LEGAL
Asset Protection Douglass Lodmell , J . D ., LL . M . & Ian Hasegawa , J . D ., M . B . A .
Sadly , our legal system has developed over the last several decades to create a hyper-litigious society long on victimization and short on accountability . Our tort system has come to resemble a perverse redistribution-of-wealth scheme that encourages plaintiffs , who risk nothing , to sue anyone who may appear to have the ability to pay . Civil litigation ( by 2008 measures ) cost the US economy approximately $ 300 billion , with less than 22 % of that money paying for actual damages . As an attorney , I am sad to say that our tort system has been designed by plaintiff ’ s attorneys for plaintiff ’ s attorneys , with actual victims receiving relatively little .
The foundations of this corrupt system , raised in the last 40 or 50 years , merit a much more detailed discussion but they include :
• The contingency fee ( prohibited prior to 1968 )
• Attorney advertising ( prohibited prior to 1977 )
• Relaxation of State Bar Ethics Rules against frivolous litigation ( stronger prior to 1983 )
• Manipulation of court procedural rules to encourage frivolous law suits ( weakened regularly ) complete . Forty three percent of insurance defense expenses go toward meritless claims . Just to defend yourself from a suit that never reaches trial will cost on average over $ 45,000 .
Traditional Tools Help , but are Insufficient
The traditional business entity structures designed to limit liability have been eroded in their efficacy . Corporations , Limited Partnerships , and Limited Liability Companies still offer some insulation from internal risk , but creditors “ pierce the corporate veil ” and reach owners ’ assets with growing frequency . Single-owner entities , such as single-member LLCs , have especially suffered a massive erosion of liability protection for owners . Additionally , business entities do not protect you from liabilities external to the organization .
Insurance is necessary and we should purchase as much as we can afford ; malpractice , employment practices liability ( EPLI ), general liability , umbrella coverage , plus personal policies for you and your family . Insur-
These and other developments have turned lawsuits into legal extortion . Even the party that “ prevails ” at trial is usually stuck paying their own legal bills , which averages $ 180,000 . The average law suit takes nearly 4 years to
31 TODAY ’ S PRACTICE : CHANGING THE BUSINESS OF MEDICINE