Legal Reform Tempts Wall Street

Still, Lester Brickman, a professor at Cardozo Law School, isn't convinced by these arguments. He believes that "runaway" jury awards have had an extremely negative impact on certain segments of the economy and that reform is necessary.

"You've had 60 bankruptcies [as a result of] asbestos litigation and some of the largest American companies are facing significant asbestos liability," he said. "If you reduce the cost to business, they will have more capital to invest in productive enterprise, and business conditions will improve."

Thomas Bezanson, head of the products liability practice at law firm Chadbourne & Parke, agrees that reforming the tort system would help to restore market confidence.

"The lack of predictability occasioned by these outlandish awards has a serious effect on the markets," he said. "Sometimes the awards are reduced from outlandish to half outlandish but that can take a long time and meanwhile the outlandish award is hanging over [the stock]."

Bezanson said he believes competitive pressure and the intense regulatory scrutiny that most companies are now under generally force them to provide safe products and services, so large fines aren't needed as a deterrent. Still, he said that placing caps on damage awards isn't always the answer, and that improving the rules governing how juries award damages may be a better solution.

Saks agrees that there are ways the tort system could be enhanced, but in the end, he said, American companies are generally happy with the system because they know it has served their interests better than it has served the interests of plaintiffs.

"If we eliminated doctors and hospitals, we could save our society a lot of expense," Saks said. "But we choose not to do that because we're trying to do something more than just maximize shareholder wealth."

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