This article regarding Steve Beshear and the legal fees associated with the demise of Kentucky Central Life Insurance Company is likely the first of many on this topic. The article is focusing on the ramifications for Steve Beshear’s bid for Governor. There may be some mileage for that purpose in the story of the millions of dollars Beshear’s firm, Stites & Harbison, charged. The real lessons to be learned from the numbers is not political though. The H-L reports:
Kentucky Central by the numbers
Just before Kentucky Central Life Insurance Co. collapsed, it had built itself into a conglomerate including TV and radio stations, citrus groves and hotels, in addition to the nearly $50 billion worth of life insurance policies it had sold. It’s little wonder, then, that its dismantling would spawn a host of costly lawsuits.
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756
Employed by Kentucky Central Life Insurance at its peak
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466,784
Total number of life insurance policies at Kentucky Central’s peak in 1992
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13
Subsidiary companies held in 1993
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44
Separate lawsuits occurring simultaneously at the height of liquidation in the mid ’90s
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103
Different law firms paid by Kentucky Central between February 1993 and March 2006
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$79,601,030.63
Paid, in total, to legal, accounting and consulting firms
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$40,914,503.79
Paid by Kentucky Central to law firms during that span
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$21,170,543.57
Paid to Stites & Harbison, Steve Beshear’s firm
Nearly 80 million dollars is a tremendous amount of money. I suspect at least a substantial portion of those fees could have been eliminated resulting in better pay outs to the consumers most intimately affected by the insurer’s collapse. No, politics is not the main story. The main story will be a critique of the economic efficiency of biglaw. The questions that should be raised include: What value was added for the Department of Insurance through Stitesand Harbison’s representation? Was the value added for the state more or less than the $20 million spent? Was there any discussion up front about value and expected outcomes or did the Department just turn the firm loose to bill whatever hours they saw fit? Was the firm’s strategy driven by billable hours or driven by maximizing value to the client (the Dept. of Insurance)?
There is a presumption in dealing with large businesses that the bigger the law firm and the higher the hourly rate, the better your representation will be. This story gives the opportunity to challenge that belief. While there are some incredibly experienced attorney’s in biglaw, there are also some incredibly experienced solos. One obvious difference between the two is that there is huge overhead in operating a large law firm. A second difference is that the client has little awareness or control over what attorney actually does the grunt work involved in the case. With a small firm, you form a relationship with the person or persons who actually handle your matter. Large law firms do carry political clout and have tremendous networks of influence. Does that change the result in the courtroom? I suppose it occasionally does. Is it worth the additional $150 to $250 dollars per hour charged? Because one is never certain when that influence might come into play or to what extent, I suggest it is not worth the additional cost. So, what big business is left paying for is the really swanky offices (marble, mahogany, great view of the city, etc.). I have been in those offices; they are really nice.
Robert Bork, former nominee to the Supreme Court, filed suit against the Yale Club of New York City. The interesting thing here is that Bork was a strong reporter of tort reform. In this suit based on a fall as he approached a dais to speak at the club, he is even seeking punitive damages. I suppose this is a reminder to us all that we should avoid being judgmental over things we have not experienced ourselves. Bork was judgemental of all those plaintiffs filing suits and supposedly getting unjustifiable windfalls (see article in Herald Leader Opinion Section for June 20, 2007). Now, he is one of those plaintiffs.
The H-L ran this story about unconstitutional searches and seizures. In prior rulings, the Supreme Court had left open the possibility that a passenger in a car was not actually “seized” by the police when stopped because they were theoretically free to continue on their merry way afoot. Basically, one of those legal fictions often engaged in to try and square the results with the law. If a passenger is not “seized” then they are not under the protection of the 4th Amendment. Now, you tell me, if you are riding in a vehicle that is pulled over by the police, and you open your door, get out, and begin walking down the road - what exactly is going to happen?
The big surprise here is that it was an unanimous decision by a relatively conservative court. Once again, you are probably thinking that a bad guy got away! Ask yourself, how many innocent people are you willing to send to jail in order to insure every criminal ends up there? Now ask yourself if you are willing to be one of those innocent people? The point is not that this guy got away with bad stuff - the point is that this decision makes subjecting an innocent person to search, seizure or other bad stuff is a little less likely now.
“The president cannot eliminate constitutional protections with the stroke of a pen by proclaiming a civilian, even a criminal civilian, an enemy combatant subject to military detention,” Motz wrote. “Put simply, the Constitution does not allow the president to order the military to seize civilians residing within the United States and detain them indefinitely without criminal process, and this is so even if he calls them ‘enemy combatants.’”
Al-Marri had been in the U.S. legally since 2001. The DOJ alleged he was a sleeper agent for the al-Qaida and that he had been to a terrorist boot camp and met with a known terrorist in the past. However, the court found no evidence that he had actually “born arms” against the U.S.
The decision has no effect on detainees captured outside of the U.S. and who are not citizens of the U.S. The court recognized that the possibility existed that al-Marri is the terrorist that the DOJ alleges but upheld the Constitution by demanding more than just allegations for someone legally on U.S. soil to be held indefinitely without the protections of criminal processes. The DOJ still has the opportunity to charge al-Marri with some specific crime and present evidence, but he will not remain in military detention.
Wouldn’t it be ironic if the great triumph of the 20th century, the end of the Cold War, became the bane of the 21st century by its revival. Vladimir Putin, President of Russia, as reported in the Associated Press, stated:
“We look at what has been created in North America: horror, torture, homelessness, Guant‡namo, detention without courts or investigation,” he said.
“You see what’s going on in Europe: harsh treatment of demonstrators, the use of rubber bullets, tear gas in one capital, the killing of demonstrators in the streets in another,” he added, in an apparent reference to the death of an ethnic Russian in the Estonian capital during protests over the removal of a Soviet-era war memorial.”
He then went on to assert:
“If a part of the strategic nuclear potential of the United States appears in Europe and, in the opinion of our military specialists will threaten us, then we will have to take appropriate steps in response,” Putin said. “What kind of steps? We will have to have new targets in Europe.”
The decisions were based, at least by outward appearances, on the law and not any political agenda despite what the article’s title suggests:
“At issue was the failure of the Pentagon to find during earlier proceedings that Omar Khadr, whom U.S. officials had charged with murder in the death of a U.S. Special Forces medic, and Salim Hamdan, a driver for Osama bin Laden, were “unlawful enemy combatants.” Instead, military panels had declared that the men were simply “enemy combatants.”
But in separate decisions, Army Col. Peter Brownback and Navy Capt. Keith Allred said that the Military Commissions Act specifically limited trials to detainees who had been tagged with the “unlawful” designation and barred trials of enemy combatants whose actions could be judged “lawful.” Without a more specific designation, a military commission has no authority to act, the judges found.
“A person has a right to be tried only by a court that has jurisdiction over him,” Brownback said.”
We cannot toss out the basic tenets of the rule of law without compromsing our position in the world.
I always read Scalia’s opinions with a bit of trepidation. This was because, as much as I often did not want to agree with him, sometimes his logic was inescapable. And yet, he usually wrote with just enough arrogance to tick me off even if he seemed right. So, I love it when he gets some of his own stuff tossed back on him - check out this post by Lawreader.
