01/25/1996 01:35 PM Senate L&C

 SL&C 1/25/96                                                                  
                                                                               
          SB 184 CIVIL LIABILITY FOR IMPROPER LAWSUIT                         
                                                                              
 CHAIRMAN KELLY called the Senate Labor and Commerce Committee                 
 meeting to order at 1:35 p.m. and announced SB 184 to be up for               
 consideration.                                                                
 ROBERT MINTZ, Anchorage, said the basic issue addressed by SB 184             
 is giving injured parties effective remedies for bad faith civil              
 litigation.  The essence of the legislation gives people who really           
 suffer harm due to abuse of the civil justice system the ability to           
 be compensated for their injury.  In addition, people who actually            
 cause that harm will be forced to pay that compensation.                      
                                                                               
 SB 184 is a departure from the existing system of self regulation             
 of the legal profession.  It gives victims of unscrupulous                    
 attorneys and their clients the ability to be compensated in cases            
 of outrageous conduct.                                                        
                                                                               
 The standard is a tougher standard than just negligence.  A mis-              
 statement must be intentional, MR. MINTZ said.                                
                                                                               
 Section c is a variation of the existing malicious prosecution law            
 where malicious conduct must be proved and it separates conduct               
 into either malicious or unreasonable.                                        
                                                                               
 The difference between this bill and current law is that the client           
 and the attorney would be held personally liable for all damages              
 caused by their conduct forcing them to do better investigation,              
 documenting claims and allegations prior to asserting them.                   
                                                                               
 The effect of this bill will be devastating for other kinds of                
 attorneys.  If somebody knowingly lies just to drag somebody into             
 court, they will end up paying for doing so.  If someone balks at             
 a complaint with frivolous claims, they will end up paying for                
 that, and if somebody files claims without checking if those claims           
 have a reasonable basis before they are filed, they will end up               
 paying for that.  If a case is filed maliciously, and someone tries           
 to extort money, because it would be cheaper for the defendant to             
 settle than to fight, than the person filing the case will pay  for           
 it.                                                                           
                                                                               
 Currently there are insufficient adverse economic consequences                
 associated with abuses of the legal system.  SB 184 is designed to            
 fix that.                                                                     
                                                                               
 Number 120                                                                    
                                                                               
 JEFF FELDMAN, Alaska Bar Association member and President of the              
 Trial Lawyers Academy, testified that SB 184 is drafted to address            
 the problem that is created when a person feels he/she has been               
 wrongfully sued with improper motives or without a reasonable                 
 basis.                                                                        
                                                                               
 Currently, three responses already exist in the system to provide             
 relief to a person wrongfully sued.  The first remedy is Alaska               
 Rule 82, which allows the prevailing party to recover a portion of            
 his/her attorney's fees.  The second response is Civil Rule 11                
 which is the authority of the court to impose sanctions for lawyers           
 and parties that take actions that contain misleading allegations             
 of fact or claims that are not well grounded in the law.  The third           
 response is the existing law of malicious prosecution.  SB 184                
 makes a slight change in the existing law of malicious prosecution            
 to require proof of either the actions of probable cause for a                
 claim or improper motive.                                                     
                                                                               
 MR. FELDMAN stated he does not have a problem with the standard of            
 conduct the bill proposes to adopt which does not differ measurably           
 from what currently exists.  He did express concern about the                 
 section that would make it easier for a person to bring a malicious           
 prosecution claim.  In any lawsuit one party is going to lose,                
 unless a settlement is reached.  Defendants who are sued generally            
 believe they are wrongfully sued.  This measure will make it easier           
 for people who have been sued and won to allege that they were                
 wrongfully sued and attempt to seek further damages by way of                 
 malicious prosecution claims.                                                 
                                                                               
 Number 226                                                                    
                                                                               
 MR. MINTZ stated there is a pendulum that may have gone too far in            
 making the system risk free for a small number of unscrupulous                
 attorneys.  The stakes need to be raised so that the civil justice            
 system cannot be abused by establishing a disincentive for those              
 people whose conduct is outrageous.  He repeated the section                  
 addresses intentional misconduct, not negligence.                             
                                                                               
 SENATOR KELLY announced the bill would be brought up again February           
 6, and adjourned the meeting at 1:50 p.m.