Friday, July 11, 2008
Put Up or Shut Up
"My point is that these cases have finally disclosed an inconvenient truth: The plaintiffs tort bar makes obscene profits at incredible profit margins. ... The reason we hear nothing about these law firms is simple: The tort lawyers are among the biggest contributors to the Democratic party. Not only does Congress ignore the obscene profits of the tort bar, but new laws are being proposed or passed that protect or enhance those profits. An example is the recent bill to allow tort lawyers to deduct 'loans' made to clients to finance their litigation", John Watson letter to the WSJ, 25 June 2008.
This is one of the most economically illiterate pieces the WSJ ever printed. WSJ, you should be ashamed of yourself. It reminds me of a lecture about predatory pricing George Stigler once gave in his class, "The Organization of Industry". Stigler discussed the "counterfactual" we should have seen but didn't. Suppose Watson is right, i.e., the tort bar makes "obscene" profits, however measured. What should we see? Harvey Pitt (HP), the worst SEC chairman we've ever seen, in my opinion, would not have joined Fried Frank, oh no, he would have joined William Lerach, or set up his own plaintiffs' firm. I await Chris Cox's leaving the SEC to join HP in their new plaintiffs' firm. Sure. And pigs will fly. Why aren't partners leaving large New York law firms like: Cadwalader, Sullivan, etc., to form sucessors to Milberg Weiss? Milberg Weiss is no more. The door is open. Where are the profits? What is Watson talking about?