By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
By Anna Merlan
By Lee Escobedo
Earlier this year, 22 plaintiffs' law firms, most of them in Dallas or on the West Coast, threw in with their historic adversaries in the manufacturing and insurance industries to push Congress for reform. Their stand is causing an unprecedented rift among trial lawyers nationwide.
While the issue is obviously national in scope, Dallas is home to several of the most important legal players, including Iola and lawyer Peter Kraus, who advocate allowing only people with serious health problems to sue asbestos defendants.
Meanwhile, Fred Baron, a partner in Dallas' largest plaintiffs' firm and a force in the influential Association of Trial Lawyers of America, has taken up as a defender of the status quo. The ever-expanding, 80-lawyer, 500-employee Baron & Budd has a backlog of cases estimated to number between 10,000 and 20,000. The firm owns or has a major financial stake in a similar firm, Silber Pearlman, which has as many as 10,000 asbestos cases of its own. Together, the two control a double-digit percentage of the roughly 250,000 asbestos claims pending nationwide.
"Kraus and Iola would prefer only their cases get compensated to the exclusion of all others," Baron says. "That doesn't seem to be a very fair way to go."
For Baron, who has a national reputation as a brilliant legal strategist, these kinds of battles are getting to be old hat. Over the past decade he has twice challenged attempts to limit asbestos claims, appealed the issue to the U.S. Supreme Court and won both times. He expects to prevail again. "When you hear both sides of it, you see the system is working pretty well," he says.
Although the issue is rife with debate about fairness and legal rights, at its core it is about money: the solvency of a swath of American industry on one hand, and on the other the huge sums the big plaintiffs' firms collect via their customary 40 percent fees. The 25-lawyer Silber Pearlman firm, with its inventory of unimpaired asbestos claims, took in $100 million in revenue in 2000, according to Reagan Silber, who sold the firm that year. Baron & Budd, by extrapolation, undoubtedly made much more.
California attorney Steve Kazan, who has been representing asbestos cancer victims for nearly 30 years, says he expects reform of the type he is advocating to cost Baron and his partners several hundred million dollars. "And, you know, that's a lot of money," Kazan says. "I'd expect him to spend as much as he can spend to fight this. Fred is a smart businessman."
Kazan, whose Oakland firm stopped taking unimpaired cases more than two decades ago, equates the lawyers pushing the gush of lawsuits from unimpaired workers to rude dinner guests. "If you're first in the buffet line, you don't eat all the shrimp," he says. "You're supposed to take a few, but don't take them all."
If every person with minor workplace exposure to asbestos demands damages--a population that could number as many as 30 million--nobody will receive meaningful compensation, Kazan and other reform advocates say. Because no viable companies will be left to pay future claims, the approximately 7,000 people who each year come down with asbestos-related cancers will be shorted worst of all.
For most of the 1990s, the lanky 42-year-old was a partner and a top courtroom lawyer at Baron & Budd. In 1998, he started his own firm with Andy Waters, another Baron & Budd alumnus, and the two now specialize in representing those afflicted with mesothelioma and asbestos-related lung cancers.
There are multimillion-dollar fees in that work, too, and Kraus' firm now houses 24 lawyers at its offices on McKinney Avenue. A blend of high-dollar slick and laid-back casual, it's a place where the stone table in the waiting room is piled up with Mother Jones magazines and more than a few lawyers seem to prefer not wearing socks.
In Kraus' view, his former colleagues at Baron & Budd have reached so far into the pool of possible clients that they now are rounding up people who have no cause to be compensated.
"I had no problem feeling good about representing people with pleural plaques, with breathing problems, all the classic signs of asbestos exposure," Kraus says. "But then you got to where you had people with mild, nonspecific changes in their lungs that could be caused by any number of things. They have no breathing problems. Their exposure history to asbestos is questionable. That is when I wanted to find something else to do.
"As the '90s went on, you got more and more people with marginal exposure to the stuff. You went from insulators and pipe fitters to having the maintenance guys in a paper mill. Yes, there was asbestos in that mill equipment, but they didn't work with it, and the medical evidence you get reflects that."
As a Baron & Budd partner, he says, "I was pushing for more of a focus on the cancer cases when I left. I started a malignancy-based practice, and they went the other way. They bought Silber Pearlman. Once they did that, their economic incentives were set. They couldn't change now if they wanted to. They would have to let go hundreds of employees and scores of lawyers and radically restructure. Nobody wants to bite that bullet."