UPDATE

Lawsuit limits, attorney restrictions on March ballot

A high stakes and high-priced campaign to limit lawsuits and restrict some attorneys' fees is shaping up as a key contest in California's March presidential primary election.

Three separate tort reform initiatives could alter the civil justice landscape by creating no-fault auto insurance, establishing a limited "loser pays" requirement in some class-action shareholder lawsuits, and limiting attorneys' contingency fees in quickly settled suits.

Backers of the measures say they will save consumers and businesses billions of dollars each year that is now spent on lawyers and litigation.

Opponents argue that if successful, the initiatives will limit the average citizen's access to the courts. Consumers will lose if any of the three is successful, they say.

Both forces agree the battle will be costly, with campaign estimates running as high as $10 million for each side.

"Passage of these initiatives would make California a better place for consumers and business," says Mike Johnson, one of the campaign's backers.

Not so, says Hilary McLean, spokeswoman for the opponents. "If they pass, there would be a devastation of consumer rights and they definitely would limit access to the courts for consumers in California."

Strange bedfellows

The tort reform battle has brought together some very strange political bedfellows. On the pro side is the Alliance to Revitalize California, an unusual coalition of Democratic consumer advocates, Republican political activists and Silicon Valley executives.

Chairman of the alliance is Thomas Proulx, co-founder of software company Intuit Inc. and author of the "Quicken" software program. Other members include Ken Khachigian, former advisor to Presidents Nixon and Reagan, and Johnson and Bill Zimmerman, consumer advocates who led the 1990 drive for passage of Prop. 103, which cut auto insurance rates.

The initiatives also have the support of Attorney General Dan Lungren, the California Chamber of Commerce and the California Manufacturers Association.

Squarely in opposition is the Consumer Attorneys of California, the powerful trial lawyers lobbying group, and Citizens Against Phony Initiatives, a coalition of groups representing labor, senior citizens and environmentalists.

Consumer advocates Harvey Rosenfield and Ralph Nader have lined up on the "no" side, along with Consumers Union, the Sierra Club and the California Nurses Association.

The essence

The three initiatives are:

• Proposition 200. Would create a no-fault automobile insurance system requiring insurers to pay benefits regardless of who causes an accident. It would eliminate most lawsuits stemming from auto accidents.
  Proponents say it will reduce auto insurance premiums and cite a Rand Corp. study estimating premiums would drop by between 25 and 34 percent. Opponents say just the opposite, arguing that rates have increased an average of 40 percent in states with a no-fault system.
• Proposition 201. Requires the losing party to pay the winner's attorneys' fees and expenses in a class-action shareholder or derivatives suit brought for alleged securities violations.
  Backers say the measure will reduce frivolous suits and prevent attorneys from making an end-run around federal reforms. Opponents, calling 201 the "swindlers' protection act," say it would limit consumers' ability to challenge big business.
• Proposition 202. Limits attorneys' contingency fees at 15 percent in personal injury, wrongful death or other tort lawsuits when the suit is settled within 60 days.
  This measure would benefit consumers, who frequently pay excessive legal fees in cases which settle quickly with relatively little work by the attorney, according to its backers. Opponents argue that because lawyers would be less likely to accept contingency cases, consumers' ability to sue will be weakened.

The Alliance's Johnson says his group is not relying on anti-lawyer sentiment in the state to carry the three measures, but says "the reason people dislike lawyers as much as they do has to do with the type of activity lawyers engage in that these initiatives are trying to correct."

McLean says lawyer-bashing is just a facade. "These three measures are really about Prop. 201," she charges. "It will prevent people who have been swindled from recovering their money. The other two are window dressing."

Looking ahead to November

Regardless of the outcome next month, the trial lawyers have two other initiatives waiting in the wings for the November ballot.

The first would repeal any limits on contingency fees and prevent the legislature from imposing such limits in the future.

The other also stops contingency fee limits, repeals or prevents any loser-pays requirements, and expands pension fund investors' ability to file and win securities suits.