Showdown in "Sue City"

By Andrea Sachs

Philip Corboy doesn't need to chase ambulances. They seem to chase him. Just one day after the July 19 crash of United Airlines Flight 232 in Sioux City, Iowa, the white-thatched, patrician-looking Chicago attorney was asked for legal help by the family of one of the survivors. Within 24 hours, Corboy had filed the first lawsuit to come out of the disaster. Since then, he has received calls from twelve other people involved in the crash. His fee, if he wins: as much as one-third of the damages.

Corboy's lawsuit was the first volley in what promises to be a high-stakes legal battle over the Iowa crash. Some attorneys have even taken to calling the tragedy "Sue City" because of the huge number of lawsuits that are expected to follow. While the 185 survivors and the next of kin of the 111 who were killed are the ultimate beneficiaries, the struggle will take place between a small cadre of plaintiffs' lawyers and their counterparts, who represent airlines, aviation manufacturers and their insurance companies. That kind of tug-of-war has grown increasingly fierce over the past few decades.

Iowa bar officials arrived at the scene of the Sioux City crash nearly as fast as the doctors did. They were determined to head off a well-known postcrash problem: unscrupulous lawyers soliciting clients on the scene in violation of ethics codes. Representatives of the state bar set up an office at the health center where many of the survivors had been taken for treatment. Bar officials also placed an ad in the Sioux City Journal asking people to call if they knew of any unethical contacts by attorneys. None were reported.

Other crash scenes have been more ghoulish. After 137 people died in the Aug. 2, 1985, crash of a Delta L-1011 at the Dallas-Fort Worth airport, legions of lawyers sought business amid the chaos, scurrying among emergency- relief workers and hospital aides. They even tramped through the halls of Parkland Memorial Hospital handing out name cards to the families of the deceased. Top lawyers in the field, who get their cases mainly through referrals, consider such tactics lowbrow. "I have utter contempt for those who choose to get cases this way. They deserve the bad reputation they have," says Lee Kreindler, a New York City lawyer who won a record $7.9 million judgment in the Delta case.

Insurers show up just as quickly as the lawyers, seeking through a disputed process known as claim control to keep costs from spiraling. Associated Aviation Underwriters, one of the major airline-liability insurance companies, has already begun the process of talking with survivors and the families of victims of the Sioux City crash, trying to settle their claims quickly and dissuade them from going to court. Says Peter Magee, executive vice president of the company: "If you buy a ticket to get from Point A to Point B, and you don't make it there, then the legal burden is on me to explain why. Statistics show you're going to recover something. It isn't a question of Is compensation fair? It's a question of how much."

The answer, say plaintiffs' lawyers, is usually "not enough" for those who sign up with the insurance companies. Friendly letters urging families and survivors to take the settlements initially offered to them -- and suggesting that they shouldn't consult a lawyer -- are anathema to the aviation bar. According to Gerald Sterns, a San Francisco lawyer who specializes in air- crash litigation, "These letters can be very dangerous for the victims if they decide later to file a lawsuit. The insurance company's concern is damage control. What they're doing is developing a rapport with the victims and duping them."

Lawyers for plaintiffs also accuse the insurers of more dastardly deeds. Says Daniel Cathcart, a Los Angeles-based lawyer who specializes in air disasters: "Either directly after the accident or a little later, as soon as the insurance companies know who the survivors are, they will dispatch a team of investigators to find out your financial situation, whom you're sleeping with and the status of your married life. Then they'll use this evidence to try to intimidate and embarrass you in court." Following the 1985 crash in Dallas, Delta was criticized for prying into the lives of passengers during litigation. After investigators found that one victim was homosexual, insurance lawyers raised the issue of whether his life expectancy would have been cut short because of AIDS.

Plaintiffs' lawyers have a strong financial incentive to keep people from settling without representation, since it is virtually certain in crash cases that damages will be paid. But a study last year by the Rand Corp. found that litigation often does not yield the jackpots that the public imagines. Rand found that airlines and other defendants paid victims' families less than half their average "economic loss," the value of what the deceased would have earned in a normal lifetime. Jury verdicts averaged $599,000 per victim. Still, the odds are good enough and the stakes high enough to ensure that lawyers will continue to litigate these cases avidly. As insurer Magee puts it, "This whole business has come to take on a lottery mentality. If someone gets hurt this week, then they rush to court to see what numbers come up."

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CREDIT: [TMFONT 1 d #666666 d {Source: 1988 Rand Study}]TIME Chart

CAPTION: CRASH PAYMENT

With reporting by Elizabeth Taylor/Chicago and Tara Weingarten/Los Angeles