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    "ocrText": "Originally Processed With FOIA(s):\nFOIA Number:\nS\nS\nFOIA\nMARKER\nThis is not a textual record. This is used as an\nadministrative marker by the George Bush Presidential\nLibrary Staff.\nRecord Group/Collection:\nGeorge H.W. Bush Presidential Records\nCollection/Office of Origin:\nSpeechwriting, White House Office of\nSeries:\nSpeech File Backup Files\nSubseries:\nAlpha File, 1987-1991\nOA/ID Number:\n13845\nFolder ID Number:\n13845-005\nFolder Title:\nMiscellaneous [Litigation Information, Campaign Material, Abortion Legislation], 1992\nStack:\nRow:\nSection:\nShelf:\nPosition:\nG\n26\n23\n3\n2\nNAM\nThe Cost of Litigation:\nA New Perspective\nwith select bibliography\nThe National Association of Manufacturers\nLaw Department\nJan S. Amundson, General Counsel\nQuentin Riegel, Deputy General Counsel\nSeptember 1992\nACKNOWLEDGMENT\nA special thanks to Gordon Richards, NAM's assistant vice\npresident and director of economic analysis, for his assistance and\ncooperation in developing and reviewing the statistical information\ncontained in this report.\n©\n1992 National Association of Manufacturers\nThe Cost of Litigation:\nA New Perspective\nWith Select Bibliography\nPrepared by the NAM Law Department\nJan S. Amundson, General Counsel\nQuentin Riegel, Deputy General Counsel\nThe National Association of Manufacturers\nSeptember 1992\nTHE COST OF LITIGATION:\nA NEW PERSPECTIVE\nLast year, the NAM published a compendium of books, articles and other\nmaterials from the past decade about America's litigation explosion, its costs, its\ncauses and possible solutions. In August 1991, the Council on Competitiveness,\nchaired by Vice President Dan Quayle, issued a report, the Agenda for Civil\nJustice Reform in America, that asserted the transaction costs in the legal system\nare too high. Debate continues over this report, as well as the assumption that\ncost and delay in the legal system affects America's competitiveness, as lawyers\nfrom the American Bar Association, the American Trial Lawyers Association, the\nAmerican Corporate Counsel Association and other groups stake out different\npositions on the reform proposals.\nThe Council on Competitiveness quoted a Forbes article, citing Peter\nHuber's 1988 book, Liability: The Legal Revolution and its Consequences,\nestimating $80 billion a year in direct litigation costs and higher insurance\npremiums, and a total of up to $300 billion in indirect costs, including the cost of\nefforts to avoid liability. Law Professor Marc Galanter of the University of\nWisconsin calls this calculation \"casual speculation.\" A study by a consulting firm\nestimates the costs of the tort system in 1987 alone at $117 billion. Another study\npegs the cost of tort litigation in state and federal courts in 1985 at $29 to $36\nbillion. Close to $24 billion more was spent in other courts or settlements.\nThe disparity of these estimates and the different cost components they\naddress highlight the difficulty in arriving at a consensus about the cost of\nAmerican litigation. This paper examines the components of the cost of the legal\nsystem in order to give some context to the significance of proposals to modify the\nsystem. Our goal is to present a set of cost figures that are objective and reliable.\nThat the costs are so high is not necessarily an indictment of the legal\nprofession or the system. Obviously, much of the cost- of legal services is\nbeneficial to maintaining an orderly society and distributing assets properly to\nenforce contractual, statutory or common law obligations. Just as obvious is the\nneed to make the system as efficient and cost-effective as possible. Efficiency and\nproductivity are a day-to-day reality for manufacturers in a free-market economy,\nand the legal system also should shoulder its share of the responsibility to improve\nproductivity to better serve its customers.\nTRADING CHARGES: ARE WE TOO LITIGIOUS?\nIt has even been given a name. Hyperlexis. Too many lawsuits. Too many\nlaws. Too many lawyers. During the 1970s, Chief Justice Warren Burger and\nothers began to decry the litigation explosion.¹ Now, we are hearing more and\nmore charges and countercharges about the increasing number, cost and\ncomplexity of laws and litigation in this country. Litigation reform bills have\ncome and gone, some implemented, some not.\nJack Anderson says \"massive, mushrooming litigation has caused horrendous\nruptures and dislocations at a flabbergasting cost to the nation. The Wall Street\nJournal calls it the \"most expensive disease in this country\n\"3 The NAM's\nchairman in 1986, Robert Dee, wrote, \"Like a plague of locusts, U.S. lawyers\nwith their clients have descended upon America and are suing the country out of\nbusiness.\"\nOn the other hand, Marc Galanter calls the debate over litigiousness \"a\nlitany of quarter-truths.\" In 1986 he found that \"[w]hile expenditures for the tort\nsystem have grown more rapidly than government as a whole or the gross national\nproduct, they have lagged behind other entitlement systems, such as public aid,\ngovernment health care and social insurance. Nor have tort costs outpaced those\nof Workers' Compensation.\"6\nThis does not mean, however, that we shouldn't seek effective solutions to\nall of those financially draining programs, and the NAM is actively promoting\nsuch solutions. With respect to the many aspects of the issue of litigiousness, each\n'Rowe, Jr., Thomas D., American Law Institute Study on Paths to a \"Better Way\": Litigation, Alternatives,\nand Accommodation: Background Paper, 1989 DUKE L.J. 824, 840; Barton, Behind the Legal Explosion, 27 STAN.\nL REV. 567 (1975); Manning, Hyperlexis: Our National Disease, 71 Nw. U.L. REV. 767 (1977).\n2Anderson, U.S. Has Become a Nation of Lawsuits, Wash. Post, Jan. 25, 1985, at B8, col. 5.\n3The American Disease, Wall St. J., Jan. 21, 1992, at A14, col. 1.\n\"Dee, Blood Bath, 10 ENTERPRISE 3 (Mar./Apr. 1986).\n⁵Galanter, Pick a Number, Any Number, Legal Times, Feb. 17, 1992, at 26.\nGalanter, M., The Day After the Litigation Explosion, 46 MD. L. REV. 3, 37 (1986).\n2\nmust be examined on its own merits. Are there more cases, or are there more\ncases per person? Are the cases taking longer and becoming more expensive?\nWhat kinds of cases are being filed more frequently? Where does the brunt of\nlitigation fall? Who benefits from the current system?\nFormer Harvard President Derek Bok has said that rules governing affluent\nclients and large institutions are numerous, intricate and applied by highly\nsophisticated practitioners, and the cost of legal services grows much faster than\nthe cost of living. For the bulk of the population, however, costs, delays and\ncomplications make access to legal services appear inequitable and inefficient.⁷\nIn addition, although there has been a rapid growth in the number of complaints\nfiled in court, the number of disputes actually litigated does not appear to be rising\nmuch faster than the population as a whole. At the same time, the complexity of\nlitigation seems to be increasing.⁸\nMost disputes are resolved without filing a suit, and increases or decreases\nin the number of filings may indicate changes in the propensity of plaintiffs or\ndefendants to settle claims.9 Much of the increase may be attributable to increases\nin certain sectors of litigation, such as divorce proceedings, which dominate state\ncourt dockets. 10 At the federal level, product liability suits increased 272 percent\nbetween 1975 and 1984, while veterans' overpayment cases increased more than\n6,600 percent! At the same time, antitrust filings fell 18 percent and class actions\nfell nearly 68 percent.¹¹\nBeyond the volume of filings and the nature of claims are questions\nregarding the linkage between this data and other costs to society: the cost and\navailability of insurance, inhibited innovation, defensive medicine and lower-\nquality adjudication.\" A cost-benefit analysis should take into account over-\n'Bok, Derek C., A Flawed System of Law Practice and Training, 33 J. LEGAL EDUC. 570 (1983).\n\"Id\nGalanter, The Day After the Litigation Explosion, 46 MD. L. REV. 3, 7 (1986).\n10Id at 10.\n\"Id. at 16.\n\"Rowe, Jr., Thomas D., American Law Institute Study on Paths to a \"Better Way\": Litigation, Alternatives,\nand Accommodation: Background Paper, 1989 DUKE L.J. 824, 844-45.\n3\nreaction to court verdicts by individuals exercising an abundance of caution, as\nwell as the benefits of positive changes in behavior that might accrue from\nlitigation. 13 One must also look at the costs and benefits to different sectors of\nsociety, since additional benefits for plaintiffs come at the expense of defendants,\nlawyers or society, and vice versa.14\nThe NAM's role at this point is to take a critical look at the quantifiable cost\nof litigation and claims settlement in this country today. We have a strong policy\nposition in favor of product liability reform because the current system is neither\npredictable, consistent nor fair, resulting in the withdrawal of certain products\nfrom the market and soaring prices for others to cover the cost of fluctuating\ninsurance premiums. But product liability litigation is a subset of a much larger\nlitigation picture, which raises significant cost and resource allocation issues. The\nresearch below will quantify the current costs for all litigation and related claims\nsettlement. Although not the direct focus of this study, we will also begin to\nexamine non-monetary costs, such as opportunity costs or the costs of the litigation\nexperience itself.¹⁵\nRESEARCH RESULTS\nA number of studies have examined various components of the costs\nassociáted with resolving disputes. It is important to recognize the differences\nbetween each of these studies and what conclusions can be drawn from them.\nListed below are the costs implicated in resolving disputes in this country. Each\nof the studies examines some, but not all, of these components.\nHowever, a new Brookings Institution study suggests that improvements in product safety result more readily\nfrom regulation and bad publicity than from litigation. See Huber, P. & R. Litan, eds., THE LIABILITY MAZE, at\n15, The Brookings Institution (1991).\n\"See Trubek, D., et al., The Costs of Ordinary Litigation, 31 UCLA L. REV. 72, 78 (1983).\n15See id. at 79.\n4\nCompensation to the plaintiff\nLegal fees and expenses for the plaintiff\nCourt costs\nInsurance company legal fees\nOther defendants' legal fees and expenses\nOpportunity costs, the cost of avoiding liability and the value of time\nA 1982 study by Kakalik & Robyn began work by the Rand Institute for\nCivil Justice to create a \"cost map\" for the civil justice system.¹⁶ It dealt with\nthe third component of cost above, and shows that government expenditures in FY\n1982 for federal district courts and the 50 states' courts of general jurisdiction for\nprocessing tort cases amounted to $320 million.\nA 1983 study by Kakalik & Ross estimated the total annual price tag for\nprocessing all civil cases at $2 billion.¹⁷\nA 1986 study by Kakalik & Pace estimated the total nationwide expenditure\nfor all tort litigation terminated in state and federal courts of general jurisdiction\nin 1985 at $29 to $36 billion. 18 This includes expenditures for compensation,\nlegal fees and related expenses, insurance company claims-processing costs for\nclaims in suit, the value of litigants' time and the costs to the court system of\nprocessing these cases. An additional $1.8 billion was spent on cases filed in\ncourts of limited jurisdiction, plus $22 billion more was paid on claims that did not\ninvolve lawsuits.\nTillinghast, a Hartford-based actuarial consulting company, released studies\nin 1985 and 1989, estimating the costs of the tort system in 1987 at $117 billion,\nquadrupling every 12 years since 1950 19 This study computes costs by adding\ntogether liability insurance costs, medical malpractice self-insurance costs and\n16Kakalik, J.S. & A. Robyn, Costs of the Civil Justice System: Court Expenditures for Processing Tort Cases,\nInst. for Civil J., No. R-2888-ICJ (1982).\n\"Kakalik, J.S. & R.L. Ross, Costs of the Civil Justice System: Court Expenditures for Various Types of Civil\nCases, Inst. for Civ. J., No. R-2985-ICJ (1983).\n\"Kakalik, J.S. & N.M. Pace, Costs and Compensation Paid in Tort Litigation, Inst. for Civ. J., No. R-3391-\nICJ (1986).\n19Sturgis, R.W., The Cost of the U.S. Tort System, Tillinghast, Nelson & Warren, Inc., Nov. 14, 1985;\nTillinghast, Tort Cost Trends: An International Perspective (1989).\n5\n\"alternative\" (other self-insured) costs. [It does not include plaintiffs' costs, if\nany, for suits that are not filed or not won, nor does it include the amounts of any\nrecoveries over the insurance coverage limits, nor does it include the value of time\nlost or opportunity costs.]\nThe 1989 report shows that tort cost growth \"far outstripped GNP growth\nsince 1930, increasing 300 times over this 57-year period, compared with a 50-fold\nincrease for GNP.\"20 In addition, tort cost escalation showed similar trends when\nanalyzed in \"real\" terms, adjusted for inflation and compared in constant dollars.\nSince 1950, according to the report's author, tort costs increased by a factor of\n13.8, GNP grew by a factor of 3.3, and the U.S. population increased by a factor\nof only 1.6.²¹ Other components of the economy rose by the following factors:\nSocial Security expenditures\n17.3\nTort costs\n13.8\nGovernment health expenditures\n12.8\nPublic welfare expenditures\n9.7\nWorkers compensation costs\n9.7\nU.S. government expenditures\n5.3\nGNP\n3.3\nDisposable income\n2.7\nU.S. population\n1.6\nThe 1989 report also shows that cost escalation has moderated for all social\nsystems except torts. Between 1980 and 1987, tort costs rose at an annual rate,\nadjusted for inflation, of 10.6 percent, while government health expenditures rose\n5 percent, workers compensation costs rose 4.5 percent, Social Security\nexpenditures rose 4.2 percent and GNP rose 2.7 percent.22\nIn addition, tort costs have risen from just over 1 percent of GNP in 1965\nto 2.5 percent of GNP in 1987, compared to relatively constant levels of\napproximately .5 percent in other free world economies.23\nTillinghast, supra note 19, at 4.\n2¹d. at 7.\nⁿId. at 10.\n²Id. at 13.\n6\nThe Tillinghast studies on tort costs are based on written premiums for\nliability insurance, combined with costs associated with self-insuring for medical\nmalpractice and an \"alternative\" cost for expenditures in the nature of self-\ninsurance. Not included in the scope of the studies are costs associated with non-\ntort-related litigation. Thus, the entire criminal justice system, domestic relations,\ncontracts, employment discrimination and other types of litigation are additional\ncosts to be factored in.\nECONOMIC CONCEPTS AND SOURCES OF DATA\nThe NAM has conducted research into expenditures for legal services from\ninformation available from the U.S. government. In general, expenditures for\nlegal services take place at two levels: (1) expenditures by consumers at the final\nsales or gross domestic product (GDP) level, and (2) expenditures by business at\nthe inputs-to-production or intermediate level. These statistics do not take into\naccount legal costs for in-house counsel, the value of litigants' time, awards of\ndamages and indirect costs such as the cost of avoiding liability.\nEXPENDITURES BY CONSUMERS\nThe source for personal consumption expenditures (PCE) is the national\nincome accounts. Consumption spending for legal services is available in both\ncurrent and constant 1987 dollars for 1980 to 1990.\nIn 1990, Americans spent $3,742.8 billion (in current dollars) for personal\nconsumption. Legal services, a component of personal consumption expenditures,\ntotaled $49.2 billion, or 1.31 percent of the total.\nThe following table gives personal consumption expenditures for legal\nservices alone in current and constant 1987 dollars, and the ratios of spending for\nlegal services to total personal consumption expenditures. In addition, forecasts\nare provided for 1991 to 1992, based on projections of total PCE.\n7\nTABLE 1: PERSONAL CONSUMPTION SPENDING FOR LEGAL SERVICES\nCurrent $\nRatio, Legal\nConstant $\nRatio, Legal to\nYear\n(billions)\nto total PCE\n(billions)\nTotal Real PCE\n1980\n13.6\n0.78%\n26.6\n1.09%\n1981\n16.3\n0.85%\n28.2\n1.14%\n1982\n18.4\n0.89%\n28.0\n1.12%\n1983\n21.5\n0.95%\n28.9\n1.10%\n1984\n24.7\n1.00%\n30.4\n1.11 %\n1985\n28.6\n1.07%\n32.8\n1.14%\n1986\n32.1\n1.12%\n34.6\n1.17%\n1987\n36.8\n1.21%\n36.8\n1.21 %\n1988\n41.7\n1.27%\n40.0\n1.27%\n1989\n45.6\n1.30%\n41.3\n1.28%\n1990\n49.2\n1.31%\n41.6\n1.28%\n1991\n51.3*\n1.32%*\n41.7*\n1.28%*\n1992\n53.4*\n1.31%*\n42.5*\n1.28%*\n* NAM econometric estimate.\nSome trends are immediately apparent. Between 1980 and 1990, personal\nconsumption expenditures for legal services, in current dollars, increased by 261\npercent, and stood at $49.2 billion in 1990.\n8\nPERSONAL CONSUMPTION OF LEGAL SERVICES\n(Current Dollars)\n60\n50\n40\n$ Billions\n30\n20\n10\n1978\n1980\n1982\n1984\n1986\n1988\n1990\n1992\n1994\nEven after taking inflation into account, personal consumption expenditures\nfor legal services, in constant 1987 dollars, increased by 56 percent during this\nperiod, or an average rate of 5.6 percent per year, considerably faster than the\ngrowth rate of the overall economy. By comparison, total personal consumption\nexpenditures increased at an average annual rate of 3.0 percent during the same\nperiod. Thus, while overall expenditures were rising at 3 percent a year,\npayments to lawyers were rising at more than 5 percent a year, taking resources\nfrom other expenditure areas and allocating them to legal services. The following\nchart graphically displays this increase.\n9\nPERSONAL CONSUMPTION OF LEGAL SERVICES\n(1987 Constant Dollars)\n45\n40\n$ Billions\n35\n30\n25\n1978\n1980\n1982\n1984\n1986\n1988\n1990\n1992\n1994\nSimilarly, from 1980 to 1990, the ratio of current dollar personal\nconsumption expenditures for legal services as a percent of total PCE increased\nfrom .78 percent to 1.31 percent, or about 68 percent. Thus, individuals in 1990\nspent much more of their total personal consumption expenditures for legal\nservices.\nRATIO OF LEGAL SERVICE EXPENDITURES TO TOTAL EXPENDITURES\n(Current Dollars)\n1.4\n1.3\n1.2\n1.1\n1\n0.9\n0.8\n0.7\n1978\n1980\n1982\n1984\n1986\n1988\n1990\n1992\n1994\n10\nAccounting for inflation, the ratio of spending for legal services to total PCE\nincreased from 1.09 percent in 1980 to 1.28 percent in 1990, or more than 17\npercent (see graph below). This increased ratio represents real growth for the\nlegal services industry, all attributable to personal consumption. It indicates that\nmore legal services were used.\nRATIO OF LEGAL SERVICE EXPENDITURES TO TOTAL EXPENDITURES\n(1987 Constant Dollars)\n1.35\n1.3\n1.25\n1.2\n1.15\n1.1\n1.05\n1\n1978\n1980\n1982\n1984\n1986\n1988\n1990\n1992\n1994\nDuring 1982 and 1983, this ratio actually dropped by 3.5 percent, then\nbegan a steep rise that began to level out at about 1.28 percent from 1988 to 1990.\nCoincidentally, as the economy has slowed during this period, law firms have felt\nconsiderable pressure to moderate increases in their fees, and competitive pressures\nhave influenced restructuring in the legal profession. In addition, some companies\nhave focused additional attention on bringing legal work in-house, and professional\nlegal fee auditors have gained increased prominence scrutinizing the quality and\nquantity of legal services provided.\nBUSINESS SPENDING\nThe source for business spending is the Commerce Department (Bureau of\nEconomic Analysis) input-output tables for the economy. These are produced only\nat five-year intervals. The most recent data, for 1987, is still unpublished; the\n11\nNAM has obtained the preliminary estimates. Prior data is from the 1982 input-\noutput table. All the business data is in current rather than constant dollars.\nBusiness spent $38.8 billion for legal services in 1982, and $75.8 billion in\n1987, an increase of 95.4 percent in five years. In 1982, business spending for\nlegal services came to 1.42 percent of total spending for intermediates (i.e.,\nspending in the production of goods or services for the final sales level). In 1987,\nthis figure had increased to 2.16 percent (see table below). Thus, just as with\npersonal consumption expenditures, legal services constituted a higher share of\nbusiness expenditures from 1982 to 1987.\nBusiness Expenditures ($ Billions)\n1982\n1987\nLegal Services\n38.8\n75.8\nAll Intermediates\n2,732.2\n3,502.8\nRatio\n1.42%\n2.16%\nSource: U.S. Dept. of Commerce, Input-Output Tables, published in \"Survey of\nCurrent Business,\" July 1991 at 49 and April 1992 at 71.\nIf the increased rate of spending for legal services in the business sector increased\nbetween 1987 and 1992 at the same rate as it did in the 1982 to 1987 period,\nbusiness in 1992 will spend $148.1 billion for legal services. However, this\ncalculation must be regarded as purely speculative because business spending was\nsubstantially affected by different economic conditions in the latter period. One\nuseful way to check the plausibility of estimates of this type is to compare the\ngrowth rate of business to personal consumption expenditures.24\nFrom 1982 to 1987, personal consumption expenditures for legal services\nin current dollars increased by 100 percent, clearly the same order of magnitude\nas the 95.4 percent increase in business spending for legal services. 25 However,\n24 Since business spending is available only in current dollars, the appropriate comparison is PCE in current\ndollars.\n25 Since PCE for legal services in constant dollars increased by only 31.2 percent from 1982 to 1987, the real\nmagnitude of the increase for business was also in the same general range.\n12\nusing the NAM projections, PCE for legal services in current dollars increased at\na slower rate between 1987 and 1992: 45.1 percent. If business spending\nincreased by the same order of magnitude, the implied figure for 1992 is in the\narea of $110 billion. The following chart summarizes these estimates.\nBUSINESS EXPENDITURES FOR LEGAL SERVICES\n(1987-92 estimated)\n160\n140\n120\n100\n80\n60\n40\n20\n1982\n1987\n1992\nAssuming 95.4% increase for 1987-92\n-\nAssuming 45% increase for 1987-92\nThese two estimates, $110 billion and $148 billion, can be taken as\nparametric boundaries for business spending on outside legal services in 1992.\nWhile business spending increased by the same order of magnitude as consumer\nspending from 1982 to 1987, it is not known if this was also the case from 1987\nto 1992. Overall personal consumption expenditures slowed sharply from 1988\nonward, reflecting factors such as high levels of debt and a deterioration in balance\nsheets. On the other hand, business spending on legal services may have increased\nmore rapidly, since the causes of demand for legal services by business include\nfactors that do not affect consumers, such as compliance with federal statutes and\nregulations and increased litigation in such areas as employment discrimination and\nproduct liability.\nThese statistics encompass direct transfers to law firms for services,\nincluding photocopying, travel and miscellaneous items. They do not include\npayments to in-house counsel, such as insurance company lawyers working within\nthose companies to handle claims without the assistance of outside counsel. They\nalso do not include payments by companies to in-house counsel in other business\n13\nsectors. The Bureau of Labor Statistics estimates that in 1990 there were 586,581\nlawyers working in this country, but it is impossible to tell how many of these\nwere in-house counsel not included in the input-output tables of the Department of\nCommerce. 26 Suffice it to say that millions were spent on in-house legal counsel\nthat do not appear in the figures above.\nINDUSTRY SECTOR STATISTICS\nThe input-output tables showing business expenditures for legal services are\nbroken into subcategories based on Standard Industrial Classifications (SICs). In\n1982, the largest sectors using legal services were (in millions of dollars):\nClassification\nIndustry\nExpenditures\n69.0200\nRetail trade, except eating and drinking\n5,900.3\n69.0100\nWholesale trade\n1,578.9\n71.0201\nReal estate\n971.0\n74.0000\nEating and drinking places\n807.7\n71.0100\nReal estate: owner-occupied dwellings\n694.9\n70.0400\nInsurance carriers\n574.4\n70.0100\nBanking\n452.4\n73.0303\nAccounting, auditing & bookkeeping, & misc. serv. n.e.c.\n324.5\n73.0105\nManagement & consulting services, testing & research labs\n287.6\n73.0302\nEngineering, architectural & surveying services\n272.2\n99.3009\nState & local gov't purchases, other gen'l gov't activities\n267.8\n70.0200\nCredit agencies other than banks\n249.6\n70.0500\nInsurance agents, brokers & services\n236.3\n77.0200\nHospitals\n233.0\n97.0000\nFederal government purchases, non-defense\n223.9\n26.0100\nNewspapers\n217.8\n66.0000\nCommunications, except radio & TV\n213.4\n84.0000\nExports\n181.5\n77.0100\nDoctors and dentists\n180.5\n72.0100\nHotels and lodging places\n170.4\n25 Of all lawyers, the Bureau of Labor Statistics reports that 388,581 are waged or salaried and 198,000 are\nself-employed. Not all of the 388,581 salaried lawyers are employed as in-house corporate counsel; we assume\nthat a large number of them are employed by their law firms. They would therefore be counted by the BLS as\nsalaried, but their income would be counted by the Department of Commerce as a payment to a third party. Further\ninformation about the number of in-house counsel is unavailable from the government. Prentice Hall Law &\nBusiness will be publishing a report shortly about the nation's largest corporate law departments.\n14\nClassification\nIndustry\nExpenditures\n51.0101\nElectronic computing equipment\n154.3\n98.0001\nState & local gov't purchases, elementary & secondary schools\n153.1\n70.0300\nSecurity and commodity brokers\n152.7\n8.0000\nCrude petroleum and natural gas\n135.3\n73.0104\nComputer and data processing services\n135.0\n96.0000\nFederal gov't purchases, national defense\n133:5\n67.0000\nRadio and TV broadcasting\n129.7\n65.0300\nMotor freight transportation and warehousing\n129.4\n73.0109\nOther business services\n123.2\n68.0100\nElectric services (utilities)\n111.0\n77.0402\nColleges, universities and professional schools\n109.7\n26.0501\nCommercial printing\n106.3\n11.0201\nNew construction: industrial buildings\n102.7\nThese input-output tables do not include payments to in-house counsel, nor\ntransfers in the nature of damage awards, since such awards are not payment for\nservices per se. Payments to law firms include payments for such things as\nphotocopying, travel and miscellaneous items.\nWe have also examined recent trends within specific industries to see how\ntheir legal cost increases compare with those of all standard industrial\nclassifications (including non-industry sectors). The following chart shows how\nsome industries compare.\nSECTORAL CHANGES IN LEGAL SERVICE EXPENDITURES\n1982 1987 Actual\n900\n800\n700\n600\n$ Millions\n500\n400\n300\n200\n100\n0\nNew construction\nMotor vehs. & eqpt\nDoctors/dentists\nChemicals\nAircraft & parts\nColleges\n1982\n1987\n15\nUNQUANTIFIABLE COSTS\nIn his book, Peter Huber guessed that indirect costs account for up to $300\nbillion in costs attributable to America's liability system. This was based on the\nassumption that \"doctors spend $3.50 in efforts to avoid additional charges for\neach $1 of direct tax [liability] they pay.\" It is impossible to accurately quantify\nthe indirect costs that society incurs to avoid liability. Nevertheless, there are\nrecognizable manifestations of such avoidance: Doctors are criticized for\npracticing excessive \"defensive medicine,\" manufacturers discontinue businesses\nthat are too risky and companies settle questionable claims to avoid the expense\nof litigation.\nIn addition, there are direct costs from claims and litigation that actually\noccur. Lawsuits sometimes take over the lives of the defendants. Lengthy\ndiscovery requests, depositions, interrogatories and other behind-the-scenes\nmaneuvering can consume tremendous amounts of time, taking employees and\nmanagement, including chief executive officers, away from other productive\nactivities. More time spent in the courtroom or the lawyer's office means less\ntime spent on the plant floor, in the laboratory or at the drafting table.\nCONCLUSION\nIn 1992, consumer spending on legal services will total approximately $53\nbillion, while business will spend between $110 and $148 billion. The NAM\nestimates that, together, business and consumers will spend between $163 and\n$201 billion on legal services in 1992.2 Countless billions more are paid to\nsalaried workers, management and in-house lawyers, redirecting productive\nI7\nIt is to be emphasized that business spending for legal services does not enter in GDP. Outside the\neconomics profession, it is not widely known that GDP is not a total production measure, but a final sales or value-\nadded concept. Technically, GDP is equal to total production less all intermediate inputs. This becomes clearer\nwhen it is borne in mind that GDP is the sum of PCE, plus business investment (structures, equipment and\ninventories), plus government purchases, plus exports, less imports. None of these categories includes any\nintermediate production.\nFor this reason, it is best to consider consumer and business expenditures for legal services separately.\nIt is equally obvious in this context that the two cannot be added together and expressed as a share of GDP, since\nbusiness spending on intermediate legal services is netted out in the calculation of GDP.\n16\nresources away from business to claims resolution. And finally, claims that are\nactually paid sometimes include substantial amounts for punitive damages.\nThese estimates are the most precise that the NAM can obtain. They are\nbased in each instance on Commerce Department data, obtained from a broad\nsurvey of firms in every sector of the economy. They should, therefore, be\nregarded as more accurate than anything provided by private studies relying on\nsmaller samples of firms.\nThe appendix is a select compilation of research and other publications\nfrom the past five to ten years relating to the components of the cost of the legal\nsystem.\n17\nAPPENDIX OF RESEARCH MATERIALS RELATING TO COSTS\nLEGAL PERIODICALS\nManning, Hyperlexis: Our National Disease, 71 Nw.\nU. L. REV. 767 (1977).\nBarton, Behind the Legal Explosion, 27 STAN. L. REV.\nMiller, Arthur R., The Adversary System: Dinosaur or\n567 (1975).\nPhoenix, 69 MINN. L. REV. 1 (1984).\nBlake, Eliot M., Rumors of Crisis: Considering the\nNye, David J. & Donald G. Gifford, The Myth of the\nInsurance Crisis and Tort Reform in an Information\nLiability Insurance Claims Explosion: An Empirical\nVacuum, 37 EMORY L.J. 401 (1988).\nRebuttal, 41 VAND. L REV. 909 (1988).\nBok, Derek C., A Flawed System of Law Practice and\nRoper, The Propensity to Litigate in State Trial Courts,\nTraining, 33 J. LEGAL EDUC. 570 (1983).\n1981-1984, 1984-1985, 11 JUST. SYS. J. 262 (1986).\nBrunet, Edward, Measuring the Costs of Civil Justice,\nRosenberg, Let's Everybody Litigate?, 50 TEX. L. REV.\n(Book Review), 83 MICH. L. REV. 916 (1985)\n1349 (1972).\n(reviewing Kalakik & Ross, Costs of the Civil Justice\nSystem: Court Expenditures for Various Types of Civil\nRowe, Jr., Thomas D., American Law Institute Study on\nPaths to a \"Better Way\": Litigation, Alternatives, and\nCases).\nAccommodation: Background Paper, 1989 DUKE L.J.\nCiviletti, Benjamin, Zeroing In on the Real Litigation\n824.\nCrisis: Irrational Justice, Needless Delays, Excessive\nCosts, 46 MD. L. REV. 40 (1986) (comment on\nSaks, In Seach of \"The Lawsuit Crisis,\" 14(2) L. MED.\nGalanter article).\n& HEALTH CARE 77 (1986).\nCrampton, The Trouble with Lawyers (and Law\nSaks, Michael J., If There Be a Crisis, How Shall We\nSchools), 35 J. LEGAL EDUC. 359 (1985).\nKnow It? 46 MD. L REV. 63 (1986) (commenting on\nGalanter article).\nCutler, Conflicts of Interest, 30 EMORY L.J. 1015\nSamuelson, Robert J., The Litigation Explosion: The\n(1981).\nWrong Question, 46 MD. L. REV. 78 (1986)\nDobbs, Dan B., Can You Care for People and Still\n(commenting on Galanter article).\nCount the Costs? 46 MD. L. REV. 49 (1986) (comment\non Galanter article).\nSanders J., & C. Joyce, Off to the Races: The 1980's\nTort Crisis and the Law Reform Process, 27 Hous. L.\nGalanter, Marc, The Day After the Litigation Explosion,\nREV. (1990).\n46 MD. L. REV. 3 (1986).\nSchuck, Peter & Robert L Rabin, Tort System on Trial:\nGalanter, Marc, Reading the Landscape of Disputes:\nThe Burden of Mass Toxics Litigation. Agent Orange\nWhat We Know and Don't Know (and Think We Know)\non Trial: Mass Toxic Disasters in the Court (enlarged\nAbout Our Allegedly Contentious and Litigious Society,\ned.), 98 YALE L.J. 1281 (1989).\n31 UCLA L. REV. 4 (1983).\nSilberman, Will Lawyering Strangle Democratic\nGalanter, Marc, The Life and Times of the Big Six; or,\nCapitalism?, REGULATION 15 (Mar.-Apr. 1978).\nthe Federal Courts Since the Good Old Days, 1988 WIS.\nL. REV. 921.\nTrubek, David M., Austin Sarat, William L. F.\nFelstiner, Herbert M. Kritzer & Joel B. Grossman, The\nA-1\nCost of Ordinary Litigation, 31 UCLA L. REV. 72\nR-2881-ICJ The Civil Jury; Trends in Trials and\n(1983).\nVerdicts, Cook County, Illinois, 1960-1979. M.A.\nPeterson, G.L. Priest. 1982.\nVan Valkenburg, E. Walter, Inside the Litigious Society\n(Book Review), 85 COLUM. L. REV. 216 (1985)\nR-2881/1-ICJ The Civil Jury: Trends in Trials and\n(reviewing JEROLD S. AUERBACH, JUSTICE WITHOUT\nVerdicts, Cook County, Illinois, 1960-1979. Executive\nLAW?).\nSummary. M.A. Peterson, G.L. Priest. 1982.\nWinter, R.A., The Liability Crisis and the Dynamics of\nR-2888-ICJ Costs of the Civil Justice System: Court\nCompetitive Insurance Markets, 5 YALE J. ON REG. 455\nExpenditures for Processing Tort Cases. J.S. Kakalik,\n(1988).\nA. Robyn. 1982.\nNEWSPAPERS/PERIODICALS\nR-2985-ICJ Costs of the Civil Justice System: Court\nExpenditures for Various Types of Civil Cases. J.S.\nGranelli, Long Trials Play Havoc With Courts, Nat'l\nKakalik, R.L. Ross, 1983.\nL.J. 1, Dec. 27, 1982.\nR-3042-ICJ Costs of Asbestos Litigation. J.S. Kakalik,\nMagee, S., A Taxing Matter: The Negative Effects of\nP.A. Ebener, W.L.F. Felstiner, M. Shanley. 1983.\nLawyers on Economic Activity, Economic Insights,\n(Jan/Feb. 1991).\nR-3084-ICJ Regulating the Content and Volume of\nLitigation: An Economic Analysis. G.L. Priest. 1983.\nOlson, W., California Counts the Costs of Lawsuit\nMania, Wall St. J., June 3, 1992, at A15.\nR-3391-ICJ Costs and Compensation Paid in Tort\nLitigation. J.S. Kakalik, N.M. Pace. 1986.\nAmerican Competitiveness, Wall St. J., Aug. 14, 1991.\nR-3410-ICJ New Evidence on the Frequency and\nDo We Have Too Many Lawyers?, Time, Aug. 26,\nSeverity of Medical Malpractice Claims. P.M. Danzon.\n1991.\n1986.\nLess Litigation, More Justice, Wall St. J., Aug. 14,\nR-3421-ICJ Costs and Compensation Paid in Aviation\n1991.\nAccident Litigation. J.S. Kakalik, E.M. King, M.\nTraynor, P.A. Ebener, L.O. Picus. 1988.\nCourting Disaster: Is America's Civil Liability System\nTotally Out Of Control? World, Apr. 1986, at 30.\nR-3466-ICJ Civil Juries in the 1980s: Trends in Jury\nTrials and Verdicts in California and Cook County,\nEnough Is Enough, Forbes, Apr. 20, 1987, at 56.\nIllinois. M.A. Peterson. 1987.\nThe Liability Crisis: Who's At Risk?, Chief Executive,\nR-3583-ICJ Trends in Tort Litigation: The Story\nSummer, 1986, at 29.\nBehind the Statistics. D. Hensler, M.E. Vaiana, J.S.\nKakalik, M.A. Peterson. 1987.\nModern Tort Law and the Current Insurance Crisis,\nTime, March 24, 1986, at 18.\nR-3668-ICJ Product Liability and the Business Sector:\nLitigation Trends in Federal Courts. T. Dungworth.\n1988.\nRAND INSTITUTE ABSTRACTS\nR-3885-ICJ Statistical Overview of Civil Litigation in\nthe Federal Courts. T. Dungworth, N.M. Pace. 1990.\n(available from The Institute for Civil Justice, The\nRAND Corporation, 1700 Main Street, P.O. Box 2138,\nP-5921 Costs and Benefits of the Tort System if\nSanta Monica, CA 90407-2138 (310) 393-0411, ext.\nViewed as a Compensation System. P. Munch. June\n6686 or 7433.\n1977.\nA-2\nP-7210-ICJ Summary of Research Results on the Tort\nMemorandum on MCSC Data, Alliance of Am.\nLiability System. D. Hensler. March 1986.\nInsurers, Greg Heidrich (Apr. 25, 1986).\nP-7243-ICJ Costs and Compensation Paid in Tort\nPublic Policy Considerations Underlying Insurance Data\nLitigation: Testimony Before the Joint Economic\nReporting, Ins. Acctg. & Systems Ass'ns (June 1987).\nCommittee of the U.S. Congress. J.S. Kakalik, N.M.\nPace. July 1986.\nP-7271-ICJ Summary of Research Results on Product\nBOOKS\nLiability. D. Hensler. Oct. 1986.\nBRODEUR, PAUL, OUTRAGEOUS CONDUCT: THE\nP-7287-ICJ Trends in California Tort Liability\nASBESTOS INDUSTRY ON TRIAL (N.Y.: Pantheon\nLitigation. D. Hensler. March 1987.\nBooks, 1985).\nFERGUSON, ALBERT, THE LIABILITY CRISIS AND How\nSCHOLARLY PAPERS\nTO SOLVE IT (Pittsburgh, Pa.: Claymore Press, 1987).\nAmerican College of Trial Lawyers, Recommendations\nFLANGO, V., R. ROPER & M. ELSNER, THE BUSINESS\non Major Issues Affecting Complex Litigation, 90\nOF STATE TRIAL COURTS (1983).\nF.R.D. 207 (1981).\nHUBER, PETER, LIABILITY: THE LEGAL REVOLUTION\nTort Policy Working Group, Report of the Tort Policy\nAND ITS CONSEQUENCES (N.Y.: Basic Books, 1988).\nWorking Group on the Causes, Extent, and Policy\nImplications of the Current Crisis in Insurance\nLIEBERMAN, J., THE LITIGIOUS SOCIETY (1981).\nAvailability and Affordability (U.S. Dept. of Justice\n1985).\nLIABILITY: PERSPECTIVES AND POLICY (Washington,\nD.C.: The Brookings Institution) (Litan, R.E. & C.M.\nTRADE ASSOCIATION PUBLICATIONS\nWinston, eds. 1988).\nAn Analysis of the Causes of the Current Crisis of\nMCLAUCHLAN, W., FEDERAL COURT CASELOADS\nUnavailability and Unaffordability of Liability\n(1984).\nInsurance, Nat'l Ass'n of Att'ys Gen., Gail E. Tverberg\n(May 1986).\nO'CONNELL, JEFFREY &C. BRIAN KELLY, THE BLAME\nGAME, (Lexington, Mass.: Lexington Books, 1987).\nCivil Justice Reform Data, AAI, AIA, Nat'l Ass'n of\nInd. Insurers (1986).\nOLSON, WALTER, THE LITIGATION EXPLOSION (N.Y.:\nPenguin Books, 1991).\nDocumenting the Case for Tort Reform: The Cost of\nExpanding Tort Liability Doctrines Beyond Traditional\nSCHUCK, P.H., AGENT ORANGE ON TRIAL: MASS\nCommon Law, Nat'l Ass'n of Ind. Insurers (May 16,\nToxic DISASTERS IN THE COURTS (Cambridge: Harv.\n1986).\nU. Press, enlarged edition 1987).\nFederal Tort Policy Report: An Update on the Liability\nSCHUCK, P.M., TORT LAW AND THE PUBLIC INTEREST\nCrisis, Ins. Information Inst. (Mar. 30, 1987).\n(N.Y.: W.W. Norton, 1991).\nThe Insurance Crisis: A Study in Deception, Ass'n of\nSUGARMAN, S., DOING AWAY WITH PERSONAL INJURY\nTrial Lawyers of Am.\nLAW: NEW COMPENSATION MECHANISMS FOR\nVICTIMS, CONSUMERS, AND BUSINESS (N.Y.: Quorum\nLegal Defense: A Large and Growing Insurance Cost\nBooks, 1989).\nISO Insurance Issues Series, Ins. Services Office, Inc.\n(Dec. 1989).\nA-3\nGAO REPORTS\nLiability Insurance: Effect of Recent \"Crisis\" on\nBusiness and Other Organizations (Washington, D.C.:\nGPO, July 1988).\nProduct Liability: Extent of Litigation \"Explosion\" in\nFederal Courts Questioned (Washington, D.C.: GPO,\nJan. 1988).\nProduct Liability Verdicts and Case Resolution in Five\nStates (Washington, D.C.: GPO, Sept. 1989).\nA-4\nI\n1331 Pennsylvania Avenue, NW\nSuite 1500 - North Tower\nWashington, DC 20004-1703\n(202) 637-3000\nBUSH QUAYLE '92 PRESS ID:202-336-7330\nJUL 15'92\n7:39 No.001 P.01\nBUSH\nQUAYLE\n92\nVia Telecopy\nJuly 15, 1992\nTO:\nSteve Provost\nFROM:\nFred Malck\nHere are a few lines that may be helpful in your speech preparation.\nFactures i made SC clary logo face HG\nloyer ya\n- (cagnet + west production elder\n1030 15th St. NW, Washington, DC 20005\nPaid for by Bush-Quayle '92 Primary Committee. Inc.\nPrinted on Recycled Paper\nBUSH QUAYLE '92 PRESS\nID:202-336-7330\nJUL 15'92\n7:39 No 001 P.02\nPossible Lines for POTUS for July/August :30s\nThese lines envision GB in interview format, living room setting,\nleaning forward toward interviewer, speaking with passion.\nAmerica is still the greatest nation on earth. but we face\nsome big problems. I know we can solve those problems by\nreturning to the values that made us great. Promoting the\nfamily as the basic unit of society. Teaching respect for\nlaw and order and enforcing the law with speed and certainty.\nPromoting thrift among our citizens. and makingithe government\nlive within its means. That's what I believe.\nI believe in three basic principles and I will use them to\nlead this nation. Number one, we won't have a healthy,\ngrowing economy until we balance the federal budget. Number\ntwo, government policies should encourage family values and\nprovide incentives for families to come together and stay\ntogether. And number three, we are a nation of laws.\nEvery citizen must respect the law and the President must\nenforce it. That's what I'll do, if the American people\nsupport these principles.\nGovernment can't solve all our problems. You can trace this\ncountry's problems to the fact that some people have lost\nsight of their basic morality. There are absolute standards\nof right and wrong that we know and recognize in this country.\nOur children must be taught the difference in right and wrong\nand our adults must be held accountable if they don't respect\nthe difference in right and wrong. I'm going to speak out\nfor the basic moral code that unites us, whether certain\ncultural elites like it or not.\nWhen I say I believe in family values I don't just mean\nthat candidates should travel with their children. I\nmean that children should have the right to pray in their\npublic school. That parents should have the right to\nchoose what school their children attend. That government\npolicy should discourage single mothers from having more\nchildren, not encourage it. And, yes, that parents have\na right to know if their teenaged daughter decides to have\nan abortion.\nLet's face the facts. You and I both know, and the American\npeople know, that this recession and all our economic problems\nare caused by the federal government spending too much money\nand running a deficit. We will have a healthy, growing\neconomy over a long period again only when the federal\ngovernment balances its budget. I'd like to have Congress'\nBUSH QUAYLE '92 PRESS ID: 202-336-7330\nJUL 15'92\n7:40 No. 001 P.03\n-4-\nhelp in balancing the budget. But, I will cut federal spending.\nI will reduce this deficit. With or without their help.\nI have said from the very beginning that we will only have a\ngrowing economy when the federal government stops spending\nmore than it takes in. Congress disagrees. I've compromised\nwith them--at great political cost to myself--I've cajoled\nthem and I've confronted them. But, the spending keeps right\non growing. No more. I'm using my veto to cut federal\nspending and to do it right now. That's what I believe in\nand that's what I'm going to do.\nYou know, you can trace a lot of our social problems directly\nto the viscious cycle of welfare dependency we have created\nin this country. I have strong views about changing that\nsystem and we're doing it right now. My welfare plan is\nbased on family values. We will give families the incentive\nto stay together. Fathers will be financially responsible\nfor their children. I will cut welfare benefits for single\nmothers who have more children. Everyone on welfare will\nreceive mandatory job training, then we'll get them a mandatory\njob. From now on, welfare is a temporary helping hand. Not\na permanent way of life.\nYou watched the riots in Los Angeles with the same horror that\nI did. Who was responsible? The individual criminals who did\nthe killing and burning. A generation in our cities has grown\nup without being taught respect for law and order, the difference\nin right and wrong. Well, now we're going to teach them.\nThe Civilian Training Corps will teach them the difference,\nteach them to respect the law, and give them the discipline\nand work ethic needed to succeed in life. That's my program,\nbased on my basic belief in traditional American values.\n-intel. underpinnings\n-anecdotes\nSolzenitsyn\nTHE WHITE HOUSE\nWASHINGTON\nJune 26, 1992\nMEMORANDUM TO ALL WRITERS/RESEARCHERS\nFROM:\nDAN MC GROARTY Mur\nSUBJECT: MEETING WITH HENSON MOORE\nHenson praised the following \"formula\" used in the Texas\nState Convention speech:\nAmericans want families -- strong and united. Good schools,\nsafe neighborhoods, a job-creating economy -- and a world at\npeace.\nHenson points out that the campaign shares his enthusiasm\nfor this formulation. This shorthand should be built into each\nspeech.\n# # #\n06/17/92\n09:38\nREPUBLICAN WHIP OFFICE WASH. DC\n002\nMembers Who Voted\nMembers Who Voted\nFor BBA in 1990 and\nFor BBA in 1990\nMembers Who Cosponsored\nDidn't Cosponsor Stenholm\nStenholm bill\nCosponsored Stenholm bill\nAnd Voted AGAINST BBA\nBut Voted AGAINST BBA\nBut Voted AGAINST BBA\nAnnunzio\nColeman (TX)\nHorn\nBustamante\nGaydos\nMartinez\nMcNulty\nSchroeder\nKleczka\nMfume\nTraficant\nLantos\nMurphy\nRose\nNeal (MA)\nslaughter\nolin\nTallon\nMembers Voting Against\nMembers Voting Against\nthe BBA in 1990 but\nthe BBA in 1990\nCosponsored Stenholm bill\nDidn't Cosponsor Stenholm\nand Voted FOR BBA\nAnd Voted FOR BBA\nAnderson\nBruce\nGlickman\nDonnelly\nKennedy\nFeighan\nFrost\nHoyer\nMembers Who Voted\nMembers Who Voted\nFor BBA in 1990 and\nFor BBA in 1990\nMembers Who Cosponsored\ncosponsored Stenholm bill\nDidn't Cosponsor Stenholm\nStenholm bill\nBut Voted AGAINST BBA\nAnd Voted AGAINST BBA\nBut Voted AGAINST BBA\nColeman (TX)\nHorn\nAnnunzio\nBustamante\nGaydos\nMartinez\nKleczka\nMcNulty\nSchroeder\nLantos\nMfume\nTraficant\nMurphy\nRose\nNeal (MA)\nslaughter\nolin\nTallon\nMembers Voting Against\nMembers Voting Against\nthe BBA in 1990 but\nthe BBA in 1990\nCosponsored Stenholm bill\nDidn't Cosponsor Stenholm\nand Voted FOR BBA\nAnd Voted FOR BBA\nAnderson\nBruce\nGlickman\nDonnelly\nKennedy\nFeighan\nFrost\nHoyer\nJUL- 1-92 WED 23:21 POLICY DEVELOPMENT\nP.01\nJUSTITLE DOMINA PRO SEQUITUR MO OF\nOffice of Policy Development\nUnited States Department of Justice\n10th Street and Constitution Avenue, N.W.\nWashington, D.C. 20530\nJuly 2, 1992; 11:13 am\nTO:\nEd Walters\nFAX: 456-6218\nWhite House Speechwriter\nTelephone: 456-7750\nFROM:\nKevin R. Jones\nVoice: (202) 514-4604\nDeputy Director\nFAX: (202) 514-8639\nRoom 4245, Main\nTotal Pages (excluding this cover): 5\nAdditional Message:\nAttached as you requested is the Department's most current statement on the\nFreedom of Choice legislation, which was signed by the Attorney General and sent to\nCongress yesterday.\nJUL- 1-92 WED 23:22 POLICY DEVELOPMENT\nP.02\nOffice of the Attorney General\nWashington, B. C. 20530\nJuly 1, 1992\nHonorable Edward M. Kennedy\nChairman\nCommittee on Labor and Human Resources\nU.S. Senate\nWashington, D.C. 20510-63,00\nDear Mr. Chairman:\nThis letter presents the views of the Department of Justice\nconcerning the amended versions of the \"Freedom of Choice Act of\n1991, introduced as companion bills H.R. 25 and S. 25\n(collectively \"the bill\"). The Department strongly opposes\nenactment of this legislation. The recent amendment introduced\nby Senator Mitchell, making minor changes to the bill, fails to\nconfront the bill's most serious flaws. For the reasons below,\nif the bill were presented to the President, I and the\nPresident's other senior advisors would recommend that he veto\nthis legislation.\nThe revised bill would still prohibit States from enacting\nreasonable regulatory restrictions on abortions clearly permitted\nunder Roe V. Wade and its progeny. It would also represent a\ndoubtful exercise of Congress' power under the Fourteenth\nAmendment and would rest on a questionable link to Congress'\npower to regulate interstate commerce.\nI. The Revised Bill\nThe bill is described by its sponsors as a \"codification\" of\nmuch of the complex regime of abortion legislation erected by the\nSupreme Court since its 1973 decision in Roe v. Wade, 410 U.S.\n113 (1973). The bill as revised expressly states its purpose to\nbe \"to achieve the same limitations as provided, as a\nconstitutional matter, under the strict scrutiny standard of\nreview enunciated in Roe v. Wade and applied in subsequent cases\nfrom 1973 to 1988.' Section 2 (b). Because of its sweeping\nlanguage, however, the bill would enact a federal statutory\nregime of abortion regulation that leaves the States with\nsubstantially less regulatory authority than under Roe or the\nSupreme Court's decision earlier this week in Planned Parenthood\nof Southeastern Pa. V. Casey.\nJUL- 1-92 WED 23:22 POLICY DEVELOPMENT\nP.03\nThe essence of the bill remains substantially unchanged: \"a\nState may not restrict the freedom of a woman to choose\nwhether or not to terminate a pregnancy before fetal viability,\"\nand after viability the state may not restrict abortion if the\nabortion \"is necessary to protect the life or health of the\nwoman.\" Section 3 (a) (1) and (2)-\nThe revised bill would thus still allow abortions for any\nreason, even sex selection, before the fetus becomes \"viable.\"\nWith no definition or standards for viability, it appears that\nthe bill could leave that determination to the person performing\nthe abortion. Thus a single health care professional's judgment\nthat a particular fetus was not \"viable\" would be conclusive and\nbinding on the State, whether or not the fetus satisfied other\nobjective criteria of \"viability\" such as a test for weight. It\nis not even clear that the professional judgment must be rendered\nby a medical doctor.\nEven after fetal viability, with no standards for\ndetermining what constitutes the \"health of the woman\" justifying\nan abortion, the revised bill would still go well beyond merely\n\"codifying\" Roe. As we have explained in earlier statements and\ntestimony, we believe that the term \"health\" in section 3 (a) (2)\nwould likely be construed broadly. See Doe V. Bolton, 410 U.S.\n179 (1973). The Court there noted that the medical judgment must\nbe made in light of all factors, including \"emotional,\npsychological, [and] familial\" factors. Id. at 192. It is\nlikely, therefore, that even after viability an abortion\nperformed for any reason that a medical professional (who, again,\napparently need not be a licensed physician) deemed \"relevant to\nthe well-being\" of the woman, 1d., would probably be protected\nunder the bill as \"necessary to preserve the life or health of\nthe woman.\" Section 3 (a) (2) -\nThe revised bill purports to address a few of the concerns\nthe Department has raised previously. These changes, however, do\nnot fully meet the Department's concerns on the issues they\naddress, and leave many more serious flaws unaddressed.\nFor example, the revised bill allows some degree of parental\nparticipation in the decision of a minor to undergo an abortion.\nHowever, it provides only that the State could require the minor\nto \"involve\" the parent in the decision. Section 3 (b) (3) - The\nterm \"involve\" is left undefined. It is troubling that the\nbill's authors chose an inherently vague term over more definite\nwords such as \"notify\" and \"consent.\" It is simply unclear\nwhether the bill would exclude parental consent requirements.\nThe bill could thus be read to invalidate laws in the twenty-one\nStates that require some form of parental consent, including the\nPennsylvania abortion statute upheld this week by the Supreme\nCourt in Casey.\n- 2 -\nJUL- 1-92 WED 23:23 POLICY DEVELOPMENT\n04\nSo read, the bill would go well beyond Roe and later cases.\nIn Bellotti V. Baird, 443 U.S. 622, 647 (1979), for example, a\nplurality of the Court ruled that a parental consent requirement\nfor abortions by minors would be constitutional if it contained a\njudicial bypass provision. And in Planned Parenthood Association\nV. Ashcroft, 462 U.S. 476, 493-94 (1983), the Court upheld\nanother parental consent provision with a judicial bypass. The\nbill could be read to overrule these cases to the extent they\npermitted such consent provisions. The bill would not,\ntherefore, codify Roe as \"applied in subsequent cases from 1973\nto 1988,\" as it claims to do. Section 2(b).\nAlthough the revised bill would permit States to protect the\nrights of unwilling individuals to refrain from performing\nabortions, the bill does not permit institutions to refuse to\nperform abortions. Thus, a hospital whose board or sponsoring\norganization was opposed to abortions could nevertheless be held\nliable for refusing to perform them. Indeed, the bill could now\nbe read to require institutions to hire willing individuals in\norder to provide abortion services. Similarly, although the\nSenate bill has been amended to allow a state to refuse to pay\nfor abortions, section 3 (b) (2), nothing in that provision or any\nother part of the bill appears to permit a state to deny the use\nof a state facility to a woman who was willing to pay for the\nabortion. The bill might even be construed to require the states\nto provide state facilities for abortions where private\nfacilities are unavailable.\nFurther, the revised bill contains no exception for informed\nconsent and waiting periods. State laws requiring that factual\ninformation concerning the nature of the abortion procedure and\navailable alternatives be made available to a woman twenty-four\nor forty-eight hours prior to an abortion would thus be\ninvalidated. Thirty-two states currently have such laws. The\npurpose of such provisions is typically to ensure that the\nwoman's decision to abort is free, reflective and informed. That\nstate purpose would be illegitimate under the bill.\nII. Congressional Authority\nThe bill has been significantly revised to address the\nCongress' power to adopt it. The bill asserts that Congress has\nthe authority to enact the bill under both the Commerce Clause\n(Art. I, § 8) and section 5 of the Fourteenth Amendment of the\nConstitution. See section 2 (a) (4). We continue to doubt whether\nCongress has authority to enact this legislation on the proffered\ngrounds.\nIn commenting on earlier versions of this legislation, we\ncriticized the suggested reliance on Congress' power under\nSection 5 of the Fourteenth Amendment, arguing that the Section 5\nauthority does not extend to fixing the content of the\n- 3 -\nJUL- 1-92 WED 23:24 POLICY DEVELOPMENT\nP.05\namendment's substantive provisions. We are therefore pleased\nthat the bill now acknowledges that \"Congress may not by\nlegislation create constitutional rights\" and purports to create\nonly \"statutory rights.\"\nHaving recognized that Congress may not create\nconstitutional rights or alter their content, the bill's drafters\nhave now sought to assert a connection between recognized\nconstitutional rights and the statutory right to abortion that\nthe bill would adopt. That assertion, however, is unpersuasive.\nFor example, the bill suggests that the statutory rights it\ncreates would protect \"liberty.\" Section 2 (a) (4). The\nFourteenth Amendment, however, prohibits only certain\ndeprivations of liberty, for instance those that have no rational\nrelationship with a legitimate state interest; were it to\nprohibit all deprivations of liberty, it would forbid an enormous\nrange of laws including laws against homicide. Thus, to say that\na proposed federal statute prevents the States from restricting\nliberty in general is to say almost nothing about whether the\nfederal statute in any way implements the commands of the\nFourteenth Amendment. The bill also asserts that state\nrestrictions on abortion interfere with women's exercise of\nconstitutional rights unrelated to abortion. Section 2 (a) (2) (D).\nThe bill does not say what these other rights are, so it is\nimpossible to tell how it would keep the States from interfering\nwith them.\nAs we have noted with respect to earlier versions of this\nlegislation, Congress' power under the Commerce Clause has been\nheld to be quite broad. It is likely that Congress could enact\nsome legislation concerning abortion pursuant to that power. The\narguments now put forward to support this legislation under the\nCommerce Clause, however, are still troublesome. For example,\nthe bill finds that restrictions on abortion \"burden interstate\ncommerce by forcing women to travel from States in which legal\nbarriers render contraception or abortion unavailable or unsafe\nto other States or foreign nations.\" Section 2 (a) (2) (A) (ii). We\nfail to see how any increased interstate travel resulting from\ndiverse State laws regulating abortion would constitute a burden\non commerce. Moreover, the argument that travel from one\njurisdiction to another justifies a single national abortion law\non commerce grounds proves too much, for it could justify uniform\nfederal laws on any subject, which is inconsistent with the\nnotion of the federal government as a government of limited\npowers.\nFinally, in our view Congress' intervention in this area\nwould usurp a field of legislation traditionally reserved to the\nStates. As must be obvious from the public reaction this week to\nthe Supreme Court's Casey decision, the policy choices in this\narea are difficult and national consensus is elusive. The\n- 4 -\nJUL- 1-92 WED 23:25 POLICY DEVELOPMENT\nP.06\npolitical outcomes of fifty distinct state processes would be far\nmore likely to represent the genuine diversity of views that\nexists on this subject than would a uniform federal code\nentrenching a more restrictive regime than that of Roe and Casey.\nObservance of federalism is thus particularly desirable with\nrespect to abortion regulation.\nIn keeping with the President's position that \"[a]s a\nnation, we must protect the unborn, Message to the House of\nRepresentatives Returning Without Approval the District of\nColumbia Appropriations Act, 1990, 25 Weekly comp. Pres. Doc.\n1801 (Nov. 20, 1989), and for the reasons explained above, the\nDepartment of Justice opposes the enactment of the bill, and if\nthe bill were presented to the President in its current form, I\nand the President's other senior advisors would recommend a veto.\nsincerely,\nUPBan\nWilliam P. Barr\nAttorney General\n- 5 -"
}