Ethical Issues in Asbestos Litigation
81 Pages Posted: 8 Jul 2005
Asbestos litigation has given rise to over 50,000,000 claims against 8400 former producers, distributors, installers and sellers of asbestos-containing products. To date, 850,000 claimants have sought compensation, costing businesses and insurance companies over $70 billion and resulting in more than 70 bankruptcies. Over 100,000 deaths are attributable to asbestos exposure with an additional 40,000 deaths anticipated over the next 30 years. Despite the significance of the ethical issues generated by the processes of acquiring, pressing and settling the most massive litigation in history, the legal literature is substantially devoid of any such discussion. One possible reason for this paucity of coverage is that rules of ethics are rarely applied to asbestos litigation despite clear and systematic violations of those rules. In practice, it is as if each state supreme court had appended to its rules of ethics, the following exclusion: These rules shall not apply to asbestos litigation.
In this article, I undertake to discuss some of the ethical issues raised by asbestos litigation from the perspective of both plaintiffs and defendants' counsel. For example, despite the fact that the large majority of asbestos claimants have been recruited by paid agents receiving substantial sums from attorneys - in excess of $50 million - rules prohibiting such solicitation are virtually never invoked. Similarly unenforced are rules requiring that fees and expenses be reasonable.
Undoubtedly, the most complex ethical issues in asbestos litigation involve conflicts of interest. In addition to discussion of these issues, I also discuss conflicts of interest issues unique to asbestos-related bankruptcies including pre-packaged bankruptcy filings and the selection and role of the futures representative. This discussion is informed by an overview of asbestos-related bankruptcies from a law-in-action perspective, including discussion of the ethical issues generated by the unprecedented control that a small number of law firms exercise over the creation of asbestos bankruptcy trusts and the procedures for making claims against the trusts.
Conflicts of interest also abound on the defense side, especially because many defense firms represent multiple defendants with conflicting interests. These conflicts are exacerbated by recent state tort reform legislation which grants defendants the opportunity to seek to allocate substantial responsibility for any injury to other entities including other solvent corporations - even those not named as defendants in that litigation - and to trusts created in the wake of asbestos-related bankruptcies for payment of claims. This effectively requires defense counsel to switch roles and put on plaintiffs' cases against other possible responsible parties. Nonetheless, few defense firms appear to be aggressively pursuing their clients' interests in this regard. I consider a variety of the ethical issues thus generated. Other relevant tort reforms discussed that impact on conflicts of interest include those substantially limiting joint liability for noneconomic damages.
Even if Congress enacts legislation presently under consideration to create an administrative alternative that would eliminate substantially all asbestos litigation, what has thus far transpired will stand as a stark reminder of the failure of the bar and the courts to have applied rules of ethics to the most massive litigation ever.
Keywords: Asbestos, asbestos litigation, screenings, pre-packaged bankruptcies, solicitation, witness preparation, conflicts of interest, bankruptcy rule 2019, limited funds, creditors committees, tort reform, future claims representative, legal ethics, mass torts
JEL Classification: K13, K40, K41, K42
Suggested Citation: Suggested Citation