Legislature(1995 - 1996)
01/25/1996 01:35 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
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.