The Bear’s Lair: Lawfare ruins everybody’s lives

Georgia Power’s Vogtle 3 nuclear power station went into full operation this month, the first new U.S. nuclear station in 30 years. However, its cost, together with its twin Vogtle 4 has ballooned from $14 billion to $30 billion, with a six-year delay in completion due to innumerable harassing lawsuits from environmentalists and others. It is now believed that Vogtles 3 and 4 may be the last conventional nuclear power stations in the United States, despite the government’s approval for this admirably carbon-free technology. This sad saga is just another of the innumerable costs imposed on us all by uncontrolled lawfare from left-wing interest groups. It is time to root out this abomination; the only question is how best to do so.

We should first define lawfare. The term was originally used to describe using the ever-growing and infinitely complex web of international laws and codes worldwide to harass opponents, either an opposing country or domestic dissidents resident abroad. China is an expert exponent of this technique, which is of importance to defense analysts, so the technique has acquired its own Institute and blog in the ever-well-funded U.S. defense advisory sector.

To restrict the term lawfare to state action is however excessively limiting and ignores the far more important economic dimension of lawsuit abuse, or “vexatious litigation.” Over recent decades, since about the late 1960s, litigation has been used in the United States by a myriad of actors, mostly in the nonprofit sector, to obstruct economic activity and impoverish politically disfavored opponents.

While lawfare is especially virulent in the environmental sector, to the extent that any large project must reckon with its costs and, more important, delays, it stretches far beyond this area of the economy. Its use has exploded since the 2000s, and its economic costs stretch far beyond the costs of the lawsuits themselves, exceeding even misguided government regulation in the damage it does.

There is also a spontaneous lawfare, where contingency-fee lawyer groups search to find an often imaginary harm that a company has caused to a large number of consumers, and sue that company for an enormous sum, possibly bankrupting the company but always enriching the lawyers, who are paid a large percentage of the amount of damages awarded.

The United States is unquestionably the home of vexatious litigation, and indeed in my youth was regarded as thoroughly eccentric among rich countries in the scope it allowed for it. In Britain, the pass was held against it for 20 years by Tom, Lord Denning (1899-1999) who as Master of the Rolls from 1962 to 1982 fought valiantly against the rising tide of crime, the disappearance of traditional society and the tendency of institutions, governments and lawyers to complexify life, add unnecessary costs to ordinary people and allow spurious lawsuits to proliferate. For example, he disallowed the imposition of economic losses for negligence, on the grounds that allowing them would cause lawsuits to proliferate.

Alas, Denning retired in 1982 and Tony Blair became Prime Minister in 1997, and that combination undermined the protections for ordinary people that Denning so lovingly preserved. Today, Britain has nearly as much vexatious litigation as the United States, in some areas more, to the huge detriment of ordinary people and small business. It also has a “Supreme Court” appointed by other lawyers, that can thus be guaranteed to support proliferation of legal costs and tyrannical behemoth institutions over the rights of the individual.

The damage done by lawfare can easily be seen in the example of Johnson and Johnson, which had sold its “Baby Powder” talcum powder since 1894, without problems until a lawfare suit forced it in 2016 to pay $72 million in damages for causing ovarian cancer – Baby Powder was certified a non-carcinogenic substance over more than a century, but the trial lawyers were able to muddy the waters by claiming that the talc deposits from which it derived might be contaminated by asbestos, a well-known “scare” substance that had been the genesis of the lawfare industry in the 1970s and 1980s.

Once this first suit had left blood in the water, lawyers were able to dredge up over 40,000 cases of people who had used Baby Powder and then suffered cancers – an unsurprising achievement, given the ubiquity of Baby Powder in the consumer market. Johnson and Johnson is currently attempting to force a division into bankruptcy, to consolidate the lawsuits and limit their payout, but a succession of lawfare-friendly judges has prevented them from doing so. As a result, a $438 billion company with 155,000 employees and the highest ethical standards over its century of existence may in the worst case be forced out of business.

A second category of lawfare, again much worsened with the rise of the Internet and software industries is that by patent troll lawyers. There have always been patent trolls since there have been patents. Thomas Savery, who got an over-general patent for his steam pump extending 35 years until 1733 and then exercised it against Thomas Newcomen, thus preventing Newcomen getting rich from inventing the first true steam engine (though as an ironmonger he made some money by installing them) was an early example. A more damaging troll was Matthew Boulton, who got James Watt’s condenser patent extended from 1783 to 1800 and then enforced it vigorously against inventors of new high-pressure engines, the next generation of steam engine technology. Boulton’s legal efforts retarded steam engine advances by about 20 years, since he quelled Jonathan Hornblower’s high pressure “compound” engine invented in 1781, with Richard Trevithick repeating Hornblower’s invention only in 1801, after the patent had expired.

However, the greatest economic damage is inflicted by lawfare against any large project, which since the 1970s has caused the cost of such projects to increase to around 10 times their proper level. (The Holland Tunnel under the Hudson, completed in 1927 and opened by President Coolidge, cost $48 million, equivalent to $1 billion today; the projected Hudson River Tunnel is expected to cost $14 billion for the tunnel alone).

Lawfare is especially damaging because of the delays it imposes; U.S. court processes are excessively slow and can be slowed further by “discovery” demands – all the time, the clock of costs on the project is ticking and no benefit is being received. Environmental and other regulations, while excessive and expensive, are less damaging to large projects, because they can be planned for, provided they are not enforced capriciously (as in the case of the Biden administration’s withdrawal of the Keystone XL permit after the project was half completed). Nuclear power stations are especially the losers here, because of the immense weight of legal objections that can be dreamed up by well-funded irrational leftist groups, but even simple high-speed railroads, so beloved in theory by environmentalists, are subject to the same sludge being poured into the works.

So, what is the solution? One is tempted to adopt Dick the Butcher’s solution “The first thing we do, let’s kill all the lawyers.” (Shakespeare, Henry VI Part II). But, while Dick the Butcher, a participant in Jack Cade’s 1451 rebellion, was an admirable populist, his solution is simplistic – while the current legal morass is in place, other lawyers would immediately spring up and differ from the first crowd only in their initial incompetence.

There is, however, a better way. Patent and class-action lawfare are largely self-financing – the lawyers live on contingency fees. Those cases could be greatly reduced by banning contingency fees, as was done in Britain before the Courts and Legal Services Act 1990, the legislation permitting them, which was one of several indications that Margaret Thatcher was losing her grip on power. However, the lawfare against major projects such as nuclear power stations is largely undertaken by non-profit left-wing special interest groups, largely financed by lunatic billionaires, who are able to tax-deduct most of their contributions to such groups.

The solution here is thus simple: abolish the tax deduction for charitable contributions (or cap it at a low flat level, for the charitable middle classes) and remove as many as possible of the other unwarranted tax benefits that such “charities” receive. It is an utter disgrace that the middle classes must pay taxes to replace the ‘charitable’ tax-deductions of billionaires who by their contributions are subverting the welfare of the middle classes and the country as a whole. You can look at this tax reform from two directions: it will make billionaires pay middle-class tax rates, as they should, and it will de-fund leftist and economically damaging subversive groups – it’s win-win!

If that doesn’t work, maybe Dick the Butcher’s Presidential campaign is the only way to go!


(The Bear’s Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that the proportion of “sell” recommendations put out by Wall Street houses remains far below that of “buy” recommendations. Accordingly, investors have an excess of positive information and very little negative information. The column thus takes the ursine view of life and the market, in the hope that it may be usefully different from what investors see elsewhere.)