Lawsuit industry generates billions

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Trial lawyers raked in $40 billion last year from lawsuits, according to a reportreleased yesterday by a New York think tank.

Lawsuits over issues such as asbestos, mold and medical malpractice -- but not tobacco settlement payments -- cost a total of $205.4 billion last year, according to the report by the Manhattan Institute, which promotes free-market economics.

The study surveyed the lawsuit industry's size, scope and reach in the U.S. economy, reporting that lawsuits from 1975 through 2001 had cost $2.8 trillion.

"Most Americans can point to a wacky lawsuit, but many aren't aware just how large of a big business" the industry is, said James Copland, director of the institute's Center for Legal Policy.

Attorney fees at large firms have jumped from $500 an hour to as high as $30,000 in the last decade, according to figures from global management consulting firm Tillinghast-Towers Perrin.

Plaintiffs' attorneys take home 19 percent of an average settlement, while defense attorneys net 14 percent. Plaintiffs receive 22 percent for economic losses and 24 percent for other injuries. The rest goes toward administrative costs.

The high legal fees and large settlements have turned some lawyers into overnight millionaires.

About 300 lawyers from 86 firms were projected to earn up to $30 billion total over the next 25 years from the 1998 tobacco settlement, in which four big tobacco companies agreed to pay the states $246 billion.

Those lawyers have turned their interests to other industries "with deep pockets," the report said.