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 to reform.

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 Nostra.

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 claims.

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 lawyers.

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 too ambiguous.

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 language.

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 in reform.

Judge Ralph Winter serves on the United States Court of Appeals for the Second Circuit. These remarks were delivered at the Litigation 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.