Trial lawyers deep in debt?

Break out your best lawyer jokes today, because according to the Washington Times, the litigators don’t have any money to fight back.  As Republicans ramp up pressure on Democrats and the White House to include comprehensive tort reform in any overhaul of the American health-care system, one could expect the trial lawyers to respond with threats of donation boycotts or funding of opponents in next year’s midterms.  However, the American Association of Justice — the lobbying group for litigators — has gone $6.2 million in the red:

The trial lawyers lobby has been awash in debt and bleeding members – just as it embarks on a national campaign to block any clampdown on medical malpractice lawsuits as part of President Obama’s health care overhaul.

The American Association for Justice, the most prominent group representing plaintiffs’ attorneys, has seen a shake-up in its executive suite and has struggled to deal with what appears to be a mounting budget shortfall. To help it fight congressional efforts to make it harder for patients to sue doctors and lawyers, it recently sent out an extra solicitation to its members, asking them to fork over money for a lobbying campaign.

The most striking evidence of its financial woes is a swift decline in income, which resulted in a more than $6.2 million deficit in its operating budget for the fiscal year ending July 31, 2008, the most recent year for which data are available.

The biggest hit to its books was in membership dues, which dropped from $28.6 million in 2005 to $19.2 million in 2008, according to the annual AAJ financial report for that fiscal year filed with the Internal Revenue Service.

It actually is worse than it sounds.  Their annual expenditures have remained fairly constant at $34 million, but their revenues have dropped by about 25% over three years, part of which has been a one-third drop in membership dues.  Last year, the AAJ took on $14 million in debt in order to maintain their lobbying operations.

However, like most political organizations, policy crises can serve as a godsend.  If Congress gets serious about tort reform, it could give the AAJ a boost in both membership and donations to fight it.  Litigators who drifted away from the organization might be inclined to return and to put money into protecting their own revenue streams.  However, few people take the risk seriously enough to worry that this Congress and this White House will demand tort reform, so a rebound on this issue seems rather unlikely.

It will have its own ramifications for the midterms, however.  If the AAJ can’t get itself out of debt, it will not be able to play as big a role in electoral politics, just when their favored Democrats will be most vulnerable to voter wrath.  Their limitations will almost certainly mean fewer Democrats will get elected, and especially fewer Democratic incumbents.

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David Strom 6:41 PM on January 26, 2023