May 12, 1992 PRESIDENT BUSH ON LEGAL REFORM +quot;America has become the most litigious so

May 12, 1992


                 PRESIDENT BUSH ON LEGAL REFORM


     "America has become the most litigious society on Earth. 
     Frivolous lawsuits are exhausting our ability to compete.  If
     we were as good at rewarding success as we are at suing each
     other, we would be a century ahead of the rest of the world."

                              President George Bush
                              January 30, 1992


Summary:  Reducing Abuse and Promoting Competitiveness

o    President Bush understands that promoting American
     competitiveness means eliminating barriers to new jobs, to new
     products for consumers, and to new applications of existing
     technology.  Unfortunately, the country's obsession with the
     lawsuit is denying consumers new products, manufacturers new
     sources of income, and workers new sources of jobs.  As Vice
     President Quayle told the American Bar Association last
     August, "Overuse and abuse of the civil justice system has
     become a self-inflicted competitive disadvantage."

o    President Bush's legal reforms will meet government's
     responsibility to provide a swift, fair, and effective civil
     justice system.  Spearheaded by Vice President Quayle, the
     Bush Administration is working aggressively to reform the
     legal system:  changing the way government lawyers handle
     cases, advising states on how to reform anti-competitive
     procedural laws, proposing cost-saving changes to the rules
     governing federal lawsuits, and offering a broad array of
     legal reforms which now await action by Congress.

o    The President has already signed an Executive Order
     implementing many of the Administration's reforms for lawyers
     in the federal government.  However, the success of legal
     reform will require more than executive action.  The President
     has asked Congress to approve the Access to Justice Act, which
     would enact his major reforms, as soon as possible.  And the
     Administration has been championing important changes to the 
     federal procedural rules before committees that will
     eventually report to the Supreme Court.

o    Comprehensive reform will also require cooperation by those in
     the legal profession who, until now, have all too often denied
     responsibility for the erosion of public confidence in our
     legal system.  America's lawyers, more than most, have an
     important role to play in reforming the civil justice system
     to ensure its fairness and efficiency.

o    The net result of the President's legal reforms would be
     reduced costs for products and services, and fewer delays in
     resolving lawsuits.  Many Americans in rural and urban areas,
     for example, would enjoy better access to health care, now
     denied because doctors fearing lawsuits have been unwilling to
     practice.


The Problem:  An Overburdened Civil Justice System

o    Many aspects of the present legal system encourage excessive
     and meritless litigation.  The costs created by overburdened
     courts are borne by individuals, small businesses, and other
     employers in the form of excessive legal fees and high court
     costs.  

     --   The ABA estimates we will have one million lawyers by the
          year 2000, a 34% increase in one decade.  In terms of
          international comparisons, the United States has 281
          lawyers per 100,000 citizens, whereas Japan has just 11
          lawyers per 100,000 citizens.  

     --   As the number of lawyers has grown, so has the number of
          cases clogging our courts.  In 1989, 18 million new civil
          cases were filed in state and federal courts, amounting
          to almost one lawsuit for every ten adults.  Since 1955,
          the number of lawsuits filed in federal courts each year
          has tripled, from 59,375 to 217,874 in 1990. 

     --   It now takes over a year to resolve 40% of the lawsuits
          filed, and delays of 3 to 5 years are not uncommon.

o    Higher legal costs mean Americans pay higher prices for
     everything from basic consumer goods to medical treatment.

     --   Consumers and workers end up footing the bill for the
          excesses and inefficiencies of our legal system.  One
          study calculates that the direct costs of tort litigation
          alone total $117 billion a year.  Indeed, one in seven
          companies indicates that it has laid off employees
          because of liability concerns.

The President's Agenda for Civil Justice Reform in America

o    President Bush is responding directly to the litigation
     explosion.  He is challenging defenders of the status quo to
     step aside for the sake of competitiveness.  He is challenging
     us to reform our legal system for the sake of American
     citizens denied access to real civil justice.  

o    The President has endorsed fifty proposals devised by the
     Council on Competitiveness which, once enacted, will reduce
     litigation costs, promote swifter justice, and restore
     integrity to the civil justice system.  None of the
     President's reforms will impair any substantive legal rights. 
     They will simply ensure that deserving victims receive just
     compensation more quickly and at less expense.  

o    President Bush's proposals will reduce abuse of the system,
     and will promote choice for parties in deciding how to resolve
     a dispute.  Details of the President's proposals include:

     --   Multi-Door Courthouse -- The President's proposals would
          establish alternative dispute resolution (ADR) programs
          in designated federal courts.  These programs will help
          litigants choose less costly and less complicated ways to
          resolve their disputes.  The President is also calling
          for increased use of judicial sanctions to stop frivolous
          lawsuits.

     --   Discovery Reform -- Approximately 80% of the time and
          cost of a lawsuit involves discovery, the pre-trial
          investigation of the case's facts.  The President's
          proposals would require automatic disclosure of basic
          information and mandate discovery planning conferences in
          federal suits.  Additional discovery would be governed by
          incentives to prevent discovery being used as a weapon of
          intimidation. 

     --   Fairness Rule -- The United States is one of the few
          countries that does not allow the winning party to
          recover the costs of litigation from the losing party. 
          The President's proposals would reduce frivolous suits by
          allowing the winner to recover costs from the loser in
          certain types of cases.  The loser would have to pay
          costs equal to his own costs in the suit, but would not
          have to pay costs if the court determines that the
          payment would be "unjust."   

     --   Expert Witness Reform -- Unlike ordinary witnesses who
          may offer only factual testimony, expert witnesses
          provide special opinions which may hold added weight with
          juries.  Many expert witnesses have become "hired guns,"
          traveling from court to court to give testimony.  The
          President's proposals will require federal courts to
          verify the legitimacy of expert witnesses, and to
          ascertain that their testimony is based on "widely
          accepted" theories instead of "junk science."  The
          President's proposals also will ban the practice of
          paying fees to experts only if a successful verdict is
          obtained.  These arrangements can tempt experts to give
          overly-biased testimony.

     --   Punitive Damages -- The current system allows unlimited
          punitive damages, which often generate random and
          indiscriminate awards unrelated to actual harm.  The
          President's proposals would restore fairness and promote
          predictability by placing appropriate limits on punitive
          damages, dividing trials into separate phases for
          determining liability and damages, and requiring clear
          proof of malicious wrongdoing.  Eliminating unpredict-
          ability will also reduce insurance premiums for product
          liability and medical malpractice coverage.

o    The President has also integrated civil justice reforms into
     other legislative proposals, including health care reform. 
     The practice of defensive medicine, which inflates health care
     costs, has been widely attributed to doctors' fears of facing
     meritless medical malpractice suits.  Abusive malpractice
     suits also have reduced the availability of quality health
     care in rural and inner-city areas.  Ending exaggerated claims
     and reducing premiums will mean the return of physicians and
     vital preventive care to under-served communities.

Executive Action, Congressional Delay

o    Despite the urgency of legal reform, Congress continues to
     stall action on the President's proposals:  

     --   Medical Malpractice Reform.  The President's medical
          malpractice reform bill has languished in Congress for
          almost an entire year.  If enacted, this legislation
          would lower premium costs in rural areas and inner-cities
          by removing incentives to file huge damage claims.

     --   Comprehensive Legal Reform Legislation.  President Bush
          transmitted the "Access to Justice Act of 1992" on
          February 4, 1992, which incorporates in legislation those
          reforms that require congressional action.  To date
          Congress has not acted on the proposal.  

o    Congress has also failed to pass Administration-backed product
     liability legislation, which would reform the product
     liability system by reducing the risk of excessive awards,
     providing for prompt payment of legitimate claims, and
     encouraging settlement of disputes without costly, protracted
     litigation.


o    Undaunted by congressional inaction, President Bush has used
     his executive authority to further the objectives of legal
     reform in areas that do not require legislation:  

     --   Executive Action - President Bush signed Executive Order
          12778 on October 23, 1991 implementing many of the
          Administration's reforms for lawyers in the federal
          government, thereby making the government's litigators a
          model for the private sector.  

     --   Federal Rules of Civil Procedure and Evidence - President
          Bush has asked the Supreme Court, through its rule-making
          committees to amend many of the Federal Rules of Civil
          Procedure and Evidence to incorporate proposed evidence
          and discovery reforms.

     --   Model State Legislation - Most of the reforms President
          Bush has proposed for the federal system are just as
          needed in the states.  To facilitate state reform, the
          Administration has published Civil Justice Reform Model
          State Amendments and the Model Punitive Damages Act to
          serve as blueprints for state reforms, and the Justice
          Department and Council on Competitiveness are working
          with states to enact these and other related reforms. 
          Since most civil litigation occurs at the state level,
          reforms implemented through state legislatures will have
          a dramatic impact.