March 7, 2007
Lampert Rails Against Frivolous Lawsuits
The new message from Edward Lampert, chairman of Sears Holdings Corporation, in connection with the release of the company’s most recent financial report has much in it that is both intriguing and debatable.
One area we found most interesting was the section of litigation reform. All told, Mr. Lampert spent 609 words railing against trial lawyers and those who bring frivolous lawsuits against the company.
According to Mr. Lampert, the size of the Sears Holdings means it finds itself facing several lawsuits every day.
“The cost of defending even one of these cases can run into the hundreds of thousands of dollars – sometimes the millions – even when the claims asserted have no basis,” wrote Mr. Lampert. “The lawyers who bring these cases against corporations figure that rather than paying defense lawyers and taking a chance on the judicial system, companies will pay the plaintiffs (or, rather, plaintiffs’ lawyers) to go away.”
Mr. Lampert said the only way to rectify the situation is in the area of tort reform. He applauded the Private Securities Litigation Reform Act of 1995 and the Class Action Fairness Act of 2005, but said further action was needed by Congress and state legislatures.
In the end, he wrote, Sears Holdings intended to take an aggressive approach in defending itself against suits.
“We have challenged our company’s lawyers to try cases when doing so makes sense. This means that, from time to time, we will lose some cases. Sometimes, we may even lose big – but even then, we will continue to fight as long as we believe we are right and can find a forum that will fairly adjudicate the controversy. Over time, we believe this strategy will achieve the best long-term results for our shareholders. We know that our company and our associates are good and fair and ethical, so we are confident we will win far more cases than we will lose.”
Discussion Questions: Is Edward Lampert on target about the impact of lawsuits on retailers? Is this an issue relevant only to large retailers or to all? What are your thoughts on class-action suits?
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As I understand, last year London became the world’s financial capital for IPO’s and the reason cited was the problem of potential litigation in the U.S. Please correct me if I am wrong–I would like to be wrong about this.
Ed Lampert is dead on in his rant against trial lawyers and his belief that additional tort reform is necessary.
It certainly appears as if there is a segment of the legal profession who have targeted large corporations as “cash cow” targets for litigation. While working in retail this was a constant issue within the company and in many of the cases that I was familiar with, the claims seemed dubious at best.
The cost of building and maintaining a legal defense team within large corporations is indicative of our increasingly litigious society. These costs impact a company’s profitability to the detriment of shareholders and ultimately, consumers.
Basically what Mr. Lampert and others are saying is that judges and/or juries can’t be trusted (not smart enough, fair enough, etc.) to listen to opposing arguments and make a decision on the merits of a case.
If Lampert is in the right, he should go to court and win. That, like it or not, is the American way. It is also the best way to eliminate “frivolous lawsuits.” Opposing lawyers, he argues, don’t want to go to court. If that’s true, then he should insist on going to court. What better way to rid himself and his holding companies of the nuisance?
Edward Lampert is a target, perhaps unfairly, of greedy trial lawyers. They punch on the rich who are most vulnerable and Eddie is mighty rich and lots of lawyers are trying to see if he is also vulnerable. That brings us to the point of who is the greediest of the opportunists in this equation?
Yes, I believe there should be more tort reform. Far too many lawsuits are frivolous brought on frequently by semi-ethical lawyers. If frivolous law suits win the day at Sears, other retailers will be made more vulnerable unfairly. In the meantime, I say, “Fight on (almost) noble Edward for Sears and all Retaildom.”
As much as we rail about Eddie Lampert’s retailing prowess, in this matter we have to raise a hearty “huzzah!” Even after reading Jeff Weitzman’s persuasive arguments to the contrary, we still agree with Lampert on this one.
Trial lawyers use societal bias against the powerful (Australians call it the “tall poppy syndrome”) to attack individuals, companies and in some cases entire industries. When there is a real basis for vulnerability, malicious culpability or otherwise, the feeding frenzy sets in in earnest. The tobacco industry is the obvious extreme, but the firearms industry, liquor industry and food manufacturers of many stripes have felt the crosshairs on their corporate coffers recently as well. Oh, and then there’s that medical malpractice issue.
It seems these issues get ugliest when the plaintiff community turns to the court of public opinion for leverage. Unfortunately, they often get it in the courtrooms of what we now term “activist judges.” Did this term even exist fifty years ago? But now the legal community is facing the backlash of public opinion itself. And it is howling “foul” louder than an NCAA tournament coach.
To return to Jeff’s well-reasoned position, there is much to fear in tampering with our legal system. But at least one point of view is that the system’s tolerance is being abused by the legal community themselves. And there is much evidence to support that–at least in the court of public opinion.
I’ve had a tendency to disagree with Edward Lampert on some of the things he’s said in the past, however this time I believe he’s right on. I believe the impact of lawsuits on both retailers and other companies is significant. It’s not to say that some law suits don’t have merit and deserve to be won, however the number of frivolous lawsuits that are initiated are excessive and costly. It’s time to revise some of the laws that will help reduce this problem.
“We have challenged our company’s lawyers to try cases when doing so makes sense….”
I think doing things that “make sense” makes sense itself, and I hope Mr. Lampert extends this philosophy to other departments at Sears…seriously though, does any part of the report actually talk about what Sears was always known for (?): you know selling stuff.
Judges discipline attorneys and plaintiffs who file frivolous lawsuits. Can anyone name a single retail business whose profit problems largely stem from lawsuits, “frivolous” or not? Retailers face many serious threats to their existence. When thinking of the many mergers and bankruptcies, the many famous names that ceased to exist, how many disappeared because of lawsuits? I can think of retailers who disappeared because of mismanagement, poor capitalization, retail estate problems, etc. Can’t think of any who died because of the legal process.
Why not make the plaintiffs automatically liable to the defendant? Let’s just say for a percentage of the amount of their own suit.
If, in fact, it is NOT a frivolous lawsuit, then the plaintiff should be okay in the end. However, if it is proven in a court of law the company has not violated any laws nor was at fault in the particular case, and, finally was proven at fault themselves, the the plaintiff should pay.
Pay either the cost born by the company in defending itself, or a percentage of the size of the suit they have filed. And, have additional financial reprimands for the attorneys for the plaintiffs.
But, alas, an astute attorney will argue against freedom of speech and the justice system being hamstrung by the law. It will then never see the light of day.
I won’t argue that there aren’t any number of frivolous lawsuits brought against U.S. corporations, but Lampert’s words ring hollow for a number of reasons.
First, truly frivolous lawsuits don’t get very far. Lawyers face sanctions for bringing such lawsuits, and courts dismiss them pretty quickly. Yes, it’s a cost, but millions? Not for the truly frivolous.
Second, class action suits face even larger hurdles. Not only do you have to show a legitimate cause of action, but you have to have the class certified. These suits often compensate lawyers on contingency. It’s a controversial practice, but one thing it does do is eliminate suits that don’t have “legs” since the law firm foots the entire bill up front. A suit that is not a good investment isn’t going to find a law firm. That’s not to say the suit has merit, but it’s another hurdle to bringing a frivolous lawsuit.
Then there’s the legal process, with the possibility of dismissal, summary judgment, etc. Lawsuits that go all the way to trial usually have pretty strong arguments on both sides. That’s the point of the advocacy process.
Which brings us to Lampert’s vow to fight, even if they lose some cases. You may lose a case that you think you should have won, but you shouldn’t lose any cases where there was no merit to the plaintiff’s position. So he seems to be admitting that sometimes there’s a real controversy, and that a reasonable judge or jury might find them liable. That undercuts his whole argument about the tremendous cost of defending the company against evil lawsuits, doesn’t it?
And therein lies the problem. We have a whole system of justice designed to figure out who is liable, imperfect as it is. Legislating to put restrictions on who has access to that system is very dangerous. I’m *not* saying there isn’t room for any reform, but anyone who has every been to law school remembers the cases that tort law was built on–some truly horrific things have happened to consumers and society in the name of corporate expediency and profit.
We should think very carefully about what we’re giving up before we try to legislate the “nuisance factor” out of our justice system.
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As I understand, last year London became the world’s financial capital for IPO’s and the reason cited was the problem of potential litigation in the U.S. Please correct me if I am wrong–I would like to be wrong about this.
Ed Lampert is dead on in his rant against trial lawyers and his belief that additional tort reform is necessary.
It certainly appears as if there is a segment of the legal profession who have targeted large corporations as “cash cow” targets for litigation. While working in retail this was a constant issue within the company and in many of the cases that I was familiar with, the claims seemed dubious at best.
The cost of building and maintaining a legal defense team within large corporations is indicative of our increasingly litigious society. These costs impact a company’s profitability to the detriment of shareholders and ultimately, consumers.
Basically what Mr. Lampert and others are saying is that judges and/or juries can’t be trusted (not smart enough, fair enough, etc.) to listen to opposing arguments and make a decision on the merits of a case.
If Lampert is in the right, he should go to court and win. That, like it or not, is the American way. It is also the best way to eliminate “frivolous lawsuits.” Opposing lawyers, he argues, don’t want to go to court. If that’s true, then he should insist on going to court. What better way to rid himself and his holding companies of the nuisance?
Edward Lampert is a target, perhaps unfairly, of greedy trial lawyers. They punch on the rich who are most vulnerable and Eddie is mighty rich and lots of lawyers are trying to see if he is also vulnerable. That brings us to the point of who is the greediest of the opportunists in this equation?
Yes, I believe there should be more tort reform. Far too many lawsuits are frivolous brought on frequently by semi-ethical lawyers. If frivolous law suits win the day at Sears, other retailers will be made more vulnerable unfairly. In the meantime, I say, “Fight on (almost) noble Edward for Sears and all Retaildom.”
As much as we rail about Eddie Lampert’s retailing prowess, in this matter we have to raise a hearty “huzzah!” Even after reading Jeff Weitzman’s persuasive arguments to the contrary, we still agree with Lampert on this one.
Trial lawyers use societal bias against the powerful (Australians call it the “tall poppy syndrome”) to attack individuals, companies and in some cases entire industries. When there is a real basis for vulnerability, malicious culpability or otherwise, the feeding frenzy sets in in earnest. The tobacco industry is the obvious extreme, but the firearms industry, liquor industry and food manufacturers of many stripes have felt the crosshairs on their corporate coffers recently as well. Oh, and then there’s that medical malpractice issue.
It seems these issues get ugliest when the plaintiff community turns to the court of public opinion for leverage. Unfortunately, they often get it in the courtrooms of what we now term “activist judges.” Did this term even exist fifty years ago? But now the legal community is facing the backlash of public opinion itself. And it is howling “foul” louder than an NCAA tournament coach.
To return to Jeff’s well-reasoned position, there is much to fear in tampering with our legal system. But at least one point of view is that the system’s tolerance is being abused by the legal community themselves. And there is much evidence to support that–at least in the court of public opinion.
I’ve had a tendency to disagree with Edward Lampert on some of the things he’s said in the past, however this time I believe he’s right on. I believe the impact of lawsuits on both retailers and other companies is significant. It’s not to say that some law suits don’t have merit and deserve to be won, however the number of frivolous lawsuits that are initiated are excessive and costly. It’s time to revise some of the laws that will help reduce this problem.
“We have challenged our company’s lawyers to try cases when doing so makes sense….”
I think doing things that “make sense” makes sense itself, and I hope Mr. Lampert extends this philosophy to other departments at Sears…seriously though, does any part of the report actually talk about what Sears was always known for (?): you know selling stuff.
Judges discipline attorneys and plaintiffs who file frivolous lawsuits. Can anyone name a single retail business whose profit problems largely stem from lawsuits, “frivolous” or not? Retailers face many serious threats to their existence. When thinking of the many mergers and bankruptcies, the many famous names that ceased to exist, how many disappeared because of lawsuits? I can think of retailers who disappeared because of mismanagement, poor capitalization, retail estate problems, etc. Can’t think of any who died because of the legal process.
Why not make the plaintiffs automatically liable to the defendant? Let’s just say for a percentage of the amount of their own suit.
If, in fact, it is NOT a frivolous lawsuit, then the plaintiff should be okay in the end. However, if it is proven in a court of law the company has not violated any laws nor was at fault in the particular case, and, finally was proven at fault themselves, the the plaintiff should pay.
Pay either the cost born by the company in defending itself, or a percentage of the size of the suit they have filed. And, have additional financial reprimands for the attorneys for the plaintiffs.
But, alas, an astute attorney will argue against freedom of speech and the justice system being hamstrung by the law. It will then never see the light of day.
I won’t argue that there aren’t any number of frivolous lawsuits brought against U.S. corporations, but Lampert’s words ring hollow for a number of reasons.
First, truly frivolous lawsuits don’t get very far. Lawyers face sanctions for bringing such lawsuits, and courts dismiss them pretty quickly. Yes, it’s a cost, but millions? Not for the truly frivolous.
Second, class action suits face even larger hurdles. Not only do you have to show a legitimate cause of action, but you have to have the class certified. These suits often compensate lawyers on contingency. It’s a controversial practice, but one thing it does do is eliminate suits that don’t have “legs” since the law firm foots the entire bill up front. A suit that is not a good investment isn’t going to find a law firm. That’s not to say the suit has merit, but it’s another hurdle to bringing a frivolous lawsuit.
Then there’s the legal process, with the possibility of dismissal, summary judgment, etc. Lawsuits that go all the way to trial usually have pretty strong arguments on both sides. That’s the point of the advocacy process.
Which brings us to Lampert’s vow to fight, even if they lose some cases. You may lose a case that you think you should have won, but you shouldn’t lose any cases where there was no merit to the plaintiff’s position. So he seems to be admitting that sometimes there’s a real controversy, and that a reasonable judge or jury might find them liable. That undercuts his whole argument about the tremendous cost of defending the company against evil lawsuits, doesn’t it?
And therein lies the problem. We have a whole system of justice designed to figure out who is liable, imperfect as it is. Legislating to put restrictions on who has access to that system is very dangerous. I’m *not* saying there isn’t room for any reform, but anyone who has every been to law school remembers the cases that tort law was built on–some truly horrific things have happened to consumers and society in the name of corporate expediency and profit.
We should think very carefully about what we’re giving up before we try to legislate the “nuisance factor” out of our justice system.