Address to the Annual Meeting of the American Bar Association,
August 13, 1991 - ( On Legal Reform )

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Many of the Working Group's deliberations centered on the issue of Discovery under Rule 26. This reflects the view of many that, as one corporate counsel told us, "discovery is 80 percent of the problem" Anyone who has ever sued or been sued knows discovery too often becomes an instrument of delay and even harassment. Unnecessary document requests and depositions can disrupt or put on hold a company's entire research and development program, and the very idea, of limits on discovery is outdated. rm told of one judge who has said his policy is 'Just to have the parties exchange filing cabinets."

Worse yet, discovery can be a virtually cost-free weapon for the requesting party. That is what we want to change. The Council suggests the following reform. First, to require disclosure of some basic, core information on both sides. Then, to have the parties meet to formulate a discovery plan, with preset quantitative limits, approved by the court and changeable only with good cause. Discovery beyond the set limits is permissible - but only so long as the requesting party pays his adversary's production costs. We serve no purpose by allowing, the extreme waste and expense of marginal and abusive discovery under the federal ru1es. It is time that we bring it to an end.

It's also time to give people a greater right to choose among methods of resolving disputes. We believe the system should provide a "multidoor courthouse," where parties have options other than formal litigation. This idea builds on much of the ABAs important work on this subject. The Council's recommendation is that before the machinery of litigation kicks in, both sides sit down together - with a mediator, or in a conference where they tell their stories to an experienced lawyer volunteering his or her time. The object would be to probe the issues carefully but informally, and to weigh the chances for concluding the matter as quickly as possible and without a trial. In line with this procedure, alternative dispute resolution would be made more widely available.

Now, this idea will, of course, empower people with disputes, and it'll help unclog the courts. But it will also help preserve relationships that might be destroyed by the' stresses of a courtroom fight, and this is something we should all take very seriously. The great Judge Learned Hand once said that he dreaded a lawsuit "beyond almost anything short of sickness and death." A lot of Americans see things the same way. They find the system bewildering, a little intimidating, and frightfully expensive. That is why the Council advises that we do our best to give the American people a multidoor courthouse. After all, the system belongs to them, and it ought to respond to their needs.

On the question of financing litigation, there's been a,lot of discussion on the relative merits of a 'loser pays' rule. From our law school days, we know it goes by the name, the English Rule. But in fact, it's the rule in virtually every other western country. The English Rule is grounded in fairness - in the equitable principle that a party who suffers should be made whole. Where the Rule operates, the parties are encouraged to look more carefully at the merits of their cases. And there's no doubt that it weeds out a lot of frivolous claims and specious defenses.

On the other hand, to apply the rule too broadly could discourage some suits with true merit - in civil rights and the environment, to name two, areas. For that reason, we propose an experiment: to apply the English Rule in federal diversity cases where the plaintiff elects diversity.

There would be two important features to this experiment with the English Rule. First, the amount to be paid by the losing party would not exceed the amount he spent on his own case. This will keep the other side from loading up expenses to penalize the loser. Second, the rule won't be a guillotine; there will be an element of judicial discretion in its application.

Another item of great concern to the Council is punitive damages. These damages, of course, become an issue only after an injury is found and a compensatory sum is calculated. By definition, punitives aren't essential to compensation; in fact, some jurisdictions don't even have them. Most do, though, because for centuries they've been viewed, I think properly, as an effective punishment and deterrent for outrageous conduct.

The problem is, that the method of assessing punitive damages has developed over, the years without any real structure or limits. Even a casual observer knows that, in the last several decades, punitive damages have grown dramatically in both frequency and size. What began as a sanction only for the most reprehensible conduct has now become almost routine. In California, estimates are that one in every ten jury awards now includes punitive damages, in amounts averaging more than $3 million. And as these awards become more common, so do the, instances of their arbitrary, even freakish application.

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