Monday, May 27

Election ’96


Tuesday, October 29, 1996

A CLOSER LOOK AT PROPOSITION 211

By Cecilia Faissol

Daily Bruin Contributor

Proposition 211, or the "Attorney-Client Fee Arrangements.
Securities Fraud. Lawsuits" initiative aims to prohibit
restrictions on attorney-client fee arrangements.

"It’s the cutting-edge, high paying jobs that are going to get
(hurt) if this thing passes," said Taxpayers Against Frivolous
Lawsuits Research Director Mark Bogetich. And students looking for
jobs in the Silicon Valley and bio-technology companies in
California are going to get hurt right along with it, he added.

Initiative opponents have unabashedly dubbed it the "frivolous
lawsuits initiative," however the official name voters will find on
their ballots is the Retirement Savings and Consumer Protection
Act.

Spearheaded by retirement groups and securities law firms, Prop.
211 aims to curtail securities fraud by allowing individuals to sue
other individuals who "knowingly, willfully or recklessly
participate or assist in deceptive practice resulting in loss to
pension funds, retirement funds or savings," according to the
California ballot pamphlet.

Yet in spite of recent campaign commercials featuring senior
citizens feuding over the necessity of Prop. 211, the effects of
the initiative will have a larger impact on California’s general
population.

Those in favor of 211 say that it will protect anyone who
invests in stocks and bonds and puts money away in any kind of
retirement savings. "There’s no guarantee Social Security will be
around for today’s young people (in the future)," said Sean
Crowley, Communications Director for the Citizens for Retirement
Protection and Security.

More and more people, they claim, are investing in securities
for their future, for their children’s education. Prop. 211 is
about protecting that money, Crowley said.

Opponents of the initiative vehemently disagree. "Prop. 211 is
about protecting the ability of opportunistic lawyers to continue
to make millions by filing frivolous lawsuits," said Oran McNeil,
of the 60 Plus Association. He argues that the initiative will cost
millions of dollars of taxpayers’ money to pay for the huge influx
of frivolous lawsuits the new law would encourage. It would also
force companies to move out of California and cost the state
thousands of jobs, McNeil stated.

An analysis by the Law and Economics Consulting Group, Inc.
stated that "increased case loads because of the initiative would
raise the cost of supporting the state judiciary by $7.2 million a
year. This would either require higher taxes or cuts in spending
for other state services. Total employment in California could be
reduced by as much as 159,000 jobs over the next decade. The
decline in economic activity would reduce the average household
income by $155 to $235 each year."

"That’s all (absurd)," Crowley said. "It’s just not supported by
imperial evidence. We have a sworn affidavit by the State Legal
Analyst that the measure would have very little state costs."

The official summary prepared by the Attorney General states
that the potential increase in court-related costs would be of "an
unknown but probably not significant amount."

"But it doesn’t say anything about jobs," Bogetich pointed out.
"And we still disagree. The reality is that they’re putting up a
smoke screen."

Another controversial point in Prop. 211 is Section Five, which
prohibits the restriction of attorney-client fee arrangements,
except as allowed by laws existing on Jan. 1, 1995.

"They’ve gone and applied Section Five to all lawyers. In an
initiative that’s supposed to be for the elderly, there’s a
provision in it that’s applicable to personal injury cases, etc.
What the hell is that doing there? Clearly there’s something going
on behind the scenes," Bogetich said.

The current law, however, does allow the court to override fees
it deems to be outrageously high.

"211 does not change that," stressed Crowley. "Attorneys in
these cases usually get about 15 cents on the dollar, which is a
lot less than most attorneys. And 211 also has the strongest
sanctions against frivolous lawsuits in the state and in the
nation. No attorney is going to take on the risk of paying the
other guy’s fees," Crowley said.

"That’s funny," replied Bogetich, "because that has absolutely
no merit. It lowers the standard so far that if someone makes a
prediction and they turn out to be wrong, that’s fraudulent
information. If the person didn’t know, it could be considered
reckless behavior. If there’s even one shred of evidence, and by
definition every case has at least a little bit of merit, you can
be brought to court. They’ve defined a frivolous case as one that
is ‘totally and completely without merit.’"

This initiative is controversial in that it has split the
Democratic party. Many of its leaders, including President Clinton
and Diane Feinstein oppose the measure, but the California
Democratic Council is for it.

"That’s exactly the point," Crowley said. "Politicians have
failed to exercise any leadership in this area. They’re captive to
special interest groups."

Now it’s time, say 211 supporters, to change and strengthen the
laws ourselves.

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