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2
NAM
The Cost of Litigation:
A New Perspective
with select bibliography
The National Association of Manufacturers
Law Department
Jan S. Amundson, General Counsel
Quentin Riegel, Deputy General Counsel
September 1992
ACKNOWLEDGMENT
A special thanks to Gordon Richards, NAM's assistant vice
president and director of economic analysis, for his assistance and
cooperation in developing and reviewing the statistical information
contained in this report.
©
1992 National Association of Manufacturers
The Cost of Litigation:
A New Perspective
With Select Bibliography
Prepared by the NAM Law Department
Jan S. Amundson, General Counsel
Quentin Riegel, Deputy General Counsel
The National Association of Manufacturers
September 1992
THE COST OF LITIGATION:
A NEW PERSPECTIVE
Last year, the NAM published a compendium of books, articles and other
materials from the past decade about America's litigation explosion, its costs, its
causes and possible solutions. In August 1991, the Council on Competitiveness,
chaired by Vice President Dan Quayle, issued a report, the Agenda for Civil
Justice Reform in America, that asserted the transaction costs in the legal system
are too high. Debate continues over this report, as well as the assumption that
cost and delay in the legal system affects America's competitiveness, as lawyers
from the American Bar Association, the American Trial Lawyers Association, the
American Corporate Counsel Association and other groups stake out different
positions on the reform proposals.
The Council on Competitiveness quoted a Forbes article, citing Peter
Huber's 1988 book, Liability: The Legal Revolution and its Consequences,
estimating $80 billion a year in direct litigation costs and higher insurance
premiums, and a total of up to $300 billion in indirect costs, including the cost of
efforts to avoid liability. Law Professor Marc Galanter of the University of
Wisconsin calls this calculation "casual speculation." A study by a consulting firm
estimates the costs of the tort system in 1987 alone at $117 billion. Another study
pegs the cost of tort litigation in state and federal courts in 1985 at $29 to $36
billion. Close to $24 billion more was spent in other courts or settlements.
The disparity of these estimates and the different cost components they
address highlight the difficulty in arriving at a consensus about the cost of
American litigation. This paper examines the components of the cost of the legal
system in order to give some context to the significance of proposals to modify the
system. Our goal is to present a set of cost figures that are objective and reliable.
That the costs are so high is not necessarily an indictment of the legal
profession or the system. Obviously, much of the cost- of legal services is
beneficial to maintaining an orderly society and distributing assets properly to
enforce contractual, statutory or common law obligations. Just as obvious is the
need to make the system as efficient and cost-effective as possible. Efficiency and
productivity are a day-to-day reality for manufacturers in a free-market economy,
and the legal system also should shoulder its share of the responsibility to improve
productivity to better serve its customers.
TRADING CHARGES: ARE WE TOO LITIGIOUS?
It has even been given a name. Hyperlexis. Too many lawsuits. Too many
laws. Too many lawyers. During the 1970s, Chief Justice Warren Burger and
others began to decry the litigation explosion.¹ Now, we are hearing more and
more charges and countercharges about the increasing number, cost and
complexity of laws and litigation in this country. Litigation reform bills have
come and gone, some implemented, some not.
Jack Anderson says "massive, mushrooming litigation has caused horrendous
ruptures and dislocations at a flabbergasting cost to the nation. The Wall Street
Journal calls it the "most expensive disease in this country
"3 The NAM's
chairman in 1986, Robert Dee, wrote, "Like a plague of locusts, U.S. lawyers
with their clients have descended upon America and are suing the country out of
business."
On the other hand, Marc Galanter calls the debate over litigiousness "a
litany of quarter-truths." In 1986 he found that "[w]hile expenditures for the tort
system have grown more rapidly than government as a whole or the gross national
product, they have lagged behind other entitlement systems, such as public aid,
government health care and social insurance. Nor have tort costs outpaced those
of Workers' Compensation."6
This does not mean, however, that we shouldn't seek effective solutions to
all of those financially draining programs, and the NAM is actively promoting
such solutions. With respect to the many aspects of the issue of litigiousness, each
'Rowe, Jr., Thomas D., American Law Institute Study on Paths to a "Better Way": Litigation, Alternatives,
and Accommodation: Background Paper, 1989 DUKE L.J. 824, 840; Barton, Behind the Legal Explosion, 27 STAN.
L REV. 567 (1975); Manning, Hyperlexis: Our National Disease, 71 Nw. U.L. REV. 767 (1977).
2Anderson, U.S. Has Become a Nation of Lawsuits, Wash. Post, Jan. 25, 1985, at B8, col. 5.
3The American Disease, Wall St. J., Jan. 21, 1992, at A14, col. 1.
"Dee, Blood Bath, 10 ENTERPRISE 3 (Mar./Apr. 1986).
⁵Galanter, Pick a Number, Any Number, Legal Times, Feb. 17, 1992, at 26.
Galanter, M., The Day After the Litigation Explosion, 46 MD. L. REV. 3, 37 (1986).
2
must be examined on its own merits. Are there more cases, or are there more
cases per person? Are the cases taking longer and becoming more expensive?
What kinds of cases are being filed more frequently? Where does the brunt of
litigation fall? Who benefits from the current system?
Former Harvard President Derek Bok has said that rules governing affluent
clients and large institutions are numerous, intricate and applied by highly
sophisticated practitioners, and the cost of legal services grows much faster than
the cost of living. For the bulk of the population, however, costs, delays and
complications make access to legal services appear inequitable and inefficient.⁷
In addition, although there has been a rapid growth in the number of complaints
filed in court, the number of disputes actually litigated does not appear to be rising
much faster than the population as a whole. At the same time, the complexity of
litigation seems to be increasing.⁸
Most disputes are resolved without filing a suit, and increases or decreases
in the number of filings may indicate changes in the propensity of plaintiffs or
defendants to settle claims.9 Much of the increase may be attributable to increases
in certain sectors of litigation, such as divorce proceedings, which dominate state
court dockets. 10 At the federal level, product liability suits increased 272 percent
between 1975 and 1984, while veterans' overpayment cases increased more than
6,600 percent! At the same time, antitrust filings fell 18 percent and class actions
fell nearly 68 percent.¹¹
Beyond the volume of filings and the nature of claims are questions
regarding the linkage between this data and other costs to society: the cost and
availability of insurance, inhibited innovation, defensive medicine and lower-
quality adjudication." A cost-benefit analysis should take into account over-
'Bok, Derek C., A Flawed System of Law Practice and Training, 33 J. LEGAL EDUC. 570 (1983).
"Id
Galanter, The Day After the Litigation Explosion, 46 MD. L. REV. 3, 7 (1986).
10Id at 10.
"Id. at 16.
"Rowe, Jr., Thomas D., American Law Institute Study on Paths to a "Better Way": Litigation, Alternatives,
and Accommodation: Background Paper, 1989 DUKE L.J. 824, 844-45.
3
reaction to court verdicts by individuals exercising an abundance of caution, as
well as the benefits of positive changes in behavior that might accrue from
litigation. 13 One must also look at the costs and benefits to different sectors of
society, since additional benefits for plaintiffs come at the expense of defendants,
lawyers or society, and vice versa.14
The NAM's role at this point is to take a critical look at the quantifiable cost
of litigation and claims settlement in this country today. We have a strong policy
position in favor of product liability reform because the current system is neither
predictable, consistent nor fair, resulting in the withdrawal of certain products
from the market and soaring prices for others to cover the cost of fluctuating
insurance premiums. But product liability litigation is a subset of a much larger
litigation picture, which raises significant cost and resource allocation issues. The
research below will quantify the current costs for all litigation and related claims
settlement. Although not the direct focus of this study, we will also begin to
examine non-monetary costs, such as opportunity costs or the costs of the litigation
experience itself.¹⁵
RESEARCH RESULTS
A number of studies have examined various components of the costs
associáted with resolving disputes. It is important to recognize the differences
between each of these studies and what conclusions can be drawn from them.
Listed below are the costs implicated in resolving disputes in this country. Each
of the studies examines some, but not all, of these components.
However, a new Brookings Institution study suggests that improvements in product safety result more readily
from regulation and bad publicity than from litigation. See Huber, P. & R. Litan, eds., THE LIABILITY MAZE, at
15, The Brookings Institution (1991).
"See Trubek, D., et al., The Costs of Ordinary Litigation, 31 UCLA L. REV. 72, 78 (1983).
15See id. at 79.
4
Compensation to the plaintiff
Legal fees and expenses for the plaintiff
Court costs
Insurance company legal fees
Other defendants' legal fees and expenses
Opportunity costs, the cost of avoiding liability and the value of time
A 1982 study by Kakalik & Robyn began work by the Rand Institute for
Civil Justice to create a "cost map" for the civil justice system.¹⁶ It dealt with
the third component of cost above, and shows that government expenditures in FY
1982 for federal district courts and the 50 states' courts of general jurisdiction for
processing tort cases amounted to $320 million.
A 1983 study by Kakalik & Ross estimated the total annual price tag for
processing all civil cases at $2 billion.¹⁷
A 1986 study by Kakalik & Pace estimated the total nationwide expenditure
for all tort litigation terminated in state and federal courts of general jurisdiction
in 1985 at $29 to $36 billion. 18 This includes expenditures for compensation,
legal fees and related expenses, insurance company claims-processing costs for
claims in suit, the value of litigants' time and the costs to the court system of
processing these cases. An additional $1.8 billion was spent on cases filed in
courts of limited jurisdiction, plus $22 billion more was paid on claims that did not
involve lawsuits.
Tillinghast, a Hartford-based actuarial consulting company, released studies
in 1985 and 1989, estimating the costs of the tort system in 1987 at $117 billion,
quadrupling every 12 years since 1950 19 This study computes costs by adding
together liability insurance costs, medical malpractice self-insurance costs and
16Kakalik, J.S. & A. Robyn, Costs of the Civil Justice System: Court Expenditures for Processing Tort Cases,
Inst. for Civil J., No. R-2888-ICJ (1982).
"Kakalik, J.S. & R.L. Ross, Costs of the Civil Justice System: Court Expenditures for Various Types of Civil
Cases, Inst. for Civ. J., No. R-2985-ICJ (1983).
"Kakalik, J.S. & N.M. Pace, Costs and Compensation Paid in Tort Litigation, Inst. for Civ. J., No. R-3391-
ICJ (1986).
19Sturgis, R.W., The Cost of the U.S. Tort System, Tillinghast, Nelson & Warren, Inc., Nov. 14, 1985;
Tillinghast, Tort Cost Trends: An International Perspective (1989).
5
"alternative" (other self-insured) costs. [It does not include plaintiffs' costs, if
any, for suits that are not filed or not won, nor does it include the amounts of any
recoveries over the insurance coverage limits, nor does it include the value of time
lost or opportunity costs.]
The 1989 report shows that tort cost growth "far outstripped GNP growth
since 1930, increasing 300 times over this 57-year period, compared with a 50-fold
increase for GNP."20 In addition, tort cost escalation showed similar trends when
analyzed in "real" terms, adjusted for inflation and compared in constant dollars.
Since 1950, according to the report's author, tort costs increased by a factor of
13.8, GNP grew by a factor of 3.3, and the U.S. population increased by a factor
of only 1.6.²¹ Other components of the economy rose by the following factors:
Social Security expenditures
17.3
Tort costs
13.8
Government health expenditures
12.8
Public welfare expenditures
9.7
Workers compensation costs
9.7
U.S. government expenditures
5.3
GNP
3.3
Disposable income
2.7
U.S. population
1.6
The 1989 report also shows that cost escalation has moderated for all social
systems except torts. Between 1980 and 1987, tort costs rose at an annual rate,
adjusted for inflation, of 10.6 percent, while government health expenditures rose
5 percent, workers compensation costs rose 4.5 percent, Social Security
expenditures rose 4.2 percent and GNP rose 2.7 percent.22
In addition, tort costs have risen from just over 1 percent of GNP in 1965
to 2.5 percent of GNP in 1987, compared to relatively constant levels of
approximately .5 percent in other free world economies.23
Tillinghast, supra note 19, at 4.
2¹d. at 7.
ⁿId. at 10.
²Id. at 13.
6
The Tillinghast studies on tort costs are based on written premiums for
liability insurance, combined with costs associated with self-insuring for medical
malpractice and an "alternative" cost for expenditures in the nature of self-
insurance. Not included in the scope of the studies are costs associated with non-
tort-related litigation. Thus, the entire criminal justice system, domestic relations,
contracts, employment discrimination and other types of litigation are additional
costs to be factored in.
ECONOMIC CONCEPTS AND SOURCES OF DATA
The NAM has conducted research into expenditures for legal services from
information available from the U.S. government. In general, expenditures for
legal services take place at two levels: (1) expenditures by consumers at the final
sales or gross domestic product (GDP) level, and (2) expenditures by business at
the inputs-to-production or intermediate level. These statistics do not take into
account legal costs for in-house counsel, the value of litigants' time, awards of
damages and indirect costs such as the cost of avoiding liability.
EXPENDITURES BY CONSUMERS
The source for personal consumption expenditures (PCE) is the national
income accounts. Consumption spending for legal services is available in both
current and constant 1987 dollars for 1980 to 1990.
In 1990, Americans spent $3,742.8 billion (in current dollars) for personal
consumption. Legal services, a component of personal consumption expenditures,
totaled $49.2 billion, or 1.31 percent of the total.
The following table gives personal consumption expenditures for legal
services alone in current and constant 1987 dollars, and the ratios of spending for
legal services to total personal consumption expenditures. In addition, forecasts
are provided for 1991 to 1992, based on projections of total PCE.
7
TABLE 1: PERSONAL CONSUMPTION SPENDING FOR LEGAL SERVICES
Current $
Ratio, Legal
Constant $
Ratio, Legal to
Year
(billions)
to total PCE
(billions)
Total Real PCE
1980
13.6
0.78%
26.6
1.09%
1981
16.3
0.85%
28.2
1.14%
1982
18.4
0.89%
28.0
1.12%
1983
21.5
0.95%
28.9
1.10%
1984
24.7
1.00%
30.4
1.11 %
1985
28.6
1.07%
32.8
1.14%
1986
32.1
1.12%
34.6
1.17%
1987
36.8
1.21%
36.8
1.21 %
1988
41.7
1.27%
40.0
1.27%
1989
45.6
1.30%
41.3
1.28%
1990
49.2
1.31%
41.6
1.28%
1991
51.3*
1.32%*
41.7*
1.28%*
1992
53.4*
1.31%*
42.5*
1.28%*
* NAM econometric estimate.
Some trends are immediately apparent. Between 1980 and 1990, personal
consumption expenditures for legal services, in current dollars, increased by 261
percent, and stood at $49.2 billion in 1990.
8
PERSONAL CONSUMPTION OF LEGAL SERVICES
(Current Dollars)
60
50
40
$ Billions
30
20
10
1978
1980
1982
1984
1986
1988
1990
1992
1994
Even after taking inflation into account, personal consumption expenditures
for legal services, in constant 1987 dollars, increased by 56 percent during this
period, or an average rate of 5.6 percent per year, considerably faster than the
growth rate of the overall economy. By comparison, total personal consumption
expenditures increased at an average annual rate of 3.0 percent during the same
period. Thus, while overall expenditures were rising at 3 percent a year,
payments to lawyers were rising at more than 5 percent a year, taking resources
from other expenditure areas and allocating them to legal services. The following
chart graphically displays this increase.
9
PERSONAL CONSUMPTION OF LEGAL SERVICES
(1987 Constant Dollars)
45
40
$ Billions
35
30
25
1978
1980
1982
1984
1986
1988
1990
1992
1994
Similarly, from 1980 to 1990, the ratio of current dollar personal
consumption expenditures for legal services as a percent of total PCE increased
from .78 percent to 1.31 percent, or about 68 percent. Thus, individuals in 1990
spent much more of their total personal consumption expenditures for legal
services.
RATIO OF LEGAL SERVICE EXPENDITURES TO TOTAL EXPENDITURES
(Current Dollars)
1.4
1.3
1.2
1.1
1
0.9
0.8
0.7
1978
1980
1982
1984
1986
1988
1990
1992
1994
10
Accounting for inflation, the ratio of spending for legal services to total PCE
increased from 1.09 percent in 1980 to 1.28 percent in 1990, or more than 17
percent (see graph below). This increased ratio represents real growth for the
legal services industry, all attributable to personal consumption. It indicates that
more legal services were used.
RATIO OF LEGAL SERVICE EXPENDITURES TO TOTAL EXPENDITURES
(1987 Constant Dollars)
1.35
1.3
1.25
1.2
1.15
1.1
1.05
1
1978
1980
1982
1984
1986
1988
1990
1992
1994
During 1982 and 1983, this ratio actually dropped by 3.5 percent, then
began a steep rise that began to level out at about 1.28 percent from 1988 to 1990.
Coincidentally, as the economy has slowed during this period, law firms have felt
considerable pressure to moderate increases in their fees, and competitive pressures
have influenced restructuring in the legal profession. In addition, some companies
have focused additional attention on bringing legal work in-house, and professional
legal fee auditors have gained increased prominence scrutinizing the quality and
quantity of legal services provided.
BUSINESS SPENDING
The source for business spending is the Commerce Department (Bureau of
Economic Analysis) input-output tables for the economy. These are produced only
at five-year intervals. The most recent data, for 1987, is still unpublished; the
11
NAM has obtained the preliminary estimates. Prior data is from the 1982 input-
output table. All the business data is in current rather than constant dollars.
Business spent $38.8 billion for legal services in 1982, and $75.8 billion in
1987, an increase of 95.4 percent in five years. In 1982, business spending for
legal services came to 1.42 percent of total spending for intermediates (i.e.,
spending in the production of goods or services for the final sales level). In 1987,
this figure had increased to 2.16 percent (see table below). Thus, just as with
personal consumption expenditures, legal services constituted a higher share of
business expenditures from 1982 to 1987.
Business Expenditures ($ Billions)
1982
1987
Legal Services
38.8
75.8
All Intermediates
2,732.2
3,502.8
Ratio
1.42%
2.16%
Source: U.S. Dept. of Commerce, Input-Output Tables, published in "Survey of
Current Business," July 1991 at 49 and April 1992 at 71.
If the increased rate of spending for legal services in the business sector increased
between 1987 and 1992 at the same rate as it did in the 1982 to 1987 period,
business in 1992 will spend $148.1 billion for legal services. However, this
calculation must be regarded as purely speculative because business spending was
substantially affected by different economic conditions in the latter period. One
useful way to check the plausibility of estimates of this type is to compare the
growth rate of business to personal consumption expenditures.24
From 1982 to 1987, personal consumption expenditures for legal services
in current dollars increased by 100 percent, clearly the same order of magnitude
as the 95.4 percent increase in business spending for legal services. 25 However,
24 Since business spending is available only in current dollars, the appropriate comparison is PCE in current
dollars.
25 Since PCE for legal services in constant dollars increased by only 31.2 percent from 1982 to 1987, the real
magnitude of the increase for business was also in the same general range.
12
using the NAM projections, PCE for legal services in current dollars increased at
a slower rate between 1987 and 1992: 45.1 percent. If business spending
increased by the same order of magnitude, the implied figure for 1992 is in the
area of $110 billion. The following chart summarizes these estimates.
BUSINESS EXPENDITURES FOR LEGAL SERVICES
(1987-92 estimated)
160
140
120
100
80
60
40
20
1982
1987
1992
Assuming 95.4% increase for 1987-92
-
Assuming 45% increase for 1987-92
These two estimates, $110 billion and $148 billion, can be taken as
parametric boundaries for business spending on outside legal services in 1992.
While business spending increased by the same order of magnitude as consumer
spending from 1982 to 1987, it is not known if this was also the case from 1987
to 1992. Overall personal consumption expenditures slowed sharply from 1988
onward, reflecting factors such as high levels of debt and a deterioration in balance
sheets. On the other hand, business spending on legal services may have increased
more rapidly, since the causes of demand for legal services by business include
factors that do not affect consumers, such as compliance with federal statutes and
regulations and increased litigation in such areas as employment discrimination and
product liability.
These statistics encompass direct transfers to law firms for services,
including photocopying, travel and miscellaneous items. They do not include
payments to in-house counsel, such as insurance company lawyers working within
those companies to handle claims without the assistance of outside counsel. They
also do not include payments by companies to in-house counsel in other business
13
sectors. The Bureau of Labor Statistics estimates that in 1990 there were 586,581
lawyers working in this country, but it is impossible to tell how many of these
were in-house counsel not included in the input-output tables of the Department of
Commerce. 26 Suffice it to say that millions were spent on in-house legal counsel
that do not appear in the figures above.
INDUSTRY SECTOR STATISTICS
The input-output tables showing business expenditures for legal services are
broken into subcategories based on Standard Industrial Classifications (SICs). In
1982, the largest sectors using legal services were (in millions of dollars):
Classification
Industry
Expenditures
69.0200
Retail trade, except eating and drinking
5,900.3
69.0100
Wholesale trade
1,578.9
71.0201
Real estate
971.0
74.0000
Eating and drinking places
807.7
71.0100
Real estate: owner-occupied dwellings
694.9
70.0400
Insurance carriers
574.4
70.0100
Banking
452.4
73.0303
Accounting, auditing & bookkeeping, & misc. serv. n.e.c.
324.5
73.0105
Management & consulting services, testing & research labs
287.6
73.0302
Engineering, architectural & surveying services
272.2
99.3009
State & local gov't purchases, other gen'l gov't activities
267.8
70.0200
Credit agencies other than banks
249.6
70.0500
Insurance agents, brokers & services
236.3
77.0200
Hospitals
233.0
97.0000
Federal government purchases, non-defense
223.9
26.0100
Newspapers
217.8
66.0000
Communications, except radio & TV
213.4
84.0000
Exports
181.5
77.0100
Doctors and dentists
180.5
72.0100
Hotels and lodging places
170.4
25 Of all lawyers, the Bureau of Labor Statistics reports that 388,581 are waged or salaried and 198,000 are
self-employed. Not all of the 388,581 salaried lawyers are employed as in-house corporate counsel; we assume
that a large number of them are employed by their law firms. They would therefore be counted by the BLS as
salaried, but their income would be counted by the Department of Commerce as a payment to a third party. Further
information about the number of in-house counsel is unavailable from the government. Prentice Hall Law &
Business will be publishing a report shortly about the nation's largest corporate law departments.
14
Classification
Industry
Expenditures
51.0101
Electronic computing equipment
154.3
98.0001
State & local gov't purchases, elementary & secondary schools
153.1
70.0300
Security and commodity brokers
152.7
8.0000
Crude petroleum and natural gas
135.3
73.0104
Computer and data processing services
135.0
96.0000
Federal gov't purchases, national defense
133:5
67.0000
Radio and TV broadcasting
129.7
65.0300
Motor freight transportation and warehousing
129.4
73.0109
Other business services
123.2
68.0100
Electric services (utilities)
111.0
77.0402
Colleges, universities and professional schools
109.7
26.0501
Commercial printing
106.3
11.0201
New construction: industrial buildings
102.7
These input-output tables do not include payments to in-house counsel, nor
transfers in the nature of damage awards, since such awards are not payment for
services per se. Payments to law firms include payments for such things as
photocopying, travel and miscellaneous items.
We have also examined recent trends within specific industries to see how
their legal cost increases compare with those of all standard industrial
classifications (including non-industry sectors). The following chart shows how
some industries compare.
SECTORAL CHANGES IN LEGAL SERVICE EXPENDITURES
1982 1987 Actual
900
800
700
600
$ Millions
500
400
300
200
100
0
New construction
Motor vehs. & eqpt
Doctors/dentists
Chemicals
Aircraft & parts
Colleges
1982
1987
15
UNQUANTIFIABLE COSTS
In his book, Peter Huber guessed that indirect costs account for up to $300
billion in costs attributable to America's liability system. This was based on the
assumption that "doctors spend $3.50 in efforts to avoid additional charges for
each $1 of direct tax [liability] they pay." It is impossible to accurately quantify
the indirect costs that society incurs to avoid liability. Nevertheless, there are
recognizable manifestations of such avoidance: Doctors are criticized for
practicing excessive "defensive medicine," manufacturers discontinue businesses
that are too risky and companies settle questionable claims to avoid the expense
of litigation.
In addition, there are direct costs from claims and litigation that actually
occur. Lawsuits sometimes take over the lives of the defendants. Lengthy
discovery requests, depositions, interrogatories and other behind-the-scenes
maneuvering can consume tremendous amounts of time, taking employees and
management, including chief executive officers, away from other productive
activities. More time spent in the courtroom or the lawyer's office means less
time spent on the plant floor, in the laboratory or at the drafting table.
CONCLUSION
In 1992, consumer spending on legal services will total approximately $53
billion, while business will spend between $110 and $148 billion. The NAM
estimates that, together, business and consumers will spend between $163 and
$201 billion on legal services in 1992.2 Countless billions more are paid to
salaried workers, management and in-house lawyers, redirecting productive
I7
It is to be emphasized that business spending for legal services does not enter in GDP. Outside the
economics profession, it is not widely known that GDP is not a total production measure, but a final sales or value-
added concept. Technically, GDP is equal to total production less all intermediate inputs. This becomes clearer
when it is borne in mind that GDP is the sum of PCE, plus business investment (structures, equipment and
inventories), plus government purchases, plus exports, less imports. None of these categories includes any
intermediate production.
For this reason, it is best to consider consumer and business expenditures for legal services separately.
It is equally obvious in this context that the two cannot be added together and expressed as a share of GDP, since
business spending on intermediate legal services is netted out in the calculation of GDP.
16
resources away from business to claims resolution. And finally, claims that are
actually paid sometimes include substantial amounts for punitive damages.
These estimates are the most precise that the NAM can obtain. They are
based in each instance on Commerce Department data, obtained from a broad
survey of firms in every sector of the economy. They should, therefore, be
regarded as more accurate than anything provided by private studies relying on
smaller samples of firms.
The appendix is a select compilation of research and other publications
from the past five to ten years relating to the components of the cost of the legal
system.
17
APPENDIX OF RESEARCH MATERIALS RELATING TO COSTS
LEGAL PERIODICALS
Manning, Hyperlexis: Our National Disease, 71 Nw.
U. L. REV. 767 (1977).
Barton, Behind the Legal Explosion, 27 STAN. L. REV.
Miller, Arthur R., The Adversary System: Dinosaur or
567 (1975).
Phoenix, 69 MINN. L. REV. 1 (1984).
Blake, Eliot M., Rumors of Crisis: Considering the
Nye, David J. & Donald G. Gifford, The Myth of the
Insurance Crisis and Tort Reform in an Information
Liability Insurance Claims Explosion: An Empirical
Vacuum, 37 EMORY L.J. 401 (1988).
Rebuttal, 41 VAND. L REV. 909 (1988).
Bok, Derek C., A Flawed System of Law Practice and
Roper, The Propensity to Litigate in State Trial Courts,
Training, 33 J. LEGAL EDUC. 570 (1983).
1981-1984, 1984-1985, 11 JUST. SYS. J. 262 (1986).
Brunet, Edward, Measuring the Costs of Civil Justice,
Rosenberg, Let's Everybody Litigate?, 50 TEX. L. REV.
(Book Review), 83 MICH. L. REV. 916 (1985)
1349 (1972).
(reviewing Kalakik & Ross, Costs of the Civil Justice
System: Court Expenditures for Various Types of Civil
Rowe, Jr., Thomas D., American Law Institute Study on
Paths to a "Better Way": Litigation, Alternatives, and
Cases).
Accommodation: Background Paper, 1989 DUKE L.J.
Civiletti, Benjamin, Zeroing In on the Real Litigation
824.
Crisis: Irrational Justice, Needless Delays, Excessive
Costs, 46 MD. L. REV. 40 (1986) (comment on
Saks, In Seach of "The Lawsuit Crisis," 14(2) L. MED.
Galanter article).
& HEALTH CARE 77 (1986).
Crampton, The Trouble with Lawyers (and Law
Saks, Michael J., If There Be a Crisis, How Shall We
Schools), 35 J. LEGAL EDUC. 359 (1985).
Know It? 46 MD. L REV. 63 (1986) (commenting on
Galanter article).
Cutler, Conflicts of Interest, 30 EMORY L.J. 1015
Samuelson, Robert J., The Litigation Explosion: The
(1981).
Wrong Question, 46 MD. L. REV. 78 (1986)
Dobbs, Dan B., Can You Care for People and Still
(commenting on Galanter article).
Count the Costs? 46 MD. L. REV. 49 (1986) (comment
on Galanter article).
Sanders J., & C. Joyce, Off to the Races: The 1980's
Tort Crisis and the Law Reform Process, 27 Hous. L.
Galanter, Marc, The Day After the Litigation Explosion,
REV. (1990).
46 MD. L. REV. 3 (1986).
Schuck, Peter & Robert L Rabin, Tort System on Trial:
Galanter, Marc, Reading the Landscape of Disputes:
The Burden of Mass Toxics Litigation. Agent Orange
What We Know and Don't Know (and Think We Know)
on Trial: Mass Toxic Disasters in the Court (enlarged
About Our Allegedly Contentious and Litigious Society,
ed.), 98 YALE L.J. 1281 (1989).
31 UCLA L. REV. 4 (1983).
Silberman, Will Lawyering Strangle Democratic
Galanter, Marc, The Life and Times of the Big Six; or,
Capitalism?, REGULATION 15 (Mar.-Apr. 1978).
the Federal Courts Since the Good Old Days, 1988 WIS.
L. REV. 921.
Trubek, David M., Austin Sarat, William L. F.
Felstiner, Herbert M. Kritzer & Joel B. Grossman, The
A-1
Cost of Ordinary Litigation, 31 UCLA L. REV. 72
R-2881-ICJ The Civil Jury; Trends in Trials and
(1983).
Verdicts, Cook County, Illinois, 1960-1979. M.A.
Peterson, G.L. Priest. 1982.
Van Valkenburg, E. Walter, Inside the Litigious Society
(Book Review), 85 COLUM. L. REV. 216 (1985)
R-2881/1-ICJ The Civil Jury: Trends in Trials and
(reviewing JEROLD S. AUERBACH, JUSTICE WITHOUT
Verdicts, Cook County, Illinois, 1960-1979. Executive
LAW?).
Summary. M.A. Peterson, G.L. Priest. 1982.
Winter, R.A., The Liability Crisis and the Dynamics of
R-2888-ICJ Costs of the Civil Justice System: Court
Competitive Insurance Markets, 5 YALE J. ON REG. 455
Expenditures for Processing Tort Cases. J.S. Kakalik,
(1988).
A. Robyn. 1982.
NEWSPAPERS/PERIODICALS
R-2985-ICJ Costs of the Civil Justice System: Court
Expenditures for Various Types of Civil Cases. J.S.
Granelli, Long Trials Play Havoc With Courts, Nat'l
Kakalik, R.L. Ross, 1983.
L.J. 1, Dec. 27, 1982.
R-3042-ICJ Costs of Asbestos Litigation. J.S. Kakalik,
Magee, S., A Taxing Matter: The Negative Effects of
P.A. Ebener, W.L.F. Felstiner, M. Shanley. 1983.
Lawyers on Economic Activity, Economic Insights,
(Jan/Feb. 1991).
R-3084-ICJ Regulating the Content and Volume of
Litigation: An Economic Analysis. G.L. Priest. 1983.
Olson, W., California Counts the Costs of Lawsuit
Mania, Wall St. J., June 3, 1992, at A15.
R-3391-ICJ Costs and Compensation Paid in Tort
Litigation. J.S. Kakalik, N.M. Pace. 1986.
American Competitiveness, Wall St. J., Aug. 14, 1991.
R-3410-ICJ New Evidence on the Frequency and
Do We Have Too Many Lawyers?, Time, Aug. 26,
Severity of Medical Malpractice Claims. P.M. Danzon.
1991.
1986.
Less Litigation, More Justice, Wall St. J., Aug. 14,
R-3421-ICJ Costs and Compensation Paid in Aviation
1991.
Accident Litigation. J.S. Kakalik, E.M. King, M.
Traynor, P.A. Ebener, L.O. Picus. 1988.
Courting Disaster: Is America's Civil Liability System
Totally Out Of Control? World, Apr. 1986, at 30.
R-3466-ICJ Civil Juries in the 1980s: Trends in Jury
Trials and Verdicts in California and Cook County,
Enough Is Enough, Forbes, Apr. 20, 1987, at 56.
Illinois. M.A. Peterson. 1987.
The Liability Crisis: Who's At Risk?, Chief Executive,
R-3583-ICJ Trends in Tort Litigation: The Story
Summer, 1986, at 29.
Behind the Statistics. D. Hensler, M.E. Vaiana, J.S.
Kakalik, M.A. Peterson. 1987.
Modern Tort Law and the Current Insurance Crisis,
Time, March 24, 1986, at 18.
R-3668-ICJ Product Liability and the Business Sector:
Litigation Trends in Federal Courts. T. Dungworth.
1988.
RAND INSTITUTE ABSTRACTS
R-3885-ICJ Statistical Overview of Civil Litigation in
the Federal Courts. T. Dungworth, N.M. Pace. 1990.
(available from The Institute for Civil Justice, The
RAND Corporation, 1700 Main Street, P.O. Box 2138,
P-5921 Costs and Benefits of the Tort System if
Santa Monica, CA 90407-2138 (310) 393-0411, ext.
Viewed as a Compensation System. P. Munch. June
6686 or 7433.
1977.
A-2
P-7210-ICJ Summary of Research Results on the Tort
Memorandum on MCSC Data, Alliance of Am.
Liability System. D. Hensler. March 1986.
Insurers, Greg Heidrich (Apr. 25, 1986).
P-7243-ICJ Costs and Compensation Paid in Tort
Public Policy Considerations Underlying Insurance Data
Litigation: Testimony Before the Joint Economic
Reporting, Ins. Acctg. & Systems Ass'ns (June 1987).
Committee of the U.S. Congress. J.S. Kakalik, N.M.
Pace. July 1986.
P-7271-ICJ Summary of Research Results on Product
BOOKS
Liability. D. Hensler. Oct. 1986.
BRODEUR, PAUL, OUTRAGEOUS CONDUCT: THE
P-7287-ICJ Trends in California Tort Liability
ASBESTOS INDUSTRY ON TRIAL (N.Y.: Pantheon
Litigation. D. Hensler. March 1987.
Books, 1985).
FERGUSON, ALBERT, THE LIABILITY CRISIS AND How
SCHOLARLY PAPERS
TO SOLVE IT (Pittsburgh, Pa.: Claymore Press, 1987).
American College of Trial Lawyers, Recommendations
FLANGO, V., R. ROPER & M. ELSNER, THE BUSINESS
on Major Issues Affecting Complex Litigation, 90
OF STATE TRIAL COURTS (1983).
F.R.D. 207 (1981).
HUBER, PETER, LIABILITY: THE LEGAL REVOLUTION
Tort Policy Working Group, Report of the Tort Policy
AND ITS CONSEQUENCES (N.Y.: Basic Books, 1988).
Working Group on the Causes, Extent, and Policy
Implications of the Current Crisis in Insurance
LIEBERMAN, J., THE LITIGIOUS SOCIETY (1981).
Availability and Affordability (U.S. Dept. of Justice
1985).
LIABILITY: PERSPECTIVES AND POLICY (Washington,
D.C.: The Brookings Institution) (Litan, R.E. & C.M.
TRADE ASSOCIATION PUBLICATIONS
Winston, eds. 1988).
An Analysis of the Causes of the Current Crisis of
MCLAUCHLAN, W., FEDERAL COURT CASELOADS
Unavailability and Unaffordability of Liability
(1984).
Insurance, Nat'l Ass'n of Att'ys Gen., Gail E. Tverberg
(May 1986).
O'CONNELL, JEFFREY &C. BRIAN KELLY, THE BLAME
GAME, (Lexington, Mass.: Lexington Books, 1987).
Civil Justice Reform Data, AAI, AIA, Nat'l Ass'n of
Ind. Insurers (1986).
OLSON, WALTER, THE LITIGATION EXPLOSION (N.Y.:
Penguin Books, 1991).
Documenting the Case for Tort Reform: The Cost of
Expanding Tort Liability Doctrines Beyond Traditional
SCHUCK, P.H., AGENT ORANGE ON TRIAL: MASS
Common Law, Nat'l Ass'n of Ind. Insurers (May 16,
Toxic DISASTERS IN THE COURTS (Cambridge: Harv.
1986).
U. Press, enlarged edition 1987).
Federal Tort Policy Report: An Update on the Liability
SCHUCK, P.M., TORT LAW AND THE PUBLIC INTEREST
Crisis, Ins. Information Inst. (Mar. 30, 1987).
(N.Y.: W.W. Norton, 1991).
The Insurance Crisis: A Study in Deception, Ass'n of
SUGARMAN, S., DOING AWAY WITH PERSONAL INJURY
Trial Lawyers of Am.
LAW: NEW COMPENSATION MECHANISMS FOR
VICTIMS, CONSUMERS, AND BUSINESS (N.Y.: Quorum
Legal Defense: A Large and Growing Insurance Cost
Books, 1989).
ISO Insurance Issues Series, Ins. Services Office, Inc.
(Dec. 1989).
A-3
GAO REPORTS
Liability Insurance: Effect of Recent "Crisis" on
Business and Other Organizations (Washington, D.C.:
GPO, July 1988).
Product Liability: Extent of Litigation "Explosion" in
Federal Courts Questioned (Washington, D.C.: GPO,
Jan. 1988).
Product Liability Verdicts and Case Resolution in Five
States (Washington, D.C.: GPO, Sept. 1989).
A-4
I
1331 Pennsylvania Avenue, NW
Suite 1500 - North Tower
Washington, DC 20004-1703
(202) 637-3000
BUSH QUAYLE '92 PRESS ID:202-336-7330
JUL 15'92
7:39 No.001 P.01
BUSH
QUAYLE
92
Via Telecopy
July 15, 1992
TO:
Steve Provost
FROM:
Fred Malck
Here are a few lines that may be helpful in your speech preparation.
Factures i made SC clary logo face HG
loyer ya
- (cagnet + west production elder
1030 15th St. NW, Washington, DC 20005
Paid for by Bush-Quayle '92 Primary Committee. Inc.
Printed on Recycled Paper
BUSH QUAYLE '92 PRESS
ID:202-336-7330
JUL 15'92
7:39 No 001 P.02
Possible Lines for POTUS for July/August :30s
These lines envision GB in interview format, living room setting,
leaning forward toward interviewer, speaking with passion.
America is still the greatest nation on earth. but we face
some big problems. I know we can solve those problems by
returning to the values that made us great. Promoting the
family as the basic unit of society. Teaching respect for
law and order and enforcing the law with speed and certainty.
Promoting thrift among our citizens. and makingithe government
live within its means. That's what I believe.
I believe in three basic principles and I will use them to
lead this nation. Number one, we won't have a healthy,
growing economy until we balance the federal budget. Number
two, government policies should encourage family values and
provide incentives for families to come together and stay
together. And number three, we are a nation of laws.
Every citizen must respect the law and the President must
enforce it. That's what I'll do, if the American people
support these principles.
Government can't solve all our problems. You can trace this
country's problems to the fact that some people have lost
sight of their basic morality. There are absolute standards
of right and wrong that we know and recognize in this country.
Our children must be taught the difference in right and wrong
and our adults must be held accountable if they don't respect
the difference in right and wrong. I'm going to speak out
for the basic moral code that unites us, whether certain
cultural elites like it or not.
When I say I believe in family values I don't just mean
that candidates should travel with their children. I
mean that children should have the right to pray in their
public school. That parents should have the right to
choose what school their children attend. That government
policy should discourage single mothers from having more
children, not encourage it. And, yes, that parents have
a right to know if their teenaged daughter decides to have
an abortion.
Let's face the facts. You and I both know, and the American
people know, that this recession and all our economic problems
are caused by the federal government spending too much money
and running a deficit. We will have a healthy, growing
economy over a long period again only when the federal
government balances its budget. I'd like to have Congress'
BUSH QUAYLE '92 PRESS ID: 202-336-7330
JUL 15'92
7:40 No. 001 P.03
-4-
help in balancing the budget. But, I will cut federal spending.
I will reduce this deficit. With or without their help.
I have said from the very beginning that we will only have a
growing economy when the federal government stops spending
more than it takes in. Congress disagrees. I've compromised
with them--at great political cost to myself--I've cajoled
them and I've confronted them. But, the spending keeps right
on growing. No more. I'm using my veto to cut federal
spending and to do it right now. That's what I believe in
and that's what I'm going to do.
You know, you can trace a lot of our social problems directly
to the viscious cycle of welfare dependency we have created
in this country. I have strong views about changing that
system and we're doing it right now. My welfare plan is
based on family values. We will give families the incentive
to stay together. Fathers will be financially responsible
for their children. I will cut welfare benefits for single
mothers who have more children. Everyone on welfare will
receive mandatory job training, then we'll get them a mandatory
job. From now on, welfare is a temporary helping hand. Not
a permanent way of life.
You watched the riots in Los Angeles with the same horror that
I did. Who was responsible? The individual criminals who did
the killing and burning. A generation in our cities has grown
up without being taught respect for law and order, the difference
in right and wrong. Well, now we're going to teach them.
The Civilian Training Corps will teach them the difference,
teach them to respect the law, and give them the discipline
and work ethic needed to succeed in life. That's my program,
based on my basic belief in traditional American values.
-intel. underpinnings
-anecdotes
Solzenitsyn
THE WHITE HOUSE
WASHINGTON
June 26, 1992
MEMORANDUM TO ALL WRITERS/RESEARCHERS
FROM:
DAN MC GROARTY Mur
SUBJECT: MEETING WITH HENSON MOORE
Henson praised the following "formula" used in the Texas
State Convention speech:
Americans want families -- strong and united. Good schools,
safe neighborhoods, a job-creating economy -- and a world at
peace.
Henson points out that the campaign shares his enthusiasm
for this formulation. This shorthand should be built into each
speech.
# # #
06/17/92
09:38
REPUBLICAN WHIP OFFICE WASH. DC
002
Members Who Voted
Members Who Voted
For BBA in 1990 and
For BBA in 1990
Members Who Cosponsored
Didn't Cosponsor Stenholm
Stenholm bill
Cosponsored Stenholm bill
And Voted AGAINST BBA
But Voted AGAINST BBA
But Voted AGAINST BBA
Annunzio
Coleman (TX)
Horn
Bustamante
Gaydos
Martinez
McNulty
Schroeder
Kleczka
Mfume
Traficant
Lantos
Murphy
Rose
Neal (MA)
slaughter
olin
Tallon
Members Voting Against
Members Voting Against
the BBA in 1990 but
the BBA in 1990
Cosponsored Stenholm bill
Didn't Cosponsor Stenholm
and Voted FOR BBA
And Voted FOR BBA
Anderson
Bruce
Glickman
Donnelly
Kennedy
Feighan
Frost
Hoyer
Members Who Voted
Members Who Voted
For BBA in 1990 and
For BBA in 1990
Members Who Cosponsored
cosponsored Stenholm bill
Didn't Cosponsor Stenholm
Stenholm bill
But Voted AGAINST BBA
And Voted AGAINST BBA
But Voted AGAINST BBA
Coleman (TX)
Horn
Annunzio
Bustamante
Gaydos
Martinez
Kleczka
McNulty
Schroeder
Lantos
Mfume
Traficant
Murphy
Rose
Neal (MA)
slaughter
olin
Tallon
Members Voting Against
Members Voting Against
the BBA in 1990 but
the BBA in 1990
Cosponsored Stenholm bill
Didn't Cosponsor Stenholm
and Voted FOR BBA
And Voted FOR BBA
Anderson
Bruce
Glickman
Donnelly
Kennedy
Feighan
Frost
Hoyer
JUL- 1-92 WED 23:21 POLICY DEVELOPMENT
P.01
JUSTITLE DOMINA PRO SEQUITUR MO OF
Office of Policy Development
United States Department of Justice
10th Street and Constitution Avenue, N.W.
Washington, D.C. 20530
July 2, 1992; 11:13 am
TO:
Ed Walters
FAX: 456-6218
White House Speechwriter
Telephone: 456-7750
FROM:
Kevin R. Jones
Voice: (202) 514-4604
Deputy Director
FAX: (202) 514-8639
Room 4245, Main
Total Pages (excluding this cover): 5
Additional Message:
Attached as you requested is the Department's most current statement on the
Freedom of Choice legislation, which was signed by the Attorney General and sent to
Congress yesterday.
JUL- 1-92 WED 23:22 POLICY DEVELOPMENT
P.02
Office of the Attorney General
Washington, B. C. 20530
July 1, 1992
Honorable Edward M. Kennedy
Chairman
Committee on Labor and Human Resources
U.S. Senate
Washington, D.C. 20510-63,00
Dear Mr. Chairman:
This letter presents the views of the Department of Justice
concerning the amended versions of the "Freedom of Choice Act of
1991, introduced as companion bills H.R. 25 and S. 25
(collectively "the bill"). The Department strongly opposes
enactment of this legislation. The recent amendment introduced
by Senator Mitchell, making minor changes to the bill, fails to
confront the bill's most serious flaws. For the reasons below,
if the bill were presented to the President, I and the
President's other senior advisors would recommend that he veto
this legislation.
The revised bill would still prohibit States from enacting
reasonable regulatory restrictions on abortions clearly permitted
under Roe V. Wade and its progeny. It would also represent a
doubtful exercise of Congress' power under the Fourteenth
Amendment and would rest on a questionable link to Congress'
power to regulate interstate commerce.
I. The Revised Bill
The bill is described by its sponsors as a "codification" of
much of the complex regime of abortion legislation erected by the
Supreme Court since its 1973 decision in Roe v. Wade, 410 U.S.
113 (1973). The bill as revised expressly states its purpose to
be "to achieve the same limitations as provided, as a
constitutional matter, under the strict scrutiny standard of
review enunciated in Roe v. Wade and applied in subsequent cases
from 1973 to 1988.' Section 2 (b). Because of its sweeping
language, however, the bill would enact a federal statutory
regime of abortion regulation that leaves the States with
substantially less regulatory authority than under Roe or the
Supreme Court's decision earlier this week in Planned Parenthood
of Southeastern Pa. V. Casey.
JUL- 1-92 WED 23:22 POLICY DEVELOPMENT
P.03
The essence of the bill remains substantially unchanged: "a
State may not restrict the freedom of a woman to choose
whether or not to terminate a pregnancy before fetal viability,"
and after viability the state may not restrict abortion if the
abortion "is necessary to protect the life or health of the
woman." Section 3 (a) (1) and (2)-
The revised bill would thus still allow abortions for any
reason, even sex selection, before the fetus becomes "viable."
With no definition or standards for viability, it appears that
the bill could leave that determination to the person performing
the abortion. Thus a single health care professional's judgment
that a particular fetus was not "viable" would be conclusive and
binding on the State, whether or not the fetus satisfied other
objective criteria of "viability" such as a test for weight. It
is not even clear that the professional judgment must be rendered
by a medical doctor.
Even after fetal viability, with no standards for
determining what constitutes the "health of the woman" justifying
an abortion, the revised bill would still go well beyond merely
"codifying" Roe. As we have explained in earlier statements and
testimony, we believe that the term "health" in section 3 (a) (2)
would likely be construed broadly. See Doe V. Bolton, 410 U.S.
179 (1973). The Court there noted that the medical judgment must
be made in light of all factors, including "emotional,
psychological, [and] familial" factors. Id. at 192. It is
likely, therefore, that even after viability an abortion
performed for any reason that a medical professional (who, again,
apparently need not be a licensed physician) deemed "relevant to
the well-being" of the woman, 1d., would probably be protected
under the bill as "necessary to preserve the life or health of
the woman." Section 3 (a) (2) -
The revised bill purports to address a few of the concerns
the Department has raised previously. These changes, however, do
not fully meet the Department's concerns on the issues they
address, and leave many more serious flaws unaddressed.
For example, the revised bill allows some degree of parental
participation in the decision of a minor to undergo an abortion.
However, it provides only that the State could require the minor
to "involve" the parent in the decision. Section 3 (b) (3) - The
term "involve" is left undefined. It is troubling that the
bill's authors chose an inherently vague term over more definite
words such as "notify" and "consent." It is simply unclear
whether the bill would exclude parental consent requirements.
The bill could thus be read to invalidate laws in the twenty-one
States that require some form of parental consent, including the
Pennsylvania abortion statute upheld this week by the Supreme
Court in Casey.
- 2 -
JUL- 1-92 WED 23:23 POLICY DEVELOPMENT
04
So read, the bill would go well beyond Roe and later cases.
In Bellotti V. Baird, 443 U.S. 622, 647 (1979), for example, a
plurality of the Court ruled that a parental consent requirement
for abortions by minors would be constitutional if it contained a
judicial bypass provision. And in Planned Parenthood Association
V. Ashcroft, 462 U.S. 476, 493-94 (1983), the Court upheld
another parental consent provision with a judicial bypass. The
bill could be read to overrule these cases to the extent they
permitted such consent provisions. The bill would not,
therefore, codify Roe as "applied in subsequent cases from 1973
to 1988," as it claims to do. Section 2(b).
Although the revised bill would permit States to protect the
rights of unwilling individuals to refrain from performing
abortions, the bill does not permit institutions to refuse to
perform abortions. Thus, a hospital whose board or sponsoring
organization was opposed to abortions could nevertheless be held
liable for refusing to perform them. Indeed, the bill could now
be read to require institutions to hire willing individuals in
order to provide abortion services. Similarly, although the
Senate bill has been amended to allow a state to refuse to pay
for abortions, section 3 (b) (2), nothing in that provision or any
other part of the bill appears to permit a state to deny the use
of a state facility to a woman who was willing to pay for the
abortion. The bill might even be construed to require the states
to provide state facilities for abortions where private
facilities are unavailable.
Further, the revised bill contains no exception for informed
consent and waiting periods. State laws requiring that factual
information concerning the nature of the abortion procedure and
available alternatives be made available to a woman twenty-four
or forty-eight hours prior to an abortion would thus be
invalidated. Thirty-two states currently have such laws. The
purpose of such provisions is typically to ensure that the
woman's decision to abort is free, reflective and informed. That
state purpose would be illegitimate under the bill.
II. Congressional Authority
The bill has been significantly revised to address the
Congress' power to adopt it. The bill asserts that Congress has
the authority to enact the bill under both the Commerce Clause
(Art. I, § 8) and section 5 of the Fourteenth Amendment of the
Constitution. See section 2 (a) (4). We continue to doubt whether
Congress has authority to enact this legislation on the proffered
grounds.
In commenting on earlier versions of this legislation, we
criticized the suggested reliance on Congress' power under
Section 5 of the Fourteenth Amendment, arguing that the Section 5
authority does not extend to fixing the content of the
- 3 -
JUL- 1-92 WED 23:24 POLICY DEVELOPMENT
P.05
amendment's substantive provisions. We are therefore pleased
that the bill now acknowledges that "Congress may not by
legislation create constitutional rights" and purports to create
only "statutory rights."
Having recognized that Congress may not create
constitutional rights or alter their content, the bill's drafters
have now sought to assert a connection between recognized
constitutional rights and the statutory right to abortion that
the bill would adopt. That assertion, however, is unpersuasive.
For example, the bill suggests that the statutory rights it
creates would protect "liberty." Section 2 (a) (4). The
Fourteenth Amendment, however, prohibits only certain
deprivations of liberty, for instance those that have no rational
relationship with a legitimate state interest; were it to
prohibit all deprivations of liberty, it would forbid an enormous
range of laws including laws against homicide. Thus, to say that
a proposed federal statute prevents the States from restricting
liberty in general is to say almost nothing about whether the
federal statute in any way implements the commands of the
Fourteenth Amendment. The bill also asserts that state
restrictions on abortion interfere with women's exercise of
constitutional rights unrelated to abortion. Section 2 (a) (2) (D).
The bill does not say what these other rights are, so it is
impossible to tell how it would keep the States from interfering
with them.
As we have noted with respect to earlier versions of this
legislation, Congress' power under the Commerce Clause has been
held to be quite broad. It is likely that Congress could enact
some legislation concerning abortion pursuant to that power. The
arguments now put forward to support this legislation under the
Commerce Clause, however, are still troublesome. For example,
the bill finds that restrictions on abortion "burden interstate
commerce by forcing women to travel from States in which legal
barriers render contraception or abortion unavailable or unsafe
to other States or foreign nations." Section 2 (a) (2) (A) (ii). We
fail to see how any increased interstate travel resulting from
diverse State laws regulating abortion would constitute a burden
on commerce. Moreover, the argument that travel from one
jurisdiction to another justifies a single national abortion law
on commerce grounds proves too much, for it could justify uniform
federal laws on any subject, which is inconsistent with the
notion of the federal government as a government of limited
powers.
Finally, in our view Congress' intervention in this area
would usurp a field of legislation traditionally reserved to the
States. As must be obvious from the public reaction this week to
the Supreme Court's Casey decision, the policy choices in this
area are difficult and national consensus is elusive. The
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P.06
political outcomes of fifty distinct state processes would be far
more likely to represent the genuine diversity of views that
exists on this subject than would a uniform federal code
entrenching a more restrictive regime than that of Roe and Casey.
Observance of federalism is thus particularly desirable with
respect to abortion regulation.
In keeping with the President's position that "[a]s a
nation, we must protect the unborn, Message to the House of
Representatives Returning Without Approval the District of
Columbia Appropriations Act, 1990, 25 Weekly comp. Pres. Doc.
1801 (Nov. 20, 1989), and for the reasons explained above, the
Department of Justice opposes the enactment of the bill, and if
the bill were presented to the President in its current form, I
and the President's other senior advisors would recommend a veto.
sincerely,
UPBan
William P. Barr
Attorney General
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