The Honorable Ralph K. Winter*
Today's luncheon program is titled, "Meaningful Change in
our Civil Justice System: Is the Defense Bar a Problem?" It
turns out that, not having seen the title, I nevertheless began
with the line "meaningful change in our civil justice system
will not be easily accomplished." One reason for this has to
do with the incentives of the bar and the shaping of that system.
Those desiring reform tend to view the plaintiffs bar and control
of bar associations by ideologues as the principal source of opposition
Several years ago, Judge Silberman wrote an article entitled "Will
Lawyering Strangle Democratic Capitalism?" The article pointed
out that it is the entire profession and not a parochial segment
that has an economic interest in the proliferation of legal rules
and complex legal proceedings. The jury, as it were, is still out
on whether democratic capitalism will die gasping for air under
the weight of litigation. However, time may be proving Judge Silberman
right on the mark, in perceiving lawyers as a group that presses
its self-interest in shaping our legal system.
I was struck by John Stossel referring to the lawyering industry
as part of the working market. I think that is mostly wrong. The
demand for lawyers is not governed by a market where consumers may
exercise free choice, that is, as to whether to use lawyers at all.
Rather, the demand for lawyers is the result of government, a condition
which lawyers have every reason to understand. The result of being
a nation where lawyers play a major role in government is there
for all to see.
For example, some legal rules seem to exist solely because lawyers
profit from them. Civil RICO provides treble damages and attorneys
fees in cases that never involve actual racketeering organized crime,
with predicate acts alleged under the broad definition of mail fraud
developed in criminal law, and where enforcement is limited by the
exercise of prosecutorial discretion of the resources available.
Civil RICO is now routinely a source of federal jurisdiction in
what would otherwise be routine state law claims. Any dispute over
a contract that requires periodic performance or communication between
the parties can support allegations of a pattern of racketeering
activity involving misleading statements or failures to inform.
In fact, the first civil RICO case to reach the Supreme Court of
the United States was a garden variety breach of contract action.
One result of civil RICO, therefore, is that its treble damages
and attorney's fees provisions have partially displaced ancient
common law rules concerning damages for breach of contract. This
is truly a bizarre result, suggesting even that in enacting RICO,
Congress believed that Hadley v. Baxendale was the work of La Cosa
It is instructive that only a powerful group like the securities
industry has gotten political relief, even though it may turn out
to be only partial relief from civil RICO. Otherwise, civil RICO
is alive and well, threatening the less powerful, such as ordinary
individual proprietors or the construction business, although its
sole reason for existence seems to be to profit lawyers.
Additionally, there is considerable evidence that derivative and
class actions in the corporate area profit lawyers while imposing
a net loss on investors - the very class they are supposed to protect.
Even the most favorable studies suggest that in a large number of
such cases, investors receive no benefit, while paying the legal
fees of all parties.
In other cases, wealth is transferred from one group of investors
to another, with the first group of investors paying all legal fees.
Or else some investors may benefit, but the benefit comes from insurance
that most sizeable corporations purchase. In these cases, the insurance
pays all legal fees, but the cost of the insurance is ultimately
borne by the investors, and overall, the investors have a net loss.
Even in the small number of cases in which there is a net return
to investors, the settlement may often be, at best, only roughly
related to the merits of the underlying claims, resulting in the
over-compensation of weak claims and the under-compensation of strong
The only constant is the benefit reaped by both the plaintiffs'
and defendants' lawyers. Therefore, it is a misperception to single
out plaintiffs' lawyers or lawyers with particular ideological beliefs
as having the sole incentives to provide political support for unnecessary
and inefficient rules of law that increase the cost of litigation.
This is a somewhat unusual misperception in that it comes from
sources that understand economic incentives in the political and
economic marketplace and expect that an industry will act politically
to maximize returns to that industry. The fact is that the economic
incentives of defense lawyers regarding rules that proliferate litigation
do not significantly differ from those of plaintiffs' lawyers. Lawyers,
as a group, including the defense bar, have an interest in maximizing
the demand for legal services.
This is particularly the case at a time when practitioners must
deal with the high cost of support services, the instability of
law firms, and the understandably increasing restlessness of clients.
It is because the demand for legal services is affected by the nature
of substantive and procedural rules that reform of those rules which
may reduce the cost of litigation will often be met by powerful
opposition from the lawyering industry, including lawyers whose
clients might actually be aided by the reforms.
Members of the defense bar may not always be vocal in opposing
reform, but they are not likely to zealously support reform which
may result in a reduced demand for their services. Indeed, the defense
bar sometimes openly opposes measures that seek promising methods
of reducing litigation costs to their clients.
A couple of years ago, proposals were made to limit contingency
fees in personal injury cases to that portion of a settlement or
judgment to which the plaintiff's lawyer had added value. Under
one proposal, if the defendant accepted the plaintiff's early demand
for settlement, the plaintiff's counsel's fees would be capped at
ten percent of the first 100,000 dollars and five percent of any
greater amounts. If rejected, contingency fees could later be charged
only against net recoveries in excess of the offer. Moreover, the
plaintiff's demand for settlement would have to be accompanied by
basic routinely discoverable information to allow the defendant
to evaluate the claim.
I am unsure of this proposal's validity. Strikingly, it was attacked
by some members of the defense bar, although I see nothing in it
that would compel their clients to make an offer of settlement or
otherwise to weaken their case. It's difficult to see how any of
the defense bar's clients could have been adversely affected by
this proposal. The opposition from this quarter seems peculiar because
the defense bar does not generally oppose caps on contingency fees.
I only speculate, while some of those who made this proposal have
stated it openly, that what actually troubled the critics was that
the proposal would have given plaintiffs and defendants great incentive
to reach an early settlement without incurring substantial legal
bills. Similarly, the defense bar abstractly supports the need to
find ways to reduce the large resources that go into civil discovery,
but mounts ferocious and often unprincipled opposition to concrete
measures that will actually reduce that cost. I will speak at length
on this, because I was a member of the Advisory Committee on Civil
Rules when that committee took up complaints about excessive discovery,
which I, at least, perceived as coming from defendants and their
To briefly summarize the situation, over the course of several
years, the committee discussed the problem and, in its judgment,
decided one partial remedy would be to require automatic disclosure
of core information without a request by the other party that any
competent lawyer would otherwise have requested and that any competent
judge would have ordered disclosed.
In requiring the automatic provision of such materials, the committee
thought that the costs of formal requests and often frivolous opposition
would be eliminated and the case could begin quickly. The committee
proposed an amendment to Rule 26 requiring the disclosure, the names
of witnesses, and locations and categories of documents "likely
to bear significantly on any claim or defense." I favored the
general venture of looking for ways to reduce discovery costs. However,
I had great doubts about this particular proposal and, indeed, voted
against it. I believe I was the only member of the committee to
vote against it at this early stage, because I thought it was entirely
When the proposal went out for comment, criticism quickly appeared
in great quantity. There was an organized campaign that sent the
committee a barrage of letters and presented oral testimony from
lawyers throughout the country. Although the lawyers were widely
dispersed geographically, many of the letters used virtually identical
I see nothing wrong with this method of lobbying so long as the
person signing the letter verifies the merits of the criticism that
has been provided for retransmission. Disturbingly, much of the
correspondence had not done that. We received a large number of
letters and heard an amount of oral testimony that asserted the
entirely false claim that privileged or work product materials would
have to be automatically disclosed under the proposed rule and even
under every version of the proposal. Yet, the proposal specifically
allowed parties to assert and get a ruling on a work product or
privilege claim before materials subject to such a claim needed
to be disclosed. However, I thought the criticism was, for the most
part, well taken. As drafted, it seemed to require disclosure of
all materials relevant to any legal theory the answer or complaint
might support. If a party failed to anticipate a legal theory of
its adversary, the disclosure might be deemed inadequate and violate
the rule. Moreover, as proposed, the rule would cause a party to
alert the adversary to legal theories of which it was ignorant.
All this is quite beyond the other problems associated with the
expectation that discovery might be massive, for little purpose
and so forth.
After receiving the commentary, the committee revised the proposal
to require automatic disclosure only of materials that were "relevant
to disputed facts alleged with particularity in the pleadings."
This language was taken from Rule 9(b) and had a body of case law
interpreting it. Under the revised rule, a general allegation that
a product injured a person through a design defect would not trigger
any disclosure because it doesn't involve facts alleged with particularity.
On the other hand, an allegation that a railroad crossing at a particular
location was unattended and that the plaintiff's car was struck
by a particular Amtrak locomotive at 2:15 p.m. on a date certain
would trigger disclosure.
Of course, there is an inevitable area of ambiguity, but it is
no more than the irreducible ambiguity that exists with any rule.
Furthermore, there will be judges who will come down with decisions
that do not seem right, as is often the case with other rules. I
suggest that the present rules when interpreted by those same judges
would lead to exactly the same result, but only after a great deal
of papers have been filed. Therefore, the committee regarded it
in good faith as having responded to the criticism. Under the rule,
no one had to disclose anything and no one had to concern themselves
with what the adversary's legal theories were. If there was a fact
that was alleged, you could move under Rule 12(f) to strike it as
irrelevant. I, as well as others, thought that the revised proposal
met most of the legitimate criticism.
Nevertheless, the outrage of the bar continued. One charge that
I really do not understand and, therefore, will make some light
of, is that the rule would interfere with the relationship between
attorneys and their clients. This idea is based on the premise that
a legal obligation to disclose unhelpful, not to say negative, materials
should not be imposed because lawyers do not want to have to tell
their clients that they have an obligation to disclose it. That
is a very peculiar view of the lawyer's role. It seems to posit
that a would-be Willy Sutton's lawyer should not have to tell him
that he had an obligation not to rob banks, because that would interfere
with their attorney-client relationship. Now, once the bank was
robbed and Willy Sutton was convicted, then it's okay.
The argument also reflected the troubling notion that the attorney-client
relationship is enhanced by charging substantial sums to a client
for the fruitless defense of a result for discovery, resulting in
an inevitable order of disclosure. Indeed, it seemed to me the very
argument that costless, but useless proceedings are desirable is
in itself an admission that wasteful civil discovery routinely occurs,
largely for the benefit of lawyers. Finally, it was charged that
automatic disclosure was inconsistent with the adversary system.
However, most discovery in the criminal law area is in fact in the
nature of automatic disclosure; in particular, the obligation of
the government to disclose exculpatory material to the defendant.
Just recently, the Judicial Conference of the United States killed
a proposal that would have introduced more limited formal discovery
in criminal law as in civil discovery. It would not be nearly as
extensive as civil discovery, but it would still be formal discovery.
The conference killed the proposal for limited formal discovery
in criminal proceedings and, to my knowledge, no one argued to the
conference that we have to have formal discovery because it is necessary
to make criminal proceedings adversarial.
Although I disagree with the concept that automatic disclosure
was inconsistent with the adversary system, numerous people, including
Justices Scalia, Thomas, and Souter agreed with it to one degree
or another. Several of the critics simply ignored the new language
requiring disclosure only of materials relevant to disputed facts
alleged with particularity and continued to attack the original
and discarded proposal that was thought to be ambiguous even though
it had been redrafted.
At a symposium on procedure, I encountered an executive of a drug
company who was organizing opposition to the rule, but had not been
informed that the rule had been rewritten. Moreover, some of these
articles and some of the critics continued to assert that the rule
purported to eliminate the attorney-client privilege and work product
immunity. The most troubling thing, however, was what did not appear.
What did not appear was any rebuttal to the argument that costly
proceedings should attend disclosure of materials that any competent
lawyer will ask for and any competent judge will grant. No constructive
alternatives that would reduce the costs of civil discovery were
offered, nor was the status quo defended. Any possibilities for
change were simply denounced. In watching this entirely misleading
debate unfold, I became convinced that the defense bar's failure
to address the merits was, in part, a strategy to mislead its clients,
as well as to persuade the Congress to reject the rule. For all
of the protests by the defense bar, the plaintiffs bar also was
not enthusiastic about the proposal.
In conversation with plaintiffs' lawyers and from some remarks
quoted in the press, I gather that many in the plaintiffs bar did
not share the view that the amendments to Rule 26 disadvantaged
defendants. They viewed automatic disclosure as a device that might
expose weaknesses in their case before they have had an opportunity
for discovery. I am in no position to judge whether they were right
or wrong, but the widely held view that defendants will be terribly
disadvantaged was simply not shared by all the plaintiffs groups.
I want to emphasize that I do not mean to say that automatic disclosure
or that rule is a panacea, may not be misused, or cannot be improved
upon. I am also not saying that there are legitimate arguments against
it and it is possible it was even a mistake. I am not saying any
of those things. Indeed, I once described the rule in print as barely
non-trivial, because any wrongs it causes will all occur anyway
under the present rule, but at greater expense to the clients. In
my opinion, on the merits, it simply did not justify all of the
resistance and controversy generated. Experience with the rule,
as I understand it, can be described as positive, although there
are a lot of jurisdictions that do not use it. There are also some
jurisdictions in which it is in the rules, but the lawyers do not
use it, either because they are ignorant of it, they do not like
it on principle, or they would rather bill their clients.
A preliminary draft, I understand, of a survey under the Biden
bill indicates that where automatic disclosure has been used, there
has not been a feared increase in satellite litigation. Of judges
with experience with it, 85 percent of them say they favor some
form of continued automatic disclosure. Of the attorneys with experience,
I am told, some 60 percent want some form to continue. Nevertheless,
I think further discovery reform may well be dead. I originally
thought that automatic disclosure might come as a first step followed
by a rule that said that all further discovery would be by leave
of court, thereby preventing these enormous fishing expeditions.
However I think further discovery reform is a corpse with a contagious
disease. As for who killed it, that I do not know. If the lawyers
killed it, it was the perfect crime because they left their clients'
fingerprints on the body.
I have described this controversy because I was familiar with it
and the most skeptical person involved in this whole venture. But
also, I think it illustrates the enormous political difficulties
inherent in any reform that lessens the cost of litigation. Many
of the areas where reform has been suggested, such as discovery,
are really central to the profit centers that are at the heart of
the staffing and organization of law firms. With many mouths to
feed, those who run firms necessarily view these proposals with
great disquiet, because they might disrupt their business, their
way of life, and their standard of living. Not only are these firms
powerful institutions, but they are run by persons of influence,
great ability and great learning. They are also the principal source
of information to clients as to how reforms will affect them. It
is to be expected that any proposal that reduces the cost of litigation
to clients will be portrayed by some as disadvantaging the clients
in litigation and increasing the amounts of judgments and settlements
to be paid. As for some types of changes, that portrayal may well
be entirely accurate. However, at least in my view, the history
of Rule 26 suggests that often it will not. So the principal organized
constituency for reform is partially disabled by having access only
to flawed information, while the ultimate beneficiary, the public,
is diffuse and disinterested. Reformers face a long lonely road
in even getting the attention of those whose self-interest lies
*Judge Ralph Winter serves on the United States Court of Appeals
for the Second Circuit. These remarks were delivered at the Practice
Group's September 1996 conference, Civil Justice and the Litigation
Process: Do the Merits and the Search for Truth Matter Anymore?
The proceedings of the conference will be published this spring
by the New York Law School Law Review.