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To one side, America has the most expensive system of civil lawsuits in the developed world, acting as a drag on business investment. To another, lawsuits make the economy more efficient, by providing an incentive for companies to put an end to costly mistakes. On Tuesday, corporate lawyers and their rivals in the plaintiffs’ bar were back at their old arguments over the nation’s tort system, this time before a U.S. House Judiciary subcommittee. The subcommittee held a hearing titled, “Can We Sue Our Way to Prosperity?: Litigation’s Effect on America’s Global Competitiveness,” and it heard from witnesses including a partner at Skadden, Arps, Slate, Meagher & Flom. House Republicans have taken on trial lawyers as a main culprit of lagging economic growth. This year, they have pushed a bill that would cap non-economic damages in cases of medical malpractice, and they have held a hearing on a proposal to implement mandatory sanctions of attorneys who violate civil procedure’s Rule 11 against filing frivolous claims. The latest hearing served as an outlet for debate over those and other proposals. “Too many trial lawyers view the law as a business to make money for themselves,” said Rep. Lamar Smith (R-Texas), the chairman of the Judiciary Committee. He said large-scale class actions and other torts hurt U.S. companies domestically and abroad and discourage foreign companies from investing in the United States. Charles Silver, a professor at the University of Texas School of Law, testified that the bigger problem is companies making costly mistakes. He cited a 2005 Wall Street Journal report that anesthesiology had evolved since the 1980s from a profession in which errors and insurance costs were high to one in which anesthesiologists make a greater effort to avoid mistakes. “Why did they act when they did? They were beset by lawsuits and their premiums were rising,” Silver said. As a result of changes in that profession, he added, more Americans are alive, healthy and working productively, and lawsuits have gone down. John Beisner, co-chair of the mass torts practice at Skadden, asked lawmakers to help rein in a “love affair with litigation” that he said is beset by fraud and unlike anything found abroad. “As a practitioner, one need only encounter a European businessperson for the first time, who’s engaged in business litigation in the United States, who says, ‘I’ve never experienced anything like this before,’ in terms of the resources needed for litigation,” Beisner said. Beisner and another witness, Paul Hinton of NERA Economic Consulting in New York, have both done work on behalf of the U.S. Chamber of Commerce or the Chamber’s Institute for Legal Reform. That led a spokeswoman for the American Association for Justice, which represents trial lawyers, to call the hearing a “farce” that was effectively “sponsored” by the Chamber. Rep. Bobby Scott (D-Va.) took aim at one proposal to deter lawsuits, the idea of making Rule 11 sanctions mandatory. He asked Beisner whether defense counsel should face sanctions if they make a filing denying liability in a case where the defendant’s liability is “clear.” “It’s a boiler-plate defense: just deny everything,” Scott said. Beisner said Rule 11 sanctions already “work both ways.” The legislation in question, called the Lawsuit Abuse Reduction Act and sponsored in the House by Smith, has not yet come up for a vote. David Ingram can be contacted at [email protected] .  

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