GlobalTort : Commentary from lawyers and experts on mass torts, law, insurance and science

"Big law" - and litigation boutiques -  love large problems because they create many years of work. Indeed, the problems sometimes create far more revenue than myriad deals. Three examples popped up today, with two of them in AmLaw's Litigation Daily.

A story on Lehman's bankruptcy notes that professional fees paid by the estate (not all to lawyers) are now up to $1.5 billion. The big winner is New York and some of its law firms, such as Weil, with Lehman estate billings of $ 375 million and Milbank with Lehman estate billings at $ 133 million. 

Then there is a story on Chevron's increasingly desperate bid to avoid paying an $ 18 billion judgment for polluting Ecuador and creating cancers. Chevron filed a "privilege log" listing the lawyers and law firms it has used for for various aspects of the litigation. According to the story:

"In a recent discovery filing, Chevron disclosed that it is employing no fewer than 39 law firms in the Ecuador matter (including four law firms representing the related individual defendants, but not including non-U.S. counsel retained in connection with potential enforcement actions). By the Ecuadorian plaintiffs' count (which we did not verify), Chevron employs close to 500 outside lawyers or paralegals to counter their claims.

Among the 39 law firms listed are 15 Am Law 100 firms—Akin Gump; Ballard Spahr; Boies, Schiller, Crowell; Gibson Dunn; Holland & Knight; Jones Days; King & Spalding; Mayer Brown; Nutter McClennen; Pillsbury;  Schulte Roth; Skadden; Sonnenschein; and Steptoe—and four smaller firms that qualify for the NLJ 250."

Finally, there is a Reuters story on Western MacArthur and insurance coverage battles over its asbestos losses. The latest story is a New York appellate court opinion confirming an award of $ 420 million for Travelers and against reinsurers. The ruliing is the latest step in a journey that dates back at least as far back as Western suing Travelers for coverage - in 1993. No doubt there were negotiations before the start of the 1993 litigation. So, two decades and many lawyers and law suits to deal with just one part of an insurance portfolio for one asbestos defendant. 

Conclusion? The litigation industry will continue to expand for as long as short-term thinking continues to create large, long-term problems.  

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"Direct actions" allow an injured plaintiff to file a lawsuit directly against the insurer for a defendant. Direct actions are not allowed in many jurisdictions, but some do permit direct claims. When a direct action remedy is available, the FDIC is using it in bank failure cases. Kevin LaCroix has the story in a recent post at The D & O Diary.

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Carlyle Group's IPO papers include - so far - terms purporting to preclude future class actions over securities disclosures. Ahead should be a decision by the SEC on what it will say about the use of such terms. The story in a bit of detail is on the Conglomerate blog. The overall terms of the IPO are characterized in more detail - and more harshly - by Professor Davidoff in a very pointed article on DealBook. As he notes, the offering also eliminates most other traditional shareholder rights.  

The issues are important in many ways. Over time, the answers on the issues will impact companies that face mass tort claims because some of the companies face significant uncertainty, and also have a very real need to maintain a workable capital base.

Good, bad or otherwise, the reality of the marketplace is that financiers and lawyers will always be moving faster than government and existing laws and regulations. Simply including the terms in the IPO - if allowed - will create uncertainties and leverage that would not otherwise exist. Set out below is the introduction to Professor Davidoff's article - the entire article is well worth a read. 

"It is quite possible that the Carlyle Group, the private equity firm that is preparing to go public, is proposing the most shareholder-unfriendly corporate governance structure in modern history.

It starts with the fact that Carlyle is providing its soon-to-be public shareholders with no power over the company. Carlyle shareholders will have no ability to elect directors. Instead, Carlyle intends for the company to be controlled by its management, primarily its co-founders: Daniel A. D’Aniello, the firm’s chairman, and William E. Conway Jr. and David M. Rubenstein, the co-chief executives. They will have special power to elect Carlyle’s board of directors as long as they and Carlyle’s affiliates own more than 10 percent of the company." 

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Insurer "bad faith" has been a significant and growing problem ever since consulting heavyweight McKinsey & Company advised various insurers on financial engineering, and how to "manage" claims. For the history, see Professor Jay Feinman's great book - Delay, Deny, Defend - here is the web page for the book. Jay is a Distinguished Professor at Rutgers. 

The short-hand term "bad faith" actually is a misnomer. The real issue is that many insurers (not all) and their agents have built a business model based on refusing to pay claims. Insurers using this business model time and again breach the duty of good faith and fair dealing. Thus, instead of acting fairly and responsibly, they follow McKinsey's financial engineering advice on looking for excuses to refuse to pay claims instead of fairly evaluating and paying claims.  

I've often seen the lack of good faith in both my professional life and personal life. Some of the most egregious examples involve failure to pay for expensive treatments for cancer patients - the stories are real, the examples are legion, and people die and/or suffer terribly because of the practices of many  (but not all) health insurers.  Egregious also is the label for  insurers which refuse to pay asbestos claims - many still trump up excuses, and courts let them get away with it, thus helping to worsen the problems of mass tort litigation. 

For those interested in the subject, Rutger's is sponsoring a great looking February 29, 2012  conference on the subject  of "Bad Faith and Beyond." The speakers are top notch. The agenda is pasted below and includes heavyweights on both sides of the issues.  

Bad Faith & Beyond Conference - Agenda

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As we move further and further into an age of massive information sharing, it is logical that "sponsored research" remains a focal point in litigation over alleged or actual physical injuries and disease processes that evolve over time. More specifically, the pressures are growing as to medical advisors and disclosures involved in researching and communicating scientific information related to evolving disease processes and injuries. The pressures include assertions that information must be fully disclosed and should be evaluated by medical advisors who are leading experts in the area, and do not labor under conflicts of interest, whether "real" or "perceived." 

The most recent example I've seen arises in a new class action involving NFL players and concussions. The lawsuit is now pending in Philadelphia, and was filed filed by the Locks Law Firm, a significant national plaintiff's firm. The online press release also is pasted below. Note especially that the description chosen by plaintiff's counsel includes a focus on "sponsored research" and alleged conflicts of interest effecting medical professionals. 

PHILADELPHIA, Jan 19, 2012 (BUSINESS WIRE) -- Locks Law Firm attorneys Gene Locks, Michael Leh, and David Langfitt filed a class action lawsuit yesterday in Philadelphia against the NFL on behalf of all former NFL players, including seven named players and four spouses, all of whom are the class representatives. The named players include former Philadelphia Eagles Ron Solt, Joe Panos, and Rich Miano. The suit charges that the NFL and other defendants intentionally and fraudulently misrepresented and/or concealed medical evidence about the short- and long-term risks regarding repetitive traumatic brain injury and concussions and failed to warn players that they risked permanent brain damage if they returned to play too soon after sustaining a concussion.

Ron Solt, age 50, was an all-star guard for the Eagles from 1988 to 1991 and also played for the Indianapolis Colts, playing 10 seasons in all from 1984 to 1993. He suffered at least one concussion during an NFL game while with the Eagles, as well as multiple head traumas and concussions during practice that were never medically diagnosed. He now suffers from substantial memory loss and persistent ringing in his ears.

Joe Panos, age 41, played as an offensive lineman in the NFL from 1994 to 2000 and was with the Eagles from 1994 to 1997. He sustained concussions while with the Eagles and Buffalo Bills. He currently experiences headaches, memory loss, irritability, rage, mood swings, and, sleeplessness.

Rich Miano, age 49, played as a defensive back for 10 seasons in the NFL between 1985 and 1995 and was with the Eagles from 1991 to 1994. He is now associate head coach of the University of Hawaii football team. He sustained at least one concussion while playing but is currently asymptomatic.

Gennaro DiNapoli, age 36, was an NFL center and guard from 1998 to 2004 who sustained repeated head impacts during his NFL career. He suffers from severe depression, memory loss, headaches, anxiety and mood swings.

Adam Haayer, age 34, was an offensive lineman from 2001 to 2006 for four teams. He had at least four concussions or concussion-like symptoms and deals with memory loss, depression, and anxiety.

Daniel Buenning, age 30, played as an offensive lineman in the NFL for four seasons from 2005 to 2008. He suffers from substantial memory loss, depression, trouble with concentration, short attention span, and mood swings.

Craig Heimburger, age 34, played on the offensive line for four teams between 1999 and 2002. He sustained multiple head impacts and concussions and suffers from dizziness, memory loss, and intense headaches.

Also named in the complaints were the wives of several players including Lori Miano, Summer Haayer, Ashley Buenning, and Dawn Heimburger.

"This action is necessary because the NFL knew about the debilitating and permanent effects of head injuries and concussions that regularly occur among professional players, yet ignored and actively concealed the risks," according to Locks.

The suit from Locks Law attorneys Gene Locks, Michael Leh and David Langfitt charges that the NFL voluntarily joined the scientific research as well as public and private discussions regarding the relationship between concussions and brain impairment when it created the Mild Traumatic Brain Injury (MTBI) Committee in 1994. Rather than naming a noted neurologist to chair this committee, it appointed Dr. Elliott Pellman, a rheumatologist who was a paid physician and trainer for the New York Jets, a conflict of interest, and had training in the treatment of joints and muscles, not head injuries. While the committee was established with the stated purpose of researching and lessening the impact of concussions on NFL players, it failed to inform them of the true risks associated with head trauma.

"Although athletes who suffered brain trauma in other professional sports were restricted from playing full games or even seasons, NFL players with similar head injuries were regularly returned to play with devastating consequences," according to Locks.

The suit was filed in U.S. District Court for the Eastern District of Pennsylvania. It seeks medical monitoring, compensation, and financial recovery for the short-term, long-term, and chronic injuries, financial and intangible losses, and expenses for the individual former and present NFL players and their spouses.

Locks Law Firm ( http://www.lockslaw.com ) also plans to file additional suits on behalf of other NFL players in the upcoming weeks.

About Locks Law Firm:

With a litigation team of 23 personal injury attorneys and nearly 100 outstanding legal professionals and auxiliary staff members, Locks Law Firm serves plaintiffs and is dedicated to victims of corporate neglect and malfeasance. The firm, with offices in Philadelphia, New York, Cherry Hill, NJ, and Englewood Cliffs, NJ, is known for groundbreaking verdicts and settlements in mesothelioma, asbestos, pharmaceutical, mass tort, personal injury, and product liability cases. For more information, please visit LocksLaw.com.

SOURCE: Locks Law Firm

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Here's some incentive to stick with that resolution to exercise more often. Researches in Boston at Dana-Farber have made it into Nature with a new finding on another aspect of why exercise helps us live longer and feel better.  Part of the answer it turns out is that exercise stimulates production of a hormone now dubbed "irisin," and it helps to stimulate "good fat" instead of "bad fat." The short story is below; the ScienceDaily summary includes a link to the full article. 

"There has been a feeling in the field that exercise 'talks to' various tissues in the body," said Spiegelman, a professor of cell biology at Harvard Medical School. "But the question has been, how?"

According to the report, the irisin hormone has direct and "powerful effects" on adipose, or fatty, tissue -- subcutaneous deposits of white fat that store excess calories and which contribute to obesity.

When irisin levels rise through exercise -- or, in this study, when irisin was injected into mice -- the hormone switches on genes that convert white fat into "good" brown fat. This is beneficial because brown fat burns off more excess calories than does exercise alone.

Only a small amount of brown fat is found in adults, but infants have more -- an evolutionary echo of how mammals keep themselves warm while hibernating. In the wake of findings by Spiegelman and others, there has been a surge of interest in the therapeutic possibilities of increasing brown fat in adults.

Along with stimulating brown fat development, irisin was shown to improve glucose tolerance, a key measure of metabolic health, in mice fed a high-fat diet.

The discovery won't allow people will be able to skip the gym and build muscles by taking irisin supplements, Spiegelman cautioned, because the hormone doesn't appear to make muscles stronger. Experiments showed that irisin levels increase as a result of repeated bouts of prolonged exercise, but not during short-term muscle activity.

The Dana-Farber team identified irisin in a search for genes and proteins regulated by a master metabolic regulator, called PGC1-alpha, that is turned on by exercise. Spiegelman's group had discovered PGC1-alpha in previous research."

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Targeted killings are back online at Opinio Juris due to the recent deaths of Iranian nuclear scientists. The post includes links to various factual materials about the apparent tactics of the Israelis. 

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Thanks to the Madison County Record, the numbers are in and published for new asbestos case filings for 2011.  Last year ties the largest prior year at 953. The numbers once again prove - if you build it, they will come.  The 2011 trial dates will help to fill up the trial date slots previously assigned. 

2011 – 953

2010 - 752

2009 - 814

2008 - 639

2007 - 455

2006 - 325

2005 - 389

2004 - 477

2003 - 953

2002 - 809

2001 - 889

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Mondaq brought up information leading me to this very useful article summarizing recent Canadian decisions on cooperation between plaintiff's counsel in Canada and in other nations.  The article is from Lerners, an Ontario firm that represents both plaintiffs and defendants in class action litigation. A January 6, 2012  decision on the subject is detailed in AmLaw's Litigation Daily on January 11, 2012. 

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