to the tune of millions. A modern Svengali. They are a relatively small group – and they get all the Perfect Cases.”

Jimmy proceeded, “So, what are the rest of us supposed to do? Anyone can get the best of the best with a great case. The rest of us are left to make something out of nothing – to try and make a name for ourselves through explosive awards. Well, good cases never came. I was left looking for someone to sue, filing bad cases with bad facts.”

Jimmy brightened as he continued, “Then I attended an eye opening seminar. Here’s what they taught me: I don’t need a great case – just deep pockets with unprotected money and assets. But, how do you find those people. Bingo, the Internet. The Internet has changed the whole ballgame. A few years ago, you couldn’t afford the time and money to track down people’s assets, now anyone can find out within 48 hours whether a person has deep pockets and whether their money is protected or not. For around $1,000, I can get a complete list of all your assets, including your real estate, your investment accounts, including balances and deposits, even your unlisted phone numbers and call logs. If I don’t know your Social Security number, it costs me an additional $37. Presto, now I know if you are worth suing. The case facts don’t matter that much. Even with poor facts, many will settle out of court. Even with mediocre facts, we can play Jury Roulette with a pretty good chance of winning. All I need to know is whether you have deep pockets and whether you have taken the necessary steps to build protective walls around your money.”

By now, Burr was simmering, if not boiling.

“Young man!” Burr took a breath to gain his composure and try not to let his anger show. “Jimmy. Do you have any idea how what you and your colleagues are doing is affecting our world? I have done the research on this. In Pennsylvania alone, it is a disaster. The American Medical Association has classified Pennsylvania as one of 21 states in malpractice crisis. Pennsylvania is ranked the 4th worst state in terms of legal environment by the Pacific Research Institute. The State Medical Board reports that since 2002, almost one half of Pennsylvania’s physicians have been sued for malpractice. One half of Pennsylvania’s doctors sued, does that even make sense?” Burr queried rhetorically.

“Uncle Burr85” Jimmy tried to interject.

“Jimmy, this is a national epidemic. The AMA estimates that through its impact on defensive medicine, liability pressure increases health system costs by between $84 and $151 billion per year.” Burr’s near perfect memory was his ally as he continued. “Do you understand how much money that is? If one dollar was a second, then one million dollars would be a week and a half. And one hundred billion dollars would be 3,170 years!”

Burr continued, “Let me put these numbers in perspective. The research firm, Tillinghast Towers Perrin, reported that if the United States tort industry were a nation, its economy would rank 19th in the world. That would rank just after Belgium and right before Sweden, both countries with populations of around ten million people. The $247 billion in tort costs in the United States in 2006 dwarf those of other countries, and not just in absolute terms. At almost 2.5 percent of gross domestic product, this is nearly three times the average in Japan and Western Europe. Fifty thousand lawsuits a day create costs that are equivalent to a 13-percent tax on wages or the combined annual output of all six New England states – Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont – or the total annual sales of the U.S. restaurant industry. We spend more than twice as much on our tort system in America as we do on new cars.”

“But Uncle Burr85” Jimmy tried again.

“Incredibly, what Americans spend on lawsuits could pay for all of the following government programs combined: education, training and employment; general science, space and technology; conservation and land management; pollution control and abatement; disaster relief and insurance; community development; Federal law enforcement and administration of justice; and unemployment compensation. All of those programs combined!” Burr said in a voice that almost rose above the noise level of the reunion.

Jimmy looked for his moment, “But Uncle Burr85”

Burr continued, “Harvard School of Public Health estimates that almost one half of medical malpractice lawsuits are groundless – meaning there is no evidence that a medical error was committed or that the patient suffered any injury. To add insult to injury, the injured parties in these suits receive less than half of the money spent on torts. If we cut the tort money into 30 slices, the injured parties would receive 15 slices, administration would receive 5 slices and the attorneys would receive 10 slices. Those ten slices are worth almost $80 billion a year.”

“Uncle Burr85” Jimmy tried again.

“That’s the impact on our nation and our economy. What about the impact on good doctors like my colleagues and me? What about my money, and my retirement? What about Ginny? What about my kids and grandkids? What happens when I get sued?” Burr asked as he looked Jimmy straight in the eye.

“But Uncle Burr,” Jimmy explained, “we only go after people with deep pockets who haven’t taken the time to protect their money and other assets. When we find someone who has used a specialist to protect their assets, we just walk away. It’s not worth it. We can find enough people with deep pockets who have only done basic estate and asset protection planning. Then it’s game over.”

Jimmy continued, “But you don’t have to worry Uncle Burr. You’ve taken the time to create an asset protection plan, haven’t you? Haven’t you?”

Scott Keffer is president and founder of Wealth Transfer Solutions, Inc., a legacy planning company in Pittsburgh.

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