Insurance Law

Scruggs Nation, March 10

By David Rossmiller

On Friday I linked to a post at Law and More that discussed a recent American Lawyer article on Dickie Scruggs.  I gave my quick take on Scruggs, without having read the article, but later that day I had a chance to read the story, by Susan Beck.  I thought this article was very well-done, but I think it rushes by some of the more significant hypotheses one can frame about Scruggs. (Here's a direct link to the Law and More post, and here's a link to the American Laywer article on Law.com).

I also read the long comment to my Friday post -- and I know who this person is and that he knows Scruggs very well.  He believes Scruggs is a sharp businessman with a law license -- not a great lawyer by any means -- a guy whose interest in helping prosecute a suit against tobacco companies coincided with other interests on both sides.  As others, notably including Walter Olson, a senior fellow at the Manhattan Institute and author of the excellent book The Rule of Lawyers, have pointed out, state attorney generals and lawmakers liked the idea of what is in essence a big tax on tobacco companies that didn't need to pass legislatures or Congress.  And the settlement benefitted Big Tobacco -- it created barriers to entry of the market that protect existing companies against competition. As the comment said, "the industry wanted the deal for protection, and they have it." 

The Beck story does an excellent job of cataloging some of Scruggs' failures, and it's ultimate conclusion seems to be that Scruggs is an idealistic guy with often poor judgment in case selection who scored big because of a few lucky confluences of events.  If his reputation was ever deserved, the story seems to say, it is behind-the-times -- sort of like an NFL lineman who keeps getting voted to the All-Pro team long after his skills have degraded to the point he is just an above average player.

Maybe.  But this theory fails to recognize that Scruggs was in large part responsible for creating a hostile legal climate for insurance companies in Katrina litigation, and it fails to account for his Katrina success long after his "prime" was supposedly over.  And I'm not sure I see Scruggs as idealistic as that term is commonly used -- opportunistic might be a better word, opportunistic in looking for a good storyline and a good opening to make money.  Also, if Scruggs was in large part the product of luck and unique circumstances, that would place him in the same boat as the rest of humanity -- whom could we look at and say this is not true?

I think this excerpt from the Beck story, however, is a significant insight into Scruggs:

Over the years, Scruggs has attempted to paint himself as a different breed of plaintiffs lawyer, one who is more principled and discerning. He has criticized lawyers who rush to file securities lawsuits after a company's stock drops. "Those are piggyback cases, not primary kills," he told Chief Executive magazine in June 2002. "I try to take on companies that have successfully avoided liability but shouldn't have. I don't want to get there after the antelope has been brought down."

In addition to eschewing securities suits, Scruggs has also opted not to take a seat on the lucrative pharmaceutical litigation bandwagon. Scruggs, it seems, isn't eager to join a case where he can't be the leader. "I'm probably not the best person in the world to work with others on a coequal basis," Scruggs told The American Lawyer in 1996. "I like to make decisions and call the shots."

I think you can take this a step further and examine Scruggs' career under the following hypothesis: did he have any legal success where he was not able to manipulate the rules? Some would say the entire field of tort liability that Scruggs plays in is about changing the rules or altering them to suit the social and policy goals of trial lawyers, but I do not mean "manipulate" in the broad context, I mean it in the context of the immediate case or cases at hand.  What success does Scruggs have where he was unable to manipulate the outcome through forum selection, publicity, and, shall we say, other means?

Don't get me wrong, I don't discount the Beck hypothesis totally.  I merely want to test it against other possible hypotheses.  In favor of the Beck theory, I would note that early on in the Katrina litigation, as noted in the Lee Harrell deposition I have often referred to, Scruggs spoke of Katrina cases in the same terms as tobacco litigation -- he had "insiders" and was going to work the cases just like he and Mike Moore had worked the tobacco litigation.  A complex man, one whose story is difficult to tell, and one on whom the last word has certainly not been written, here and elsewhere.

Full post as published by Insurance Coverage Law Blog on March 10, 2008 (boomark / email).