Back in the summer time, the House Judiciary Committee approved the Lawsuit Abuse Reduction Act (H.R. 966; identical Senate version S. 533 still in committee), the claimed purpose of which is “To amend Rule 11 of the Federal Rules of Civil Procedure to improve attorney accountability, and for other purposes.”
Attorney accountability? Sign me up! I’ve been railing against improper conduct by lawyers for years. See, for example, my posts on Grider v. Keystone Health, how lawyers deceive themselves into lying for clients, and a bogus sanctions threat I received. (For those of you who wrongly believe only plaintiff’s lawyers engage in misconduct, Grider involved misconduct by defense lawyers for a health insurance company.)
But the Lawsuit Abuse Reduction Act, if it becomes law, won’t increase attorney accountability. Quite the opposite, in fact. I assume those “other purposes” include “padding the profits of large corporate law firms,” because the Lawsuit Abuse Reduction Act is one of those exceptional bills that isn’t one-sided, but is just plain bad for everyone involved — consumers, employees, judges, and even insurance companies and corporate defendants — except for a single group of influential players, in this case the lawyers who represent big corporations in litigation.
The Lawsuit Abuse Reduction Act (“LARA”), it should be noted, has little to do with “lawsuit abuse,” to the extent that term even has a meaning. Instead, LARA proposes a limited change to Rule 11 of the Federal Rules of Civil Procedure, the rule that governs sanctions for “representations to the court” in a “pleading, written motion, or other paper.” Rule 11 doesn’t apply to the vast majority of what people call “lawsuit abuse.” Rule 11 doesn’t apply to:
- bogus threats to sue somebody,
- unethical or vexatious conduct during discovery,
- the destruction or concealment of evidence, or
- use of improper arguments or falsified evidence at trial.
Instead, Rule 11 applies solely to what lawyers or unrepresented parties write to the court, and it requires the court find a conscious intent by the lawyer to do something wrong (contrary to Walter Olson’s reference to LARA punishing “negligent” conduct). Keep that in mind: under both the current Rule 11 and under LARA, we’re talking about the very narrow situation of a lawyer or unrepresented party knowingly filing a paper with the court that includes false statements or which has no reasonable legal basis.
The current Rule 11 has a two-step process for sanctions. First, there’s a ‘safe harbor’ of 21 days, allowing attorneys to withdraw or revise any questionable “pleadings, written motions, or other papers” and thereby avoid sanctions. Second, if a court finds that a lawyer or unrepresented party “presented” to the court a writing for an improper purpose or which included a frivolous or factually unsupportable claim, “the court may impose an appropriate sanction on any attorney, law firm, or party that violated the rule or is responsible for the violation,” and those sanctions “may to the prevailing party the reasonable expenses, including attorney’s fees, incurred for the motion.”
There’s a lot of “may” in Rule 11, and for good reason: federal judges want discretion. As I wrote just last week, while discussing an example of lawyers needlessly filing sanctions motions against one another, in 2005, when similar changes to sanctions rules were being discussed, the Federal Judicial Center surveyed federal judges on a couple Rule 11 issues:
85% strongly or moderately support Rule 11’s safe harbor provision;
91% oppose the proposed requirement that sanctions be imposed for every Rule 11 violation;
84% disagree with the proposition that an award of attorney fees should be mandatory for every Rule 11 violation;
Those three proposals that the overwhelming majority of judges surveyed didn’t like — eliminating the safe harbor, making an award of sanctions mandatory for all Rule 11 violations, and making an award of attorneys’ fees mandatory — are the exact same proposals in the Lawsuit Abuse Reduction Act.
Let’s be honest: nobody thinks federal judges can’t handle their own courtrooms. They don’t need Congress telling them when and how to sanction a wayward lawyer for filing something with the judge that was misleading or false. The judges get it. They do this judging thing all day long, unlike the Members of Congress, not one of whom has ever been a federal judge for even a day.
So why the push for these changes? Simple: because the threat of sanctions intimidates pro se parties and gives big corporate law firms another excuse to overbill their clients.
In case you didn’t get the hint above, judges don’t like sanctions and they rarely award them. In every case I discussed above — even the Grider case where the Third Circuit concluded the conduct was sanctionable — the court didn’t enter sanctions. Heck, even outside sanctions it’s hard to get judges to award anything other than compensatory damages; consider Judge Posner’s opinion on attorney’s fees in trademark infringement cases. To get sanctioned, you usually have to go off the deep end, like by obviously coaching your client during a break in a deposition. Change the rules to make sanctions mandatory upon every violation, and judges will find reasons not to find a violation.
But words like “sanction” and “baseless” and “frivolous” are music to corporate and insurer ears, so they, not knowing or not caring just how rare sanctions are, will let their attorneys file sanctions motion after sanctions motion to try to stick it to some trial lawyer or pro se plaintiff. With LARA we would return to the days in which sanctions issues spawned collateral litigation, chewing through hundreds of hours of attorney time while delaying resolution on the merits of the actual case. Judges will hate it, and they will have to spent our tax dollars dealing with it. It is no stretch to call LARA welfare for unethical lawyers: it is little more than Congress providing corporate lawyers with an excuse to pad their bills with needless weak sanctions motions.
There’s another more insidious side to LARA. While enhanced Rule 11 sanctions will do diddley-squat to deter me and most of my trial lawyer colleagues because practice ethically, we believe in the merits of our cases, and we recognize the rarity of sanctions, but pro se litigants — as are common in employment discrimination and civil rights cases — don’t realize that sanctions are usually an empty threat, and the courts aren’t going to explain to the pro se litigant that the corporate defense lawyers are just blowing smoke. There’s a very real threat that pro se litigants will abandon their cases in the face of spurious sanctions threats from defense lawyers.
All in all, then, we’ll get the worst of all worlds. The new rule will do nothing extra to deter sanctionable conduct, will make litigation more expensive by encouraging hourly-billing corporate defense lawyers to file sanctions motions, and may intimidate non-lawyers into dropping meritorious claims. If you’re at an AmLaw 200 firm, this is great news. If you’re in the remaining 99.999% of society, not so much.
(For a more scholarly look, see Lonny Hoffman’s The Case Against the Lawsuit Abuse Reduction Act of 2011, 48 Hous. L. Rev. 545 (2011). Also Ron Miller, fellow plaintiff’s lawyer, has a similarly practical analysis: “The bill would save the courts minimal time and money and would risk trampling on the rights of legitimate plaintiffs.”)