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Lowering the bar on the plaintiffs bar

081116 editorial donziger
Profits from suits designed to extort funds from deep pockets are ploughed back into Democratic party politics. (AP Photo/Dolores Ochoa)

We've written in this space often about how plaintiffs' lawyers — the sort who work on contingency cases ranging from slip-and-fall to shareholder class actions — corrupt the nation's politics.

Huge profits from suits designed to extort funds from deep pockets are systematically ploughed back into Democratic party politics, in exchange for new laws and regulations that make extortionate suits easier.

But the federal Second Circuit Court of Appeals issued an extraordinary 127-page judgment on Monday highlighting how much more effective an unscrupulous American attorney can be when working in a country where the rule of law is less firmly established.

One lesson from the case, Chevron v. Donziger, is that such corruption has severe consequences for the administration of justice, even when directed at a seemingly unsympathetic defendant, such as a large oil company.

Steven Donziger, the American trial lawyer at the center of this years-long case, stood personally to gain $545 million for working on behalf of Ecuadorean plaintiffs suing over pollution allegedly left behind in that country by Texaco, an oil company later bought up by Chevron.

That's a lot of money, and to get it the plaintiffs and their lawyers made up and misrepresented evidence. Donziger's team also paid a half-million dollar bribe to an Ecuadorean judge, thus inducing him to sign a final judgment which they had secretly written for him themselves. The reason it had to be done that way was that it wasn't enough just to win the case — Donziger needed to win the case on very specific legal grounds. The wrong sort of victory, an American judge later noted, could have meant 90 percent of the money actually going to communities affected by the pollution, leaving a mere fraction (only $950 million to $1.9 billion) for Donziger and his clients.

After the bribe, the court ordered Chevron in Ecuador to pay $9.5 billion in damages. When it learned that this monumental and ridiculous judgment had been obtained by bribery, Chevron hit back with a racketeering lawsuit against Donziger in U.S. court, which it won. In 2014, a federal judge barred Donziger and his clients from collecting any money from Chevron within the United States pursuant to the tainted Ecuadorean judgment.

Monday's ruling by the Second Circuit Court of Appeals, like the 2014 district court ruling it upheld, did not weigh the merits of Chevron's liability for the pollution. But the chemical evidence at the polluted sites suggested that it probably occurred more recently, after Texaco had pulled out of Ecuador. The mess was more likely caused by Ecuador's state-run oil company, which has controlled the sites in question since Texaco cleaned them up in the 1990s. (The state-owned oil company would later hire the corrupt judge from Donziger's case.)

It would be a mistake to take consolation in the fact that judges are very rarely bribed in America. For there is plenty of money-grubbing here, too, and it corrupts both politics and justice.

In the recent Garlock case, for example, unscrupulous trial lawyers were caught double-dipping in asbestos litigation, filing fraudulent claims against several companies on behalf of the same mesothelioma patients. The case threatens to expose massive schemes by lawyers to defraud trust funds that had been set up to help sick people.

Sheldon Silver, former Speaker of the New York State Assembly, was convicted and sentenced to 12 years in prison for, among other things, a corrupt arrangement in which he used taxpayer money to steer asbestos patients toward his private law practice so he could collect referral fees from asbestos litigators without having to do any work.

Dickie Scruggs, brother-in-law of former Sen. Trent Lott and the brain behind the national tobacco settlement of the 1990s, was already a multimillionaire when he was convicted and imprisoned in Mississippi. He had tried to bribe two judges so the court would award him larger attorneys' fees in cases related to the damage from Hurricane Katrina.

The underlying lesson is that scoundrels on the plaintiffs' bar often hide their crimes behind sympathetic clients, to whose well-being they are utterly indifferent. The legal system needs greater transparency and reform to eliminate incentives for unscrupulous practitioners to snatch ill-gotten gains. We believe in free trade, but we don't want America to be the world's main exporter of corrupt lawyers.