The problem of tort reform: federalism and the regulation of lawyers.

• Author: Gasaway, Robert R.

Over the past decade, the term "tort reform" has become a popular phrase among corporations, politicians, and lawyers alike. Corporations have seen tort reform as a means of controlling the massive liabilities to which they have been exposed during recent years, as certain lawyers have become more focused on amassing political influence and certain state court systems have allowed spiraling damage awards against corporate defendants. Politicians have frequently invoked the term, prominently so in the most recent Presidential election, raising hopes that executive and legislative action soon might be taken to cure what ails our nation's civil justice system. And attorneys of all stripes have often invoked the term as a label for a wide variety of legal reforms that they would happen to prefer.

To date, this extensive talk of tort reform has produced limited results. Interested parties have been quick to cite the flaws of the current tort litigation system, but efforts to correct those flaws have been largely unsuccessful. Legislative solutions to existing problems have been hard to come by, and even those measures that have been enacted have met with a host of post-enactment obstacles to success, including invalidation by state supreme courts.(1) While the term tort reform is frequently bandied about, there seems to be a lack of any consensus on what the term means, let alone what needs to be done under its banner.

What is clear is that our civil justice system faces dramatic problems of a kind unparalleled in its more than two centuries of existence. There has been a dramatic increase in the number of suits and the magnitude of liability payouts. (2) In addition to the direct losses from liability payouts, the tort system imposes costs by increasing the prices of consumer goods, discouraging technological innovation, and decreasing the supply of reasonably priced insurance. (3) One scholar has estimated that tort liability costs American individuals, businesses, municipalities, and other government bodies at least eighty billion dollars a year. (4)

Against this backdrop, the time is ripe to step back and attempt to ascertain a larger perspective on some of the causes of the current tort crisis. This Essay addresses two such factors, selected because they are often not the first that come to mind: federalism and the ethical regulations governing attorneys. Both topics, while often not considered under the rubric of "tort reform," have profoundly shaped the civil justice system as we know it today. How we approach both issues will be of great significance in future efforts to reform civil litigation and improve the administration of justice in the United States.

1. FEDERALISM, PREEMPTION, AND THE NEED TO PREVENT STATE USURPATION OF THE FEDERAL COMMERCE POWER

   Perhaps no area of law has been the subject of as much attention and debate during the tenure of the Rehnquist Court as has federalism. Over the past seven years, the Supreme Court has effected wholesale changes in the way the courts view the prerogative of the States to legislate in those matters that are of local concern. Most notably, the Court has breathed life back into the Commerce Clause, ruling that neither the possession of guns near schools, (5) nor the availability of a civil remedy for gender-motivated violence, (6) were proper topics for Congressional, as opposed to state, regulation. Just as important, in its interpretation of the Eleventh Amendment and the concept of sovereign immunity, the Court clarified the circumstances in which the federal government can permit States to be haled into federal (or state) court. (7)

   This renewed focus on the importance of States' prerogatives is for the good. For too long, the bedrock principle that our national government is one of enumerated powers, and the related precept that the States are distinct sovereign entities entitled to regulate that which is not delegated to the federal government, had been lost in legal and political dialogue. As such, traditional state authority had been compromised, to the point where the federal government was attempting to regulate all manner of local activity, and even to commandeer the mechanisms of the States' own governments. (8) The pendulum of dual sovereignty had swung too far toward concentration of power at the national level.

   But it must be remembered that federalism is not, and never has been, a codeword for giving all power to the States. Federalism, properly defined, does not mean power in the States as opposed to in Washington. Rather, federalism means an efficiency-enhancing division of governmental labor. It is the term we use to describe our unique system of governance, in which the atom of sovereignty has been split not just between two levels of government, but between two distinguishable sets of functions. (9) Federalism, properly defined, is equally undermined by the tenet that if anything is wrong then the national government must fix it, and by the opposite, "states' rights" tenet that any and every power should be devolved to the States.

   As we move forward, the Supreme Court's ongoing reexamination of the Constitutional framework for the relationships between state and national powers will be most useful not as signifying that the States should have increased authority at the expense of the national government, but rather as a powerful reminder that the question of state versus federal must be taken into account at the outset of any debate over how a given problem should be addressed. Most importantly, inherent in the very notion that federalism is properly viewed as a...