An Interview with Ted Frank of Overlawyered.com

Editor's Note: A few weeks ago, Ted Frank of Overlawyered.com announced that he was leaving the law firm of O'Melveney & Myers for a 'dream job' at American Enterprise Institute for Public Policy Research, where he'll manage the thinktank's litigation-reform work as director of the AEI Liability Project. When I heard Ted's announcement, I thought it would be interesting to inquire a little further. Ted was kind enough to answer the following questions in an e-mail exchange. --Evan Schaeffer

On Overlawyered, you described your position with AEI as your "dream job." Why?

There probably aren't a lot of college kids who voraciously consume their subscriptions to the National Review and the New Republic, look at the two-line biographies of the policy analysts doing think pieces, and say "I'd like to be doing that," but I was one of those people. I was notorious on campus for writing a prolific number of op-eds for the school paper and for a couple of political magazines. It got to the point that I was sufficiently frustrated with the infrequency of their publication schedules that a bunch of friends and I took over a dormant left-wing magazine that was sitting on an office and a pile of student funding, but couldn't get anything done because it was organized as a collective. We turned it into a functioning organization publishing a centrist magazine, and I taught myself how to do layout so that I could help get it out the door and I'd have someplace else to write.

And now I have the opportunity to play the sort of role that I admired in college and do it at a thinktank that's perhaps the best in the business, surrounded by great thinkers in the forefront of their fields and a squad of bright research assistants. Just in the first week of May, AEI sponsored seven programs, including talks by Richard Posner, Lawrence Silberman, Tyler Cowen, Lawrence Lindsey, and Camille Paglia; that's just a wonderful environment to be in, and I'm not even changing my Metro stop to go there.

It's worth clarifying that I have several other dream jobs, like Article III appointee, Solicitor General, or game show host. Some are more plausible than others; the Yankees' third-base slot looks to be locked up for a while. But when it comes to dream jobs, it's important to make a decision and commit to it. I learned that lesson from a woman I dated who jumped from network tv executive to memoirist to med student to dot-com executive to sitcom writer to radio commentator and back again a couple of times, even achieving a measure of fame and recognition in each of those positions. She had several lifetimes' worth of dream jobs, yet she was one of the unhappiest people I've ever known, because she was always dwelling on the roads she wasn't taking. The status anxiety of successful people is just a fascinating subject that hasn't been explored enough; it amazes me that John Adams went to his grave worrying that he'd be unfavorably compared to Thomas Jefferson.

Will you miss the day-to-day grind of litigation? What will you miss about it?

I think what I liked most about litigation was doing research, thinking, and writing on knotty issues, and I certainly liked that enough that I was prepared to spend the rest of my life doing litigation to keep doing that. So I'm fortunate in that I'll get to keep doing that four blocks away.

I've gotten to visit twenty different states and a bunch of places I'd never would've gone because of litigation I've done. I would miss that, too, but hopefully I'll get a chance to talk at some law schools.

I've worked for some great law firms doing some cutting-edge cases: on average of once a year, I got to learn about an industry—hotels, TV set-top boxes, office supply retailing, ammonia pipelines, wine corks, Indian gaming, seismic retrofitting—inside and out as part of some litigation or the other I was doing.  I invariably found that part of the job fascinating. I don't know what sort of consulting opportunities will present themselves while I'm at AEI, but I imagine that I'll end up missing that aspect of litigation, though I'm not sure that that qualifies as part of the "day-to-day grind."

I can amend that to add that, forty-eight hours out from my last day, I'm suffering blackberry withdrawal symptoms.

What will your responsibilities be as the director of the AEI Litigation Project?

I'm expected to organize a certain number of conferences, seminars, and monographs on litigation reform a year, plus I'm responsible for my own agenda of research and writing. I'm responsible for making the Liability Project a successful, influential, and worthy part of the liability reform debates—overseeing its intellectual agenda, being alert for important issues the Project might address, identifying talented academics and studies, and promoting the Project's work among government officials, journalists, academics, business executives, and professionals.

You've started a new weblog. Is it your first solo weblog? Why are you starting it now?

I'm not sure it's ready for prime time, but others have already discovered it.  It's a completely frivolous project.  I'm trying to keep it politics-free, though not always succeeding. Why now? I just wanted to be sure to have the tedfrank.com domain before someone else thought to grab it. I also wanted to experiment to see if a blog was a better means of communicating with my friends and family than the e-mails I send out; I'd be perfectly okay if it's just a couple of dozen of those reading it, and it's hard to imagine that it would be interesting to anyone who doesn't know me. I don't know if I'll keep doing it; the writing so far has been slapdash, and not up to my standards, but I have to maintain some discipline not to spend too much time honing posts if I'm going to do it at all.  As it is, it's going to be dormant for a few weeks while I travel.  Maybe my brother will let me write for his considerably-more-entertaining personal blog, and then I don't have to worry about these issues.

As for previous solo weblog efforts, the less said the better. No one seems to have noticed tedfrank.blogspot.com, which is just as well.

You mention that you'll have more time to write articles and books. Do you have any books in the works?

I have three ideas in the gestational stage, which may turn into books or may end up being shorter pieces or research projects for someone else. I don't want to say more for fear of jinxing it, but I don't think the subject matter will end up being a surprise to anyone who's been reading my stuff. Chris Kahrl of Baseball Prospectus has been asking me for years to write a baseball book for her publishing house, but that ship has sailed, and I don't see myself having time to do that.

If you could change one thing about the American tort system no questions asked, what would it be, and why?

When I buy an auto, I can choose the styling, I have several choices for size, color, warranty protections, stereos, headlights, tires, safety features; as I have, I can even pay extra to purchase a Toyota Prius that has an electric engine and reduced emissions. But what I can't do is negotiate the legal rules for product liability for my automobile purchase.  I don't buy "pain and suffering" insurance in real life, but I can't reduce the price of my auto by promising to waive seeking recovery for non-economic damages. I can't negotiate a lower price by promising not to seek punitive damages, or by promising that any experts I introduce at a trial will adhere to Daubert rules, or by promising not to sue for injuries caused by the failure to wear a seat-belt or by driving drunk. And perhaps some other consumer is especially mistrustful of corporations, lives in a state that limits damages, and wants to pay more to ensure a different set of legal rules for product liability than I would prefer. Right now, neither of us has this choice; we can't even single out a particular state's law that we would like to have applied, because the manufacturer's price has to account for the fact that I might relocate, have an accident and decide to sue in a judicial hellhole. And that's because even if I were to negotiate such a contract promising to adhere to a certain set of legal rules for tort suits against the manufacturer, courts would refuse to enforce it were I to breach that contract, so the manufacturer doesn't even try.

If sellers offering products or medical services were allowed to negotiate for different sets of legal rules, and consumers were allowed to choose, it would cut a Gordian knot and solve multiple problems with one change. Elected judges? Overpermissive rules for expert testimony? Exclusion of seat-belt evidence? Untrammelled non-economic damages? Joint-and-several liability holding the deep pocket 100% liable if they're held 1% responsible? Plaintiffs' venue shopping? All of these rules in need of reform could be contracted away.

Consumers would see how much certain legal rules really cost them, and decide individually whether they want to pay that price for that "consumer protection." As I've written elsewhere, it's a mistake to view the tort debate as one of consumers vs. manufacturers. In my mind, the tort reforms I advocate make both consumers and manufacturers better off because the transactions costs imposed by lawyers outweigh the benefits to consumers of the old rule.

That said, even though I believe that consumers as a whole would be better off with tort reform, I recognize that there exist consumers who may prefer the broader regimes of liability. Why not allow a choice? Manufacturers would be able to send signals about the safety of their product by competing on the terms for liability: why is the punitive damages option for this car so much cheaper than the same option for that car? We'll see Consumers Union rate the various liability options, and recommend cars accordingly. Hey, this surgeon doesn't cap non-economic damages, while that one insists malpractice allegations be resolved by arbitration; maybe I feel safer with the one who's more confident putting his record in the hands of a jury, and will pay the higher premium, whereas now, I don't have any real way to measure whether one surgeon is better than another. As technology improves, there are other options possible: maybe I can purchase the option to sue for punitive damages for my auto in 10,000-mile increments, and signal to a manufacturer that I'm a lower risk for a liability suit than someone who drives more than I do. In many ways, allowing these sorts of contracts is the best of all possible reforms: consumers who are unhappy with litigation reform can be satisfied at the same time as consumers who are unhappy that the current system raises prices and reduces innovation.

It's one of the fundamental principles of economics that a consumer with the choice between vanilla, chocolate, and strawberry is at least as well off as the consumer who only has the choice of vanilla or nothing. The same principle applies by allowing choice here. Everybody's better off (or at least as well off as they were before), and nobody is worse off, other than the lawyers who made money by forcing consumers to pick the same broad liability rules. But why should all the law-abiding drivers be punished by higher prices because scofflaws can drive drunk or fail to wear their seat-belt and recover product-liability damages for injuries caused by their own lack of personal responsibility?

Comments

[mobar]

What the world needs now... more adhesion contracts. Even if the system worked as fairly and efficiently as you suggest, which it wouldn't, does your assessment of transaction costs account for the time consumers would have to spend familiarizing themselves with assorted legal rules in order to properly assess the choices?

And I have some questions about this: "or by promising not to sue for injuries caused by the failure to wear a seat-belt or by driving drunk." In what jurisdiction is it possible to sue oneself for injuries caused by drunk driving? And how would that no seat belt waiver be enforced? Let's say your car hits my car and I suffer injuries because I'm not wearing a seat belt. You don't have standing to enforce the contract I made with the manufacturer of my car. Even if you did, the benefit of my contract would not accrue to the manufacturer, it would accrue to you (and more to the point, your insurer), so how would it lower the cost of my car?

So much to quibble with here.

[Aaron]

If "pain and suffering" coverage does not exist for people to buy on their own, what precisely is "underinsured motorist coverage" or "uninsured motorist coverage" in a no fault state? Also, aren't "accidental death and dismemberment" policies, which provide a lump sum payment upon the satisfaction of a policy term, effectively a form of "pain and suffering" insurance? There's no economic formula behind payment, after all - if you suffer a particular injury, without regard to measurable economic harm, you receive payment.

I recognize that the nation's chambers of commerce like to argue that "pain and suffering insurance does not exist", as part of their larger goal of limiting or eliminating pain and suffering awards in personal injury cases. But it's simply not an honest argument. And beyond its facial dishonesty there a layer of artifice - the pretense that if people don't self-insure for something, it has no value. Pain and suffering is real, and there is no logical or sensible reason why people should not be able to collect damages for pain and suffering inflicted by others.

I think mobar's pithy response on the notion of consumers negotiating their own contract terms for every transaction, and somehow benefiting from the elimination of consumer protection law and tort protections in favor of contractual remedies, does a pretty good job of shooting it down. Hey - isn't that what we do right now with employment contracts, insurance contracts, credit card agreements.... Lots of room for negotiation, which is why the associated contracts are so consumer-friendly, right?

And what of the fiction that the present system increases prices and reduces innovation. Pray tell, in what developed nation with a more restrictive tort system (and that would be pretty much all of them) is there a greater history of innovation? A history of lower overall consumer prices?

[Mike]

Terrific interview. Ted seems liked a pretty normal guy. Geeze, who knew tort reformers had hopes and dreams, too? ;^>

[mobar]

I've got the solution to the standing problem. Manufacturers go into the business of assigning their contract rights to injured parties. Facing a claim for $100,000 in non-economic damages? I'll sell you a waiver for $10,000. So money would continue to be paid for pain and suffering. It would just end up in the pockets of our more responsible corporate citizens rather than those _________ plaintiffs. $10,000, and all they had to do was get the consumer to sign a piece of paper. They didn't even have to pay the salary of the dealer employee who convinced the consumer to sign the piece of paper. It's an invitation to print money. And since increased profits always translate into cheaper prices for consumers, everybody wins!

[mobar]

Whoopsy. I meant assign to "tortfeasors" not "injured parties." I can't believe I missed an opportunity to write "tortfeasors."

[Aaron]

Ted, if you are still able to engineer your role as a conference planner, unless you are lucky enough that this is already the case, try to engineer it more toward the planning and idea side, and less toward the administration side. You like "doing research, thinking, and writing on knotty issues - but there is little intellectual stimulation in the bureaucratic side of conference and seminar planning. I hope you're blessed with a good support staff.

[Captain Spaulding]

Maybe my brother will let me write for his considerably-more-entertaining personal blog

Gosh, I wish Mr. Schaeffer had provided a link to that blog. I bet it's really good. Endorsed-by-Mark-Evanier good!

[Mike]

Aaron, I agree. While in law school I planned a couple of events. What a nightmare. Worse, the pressure is one until the event begins, since one of the biggest fears is that no one shows up, and the planner looks like an ass for bringing in a big name to an empty room.

[Evan]

Captain Spaulding: I added a link to your blog. I certainly wouldn't want two Franks coming after me.

Sorry it took so long, but I haven't been near a computer in awhile.

[Ted]

I'd like to thank Evan for the generous contribution of bandwidth. I take all blame for lack of links. Go read my brother's blog so he doesn't feel he missed out. Thanks for the kind words to all who left kind words.

Paul Rubin's book on the subject discusses the objections raised here in far more detail than I can in the space of a blog post comment, but some brief points:

1. The fact that people don't insure for pain and suffering ex ante suggests not that pain and suffering have no value, but that the value of pain and suffering is sufficiently low that consumers find it inefficient to purchase insurance—and since the litigation system is considerably more inefficient than private insurance contracts, this suggests that the non-economic damages portion of the litigation system is also inefficient.

2. The fact that GM will not contract to sell me a super-low-emissions vehicle (SULEV) does not mean that GM is offering me "emissions systems of adhesion"—it just means that I'm going to be purchasing Toyotas for the foreseeable future until GM gets its act together. If consumers demand tort protections, auto manufacturers will provide it, or be punished in the marketplace.

3. In the Hardy case, hardly unique, a drunk driver not wearing a seat-belt recovered damages against an auto-manufacturer, so I'm not sure why mobar is questioning whether changing the rules in this regard could reduce costs. Many states actually forbid the introduction of evidence that a plaintiff wasn't wearing a seat-belt.

4. As for innovation not available in America, if I had bought my Prius in Japan, my passenger could enter data into the GPS while I drove, and I could engage the auto-pilot-parallel-park option. Neither of these features are available on the American model because Toyota fears liability from driver misuse of these features. Worldwide, we're probably missing out on a number of safety innovations, because manufacturers are reluctant to innovate in this area because plaintiffs' lawyers will claim that the innovation makes all the legacy vehicles defective. You may snort at such a theory, but I've first-hand experience with plaintiffs suing over such innovations as the shift-interlock.

[Aaron]

Ted, your syllogism appears to be:

1. People on the whole don't buy insurance for their own possible "pain and suffering";

3. Therefore the value of pain and suffering is extremely low.

Needless to say, there's an element missing from your syllogism:

2. The only possible reason why people wouldn't buy something is that it is extremely low value to them.

Perhaps it was an accident, but you have presented no factual or logical basis for that missing element. If you could do so now, I would be quite grateful.

As for your comment about the Prius... what are you claiming? The exception that proves the rule? And speculation that "we're probably missing out on a number of safety innovations"? C'mon. Is that really the best you can do? (Also, surely you are not trying to suggest that consumer prices are lower in Japan than in the U.S.) Why not show some patriotism, and admit the truth - that this country leads the world in innovation, and our nation's retailers lead the world in discounting. Surely the nation's insurance carriers and chambers of commerce won't hold such an admission against you, when you next hit them up for a contribution or speaking fee.

[Matt]

Ted,

I had not heard that about the Prius. Is that your opinion, or did that come from Toyota itself?

[Ted]

Aaron, that's not my argument re pain and suffering. If I've failed to explain myself clearly in a handful of sentences, I take responsibility. I defer to the longer explanations in Robert Cooter, Towards Market in Unmatured Tort Claims, 75 Va. L. Rev. 383 (1989); John E. Calfee & Paul Rubin, Some Implications of Damages Payments for Non Pecuniary Losses, 21 J. Legal Stud. 371 (1992); George L. Priest, The Current Insurance Crisis and Modern Tort Law, 96 Yale L.J. 1521 (1987).

I'm not making up the effect of jackpot justice on hurting safety; Dieter Zetsche, the CEO of DaimlerChrysler, has explicitly said the same thing. Unfortunately, it's impossible to measure the hundreds or thousands of people dying each year because of the safety improvements that haven't been invented—improvements that haven't been invented because of plaintiffs' lawyers' actions that deter their development and introduction.

[Ted]

Matt, the answer to your question is that it came from Toyota.

"While the system seems ideal for congested streets like New York's, 'we have no plans for the U.S.,' said Jon Bucci, corporate manager for advanced technology at Toyota Motor Sales. 'This is a very litigious society.'" (New York Times, Oct. 27, 2004). Just another reason to read Overlawyered daily.

[mobar]

Mr. Frank, I'm afraid you're suffering from selection bias. The Hardy case is unique. Most drunk drivers who get in accidents don't sue anyone. Even accounting for the surge in popularity of rollover litigation, most PI/car accident claims don't involve a product liability claim. And not wearing your seat belt doesn't cause accidents. A more reasonable proposition would be to have the consumer waive any rule of evidence forbidding the admission of their non-seat belt wearing status.

As for my questioning the reduction in costs, I have no doubt that your system would reduce costs for some people. What I question is how it would reduce the cost of my car.

[Ted]

Most drunk drivers who get in accidents don't sue anyone. Even accounting for the surge in popularity of rollover litigation, most PI/car accident claims don't involve a product liability claim.

I've asserted neither proposition, so I fail to see your point. With tens of thousands of deaths and injuries to drunk drivers and non-seat-belted occupants a year, it takes only a small fraction of those to involve a product liability claim to impose hundreds of millions of dollars of costs on the industry.

Hardy is most certainly not unique. Read Overlawyered regularly and you'd see that; and OL surely underestimates the impact, because the cases that auto manufacturers win (or settle for nuisance value) after spending a million in defense costs rarely get press coverage to come to our attention.

What I question is how it would reduce the cost of my car.

If the manufacturer isn't offering you a discount for waiving certain baseline rules, there isn't going to be a waiver. Economics 101. It forces auto manufacturers to put their money where their mouth is: if they want to change the legal rules, they have to make it financially attractive to the consumer to do so.

[Aaron]

Ted, with no offense intended, I am not going to hunt down law review articles which supposedly make the case better than you can. If you, who make a living as a "tort reform" advocate, are unable to parse those articles and present a coherent case for your position, I am content to regard your argument as a failed one.

And great, we have moved from the non-implementation of theoretical safety advances to a supposed lack of reasearch into theoretical safety advances which, I suppose, might not theoretically be implemented in theoretical future vehicles based upon theoretical concerns about theoretical lawsuits. How about, though, giving us something from the real world?

I don't know what to make of your penchant for providing anecdotes that, by your later argument, you seem to believe actually stand for nothing. If you don't believe that your anecdotes stand for any meaningful factual or legal principle, why do you present them?

[Matt]

If an auto manufacturer settled a case for nuisance value after spending millions in defense costs, I would bet a lot of their economic strategies are off-kilter.

[Ted]

1. Aaron, I think the pain-and-suffering argument is straightforward. You're not inclined to agree with it, and you're not inclined to address what I actually say, and I'm not inclined to spend hundreds of words on an issue that doesn't change my larger point. I provide the reference to the longer argument for those that are interested and open-minded. But it's telling that you oppose even giving consumers the choice of whether to elect to waive or limit pain and suffering damages, because if you really believed that consumers really wanted unlimited pain and suffering damages ex ante, you'd have no objection to removing the contract of adhesion the plaintiffs' bar has placed on every contract with respect to these legal rules.

2. I don't know what to make of your penchant for providing anecdotes that, by your later argument, you seem to believe actually stand for nothing.

This certainly doesn't refer to anything I've said in this thread, so I have no idea what you're talking about. Try concrete argumentation, rather than abstractions.

The perverse incentives on innovation and safety are very real; that a Type II error is difficult or impossible to measure hardly means that it doesn't exist.

3. Matt, I've first-hand experience with multiple cases where the plaintiff refuses to settle for nuisance value until the defendant proves through months or years of litigation that it's willing and able to defend itself, so I fail to see the substance behind your snark.

[Matt]

Ted, there's lots of substance you miss. I assume most of it is intentional, though.

You do a good job in service of your clients, and I can appreciate that, though, even if I think you've picked the wrong side. Although I guess at your new job they call them benefactors? Donors?

[asg]

In regards to Matt's post --

"Psychological projection (or projection bias) can be defined as unconsciously assuming that others share the same or similar thoughts, beliefs, values, or positions on any given subject. According to the theories of Sigmund Freud, it is a psychological defense mechanism whereby one "projects" one's own undesirable thoughts, motivations, desires, feelings, and so forth onto someone else (usually another person, but psychological projection onto animals and inanimate objects also occurs). The principle of projection is well-established in psychology."

(source: http://psychcentral.com/mwiki/index.php/Psychological_projection)

[Aaron]

Ted, if that is your best response, then what can I say? Perhaps you've spent so much time preaching to the choir that you can no longer see the gaping holes in your positions.

There is nothing abstract about you throwing out an anecdote, being challenged on its relevance, and effectively admitting that it has no relevance to the points under discussion. I can't recall a discussion thread where you haven't used that tactic. Your denials, given that it happened in this very thread, are both amusing and bemusing.

As for expecting me to buy arguments of dire consequences, where you cannot produce even a single real-world example? C'mon. That form of "chicken little" argument doesn't even cut it for an undergraduate speech class.

You have a remarkable penchant for shifting discussion away from the issues - it is a terrific smokescreen for the fact that you have not been able to present any substantive response to the points I raised.

[Ted]

Aaron, the only person "shifting discussion away from the issues" is you, by turning this into a meta-discussion. Each of the five anecdotes that I've mentioned in this comment thread are relevant, and I haven't said otherwise about any of them, so I can only conclude that you're deliberately or negligently misreading what I've written. You instead make vague accusations that I can't possibly respond to because if you were to make a concrete accusation, it would plainly be false.

As for expecting me to buy arguments of dire consequences, where you cannot produce even a single real-world example?

I gave a real-world example: an auto-company CEO saying that his company reduces its research on safety innovations, because such research could get used against the company in future litigation under existing "design-defect" law.

Past safety innovations have saved lives. There is no reason to think that future innovations would not also save lives. It's thus simple logic to conclude that legal rules that inhibit innovation are costing lives.

you have not been able to present any substantive response to the points I raised

I daresay three law review articles are a substantive response, but it's easy to pretend otherwise when one refuses to read them.

Matt, with his point refuted, resorts to insults that, as ASG notes, perhaps reveal more about Matt than me. It's not worth responding to him further, though it's entertaining to note that Matt can't even get the ad hominem right: I could make somewhere between 50-200% more money at a plaintiffs' firm, so whatever my motivations for supporting litigation reform, they sure aren't financial.

[Matt]

Ted,

I asked a question about your claim, wasn't trying to refute you.

Are you so ashamed of who you work for that you take it as an insult to acknowledge them? Are the companies who contribute to AEI not called donors or benefactors? Or are you trying to acknowledge that you've never put forth half truths in support of their goals? Surely you read Overlawyered, don't you? You know, covering the "ills of the American justice system" or some such nonsense? Complete with foreign cases, to boot!

I worry about your mental health when you have this much self-loathing. I do like it when people say "I could do this and X would happen," though. It means so much.

[Ted]

I don't have any sort of client relationship with AEI's benefactors and donors. I'm under no obligation, ethical or otherwise, to represent their interests, zealously or otherwise. And I certainly don't put forth half-truths; even if I were inclined to do so, there would be no need, because the truth is more than sufficient in support of my cause—a cause I've taken up because I believe it to be a good cause, and because the injustices I've seen first-hand have gotten my dander up.

I've taken this job because I'm believe that I have academic freedom to speak freely about these issues; I put the precise question directly to Chris DeMuth when I interviewed, and he pointed out instances where AEI published work that contradicted the financial interests of actual and potential benefactors and donors. If it turns out that this isn't the case, and it's put to me that my paycheck is expected to purchase a conclusion different than my own, the job will no longer be a dream job, and I'll find something else to do. Which doesn't worry me a jot, because I live relatively frugally, have several years of living expenses saved from ten years of private practice and some good luck in the real estate market and at the poker tables, and because I can make more money doing something else. AEI's purchased my time and my presence, but they haven't purchased the ability or leverage to change my opinions.

My constraints are honesty, quality, and relevance, rather than any corporation's or individual's particular interest.