Gordon Graham here with my first column for this great website in 2009. I have to get used to writing 2009 instead of 2008. It was always easy to do when I was a working cop because I would write traffic tickets with a court appearance usually six weeks out, so I was writing the next year on citations long before January 1 showed up and for some reason I did not often write down the wrong year when the new year came. But since I retired a couple of years ago, I note that I am writing the prior year in the date box more often – but that is not the end of the world – just a minor problem that I am working on.

And compared with some of the other problems we are facing right now – this “date” issue is indeed small potatoes (with a remembrance here to Dan Quayle). And with a little thought – it is fixable. It just requires a little bit of thinking – and the problem goes away. If only all of the problems we face could be dealt with this quickly!

As I type this piece, I see the Israelis dropped one hundred tons of bombs on the Gaza Strip today. And I can predict with a high level of confidence that Hamas will retaliate by tossing some missiles over the border and thus up the ante. And then Israel will retaliate – and so on and so on. And Mr. Obama will try in earnest to fix this problem, as did Mr. Bush and Mr. Clinton, and Mr. Bush I, and Mr. Reagan, and Mr. Carter and you get my drift here. There is very little that I can do to address the ongoing problems in the Middle East, many of which are clearly linked to the worldwide financial crisis.

Likewise, there is very little that I can do to address the mess that GM has been in for the last decade or so that has now come to a head. How do you even start to address these major issues? Let me see. The GM business plan is to lose $500 to $1500 on every car sold! Now I admit that I went to night school but even to me that is not adding up right. And not wanting to be a naysayer, but this “bridge loan” of some $17 Billion dollars will just postpone the inevitable. And what can you or I do about this problem – nothing! It is out of our hands.

Which brings me to the point of the brief piece. Here is another problem that has been around for a long time in America. The problem has been solved in other countries with no adverse consequences. And it is one that needs to be addressed in our country quickly. And having stressed the importance of this – I can tell you that it will not happen anytime soon. What we need, why we need it and why we won’t have it anytime soon will be the subject of the next few paragraphs.

The Civil legal system of America needs to be modified to a “loser pays” model. Simply stated, you file a civil lawsuit against someone or some organization and you lose the case – you pay the other side’s legal costs. It is just that simple! And here is my prediction. If this were the rule in America – 90+% of lawsuits that are filed would disappear – instantly! And just to be fair, I would give the plaintiff lawyers 180 days to dismiss current lawsuits without any costs. But, if they chose to continue the litigation – then the new rule “if you lose it you pay all the legal costs incurred by the defendant from the date of the filing of the lawsuit” and that would be that.

We need this change in the way we do business in America for so many reasons, but here are a few. The current volume of lawsuits (legitimate and bogus) is overwhelming the court system and there is more and more crying for more courthouses and more judges. Not necessary my friend! Reduce the number of cases being filed and you will not need to increase the size of the judiciary.

Here is another reason we need this change and it has to do with GM. Back in the early nineties I arrested a very nice fellow for DUI. And we got to talking at the jail (as I tend to do with people if you and I have not yet met) and he was an engineer for GM and he was working on the “original” ZR-1 project. For those of you not into the whole car thing – that was a rocket ship Corvette that they built for a couple of years back then – and now they have brought back the name in 2008 (and that is correct) and now it has 600 plus horsepower and is a 200 mph supercar made in the USA that gets close to thirty miles a gallon on the highway (at a reasonable speed).

Anyhow, we continued chatting about the car and I inquired about how much it would cost. And to make a very long story short, his answer shocked me. The car would have a MSRP of around $50K. The “cost” of actually building the car (parts and labor) was less (not a typo) than $10K. The rest of $50K (and I forget the amounts) went to R&D, advertisement, profit for the dealer, profit for GM, the “legacy” costs for the generous retirement and health plans for UAW members and … “insurance”.

And when I inquired about the last one he informed me that GM built in several thousand dollars into the price of this car (and I assume a lesser amount for other less powerful models) for the lawsuits they knew would come after the sale of the car.

Now this piqued my interest and he explained that whenever there was a major collision – the auto manufacturers got sued almost automatically. And even though they “won” most of the litigation – the cost of the litigation had to be factored into each unit sold.

Now going back to the point I made earlier in this piece, if we could eliminate (or substantially reduce) the number of bogus lawsuits filed against GM alleging “product liability” (the Corvette you sold me went too fast and did not handle well at 190 mph and therefore it is GM’s fault) and if this reduction in litigation could reduce the amount of money “set aside” for this litigation – all of a sudden GM is turning a profit on each car sold. And then they would not need the “bridge loan” – they would have additional money for R&D and we could start building great world-class cars again.

And if I had my choice between unemployed plaintiff lawyers (who rarely make any positive contributions to society) and unemployed UAW workers (who actually make a contribution to society) – I would always take the former. And if you want to extrapolate this thinking into the pharmaceutical industry, or the airline business, the tire business, the gun industry, or the restaurant business or any other business – be my guest. How much money is being thrown away defending “bogus” lawsuits?

Now to be fair, some plaintiff litigation is justified – and when you convince a judge or jury of the legitimacy of your lawsuit – then you get a favorable verdict and you as a plaintiff lawyer can take your 40% off the top and look for another legitimate case. But this nonsense of just filing a lawsuit on the off chance that the named defendant will settle the case thinking that would be cheaper and less risky than going through the litigation process has got to end. It is a major drain on our society – and as you know from the news over the last year or so we as a nation have got to reevaluate the way we are doing business so that we can be competitive in the global economy.

And why am I bringing this to your attention of a “Fire Department oriented” website? Trust me, past experience tells me that during this economic decline your department will experience an increase in litigation. And each lawsuit that is filed costs money to defend – and that money has to come from someplace – and that someplace will be the City budget or the Department budget and multiply that times a thousand fire departments and you have some serious money.

So this addresses the problem and why we need it fixed. And now I will tell you why we will not see this “loser pays” system anytime soon. Too many of our legislators have a vested interest in the “status quo”. They are either lawyers or have ties to organized groups of lawyers who understand the value of “lobbying” and I fear that any attempt to do away with the current system will “die in committee”.

So what can you do? We (you and I) must vote for “tort reform”. I am all in favor of “wrongs being righted” – but only when there was truly a wrong. This high cost of defending “bogus” lawsuits is a huge drain on our economy and potentially your department budget. It is an identifiable “risk” and thus a “manageable” risk. So let’s manage this risk and vote for women and men who are like-thinking and pull our nation back into the “black”.

Anyhow, I have given you a New Year’s Resolution that will benefit all of America. It is up to each of us to act to address this issue.

Thanks for taking the time to visit the Credit Union blog site, and I wish you a healthy and prosperous 2009 (and that is the correct date).

Gordon Graham
Co-President, Lexipol

This entry was posted on Friday, January 9th, 2009 at 8:47 am and is filed under FD Training. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.