Our Legal System Is a Minefield

Article excerpt

When Pres. Clinton went on nationwide television in September, 1993, to outline his plan for a new health care system, he invoked one of his favorite campaign themes - the idea that the government ought to help individuals and businesses that "work hard and play by the rules." Since that concept well may become the unifying theme of the Clinton Administration's domestic policy agenda, it deserves scrutiny.

No one would deny that Clinton understands the meaning of hard work. He grew up poor, but worked his way into elite colleges and rose very quickly in political office. The President, however, never has faced the challenge of running a business. Although he has experienced life on the campaign trail and logrolling in the Capitol, Clinton never has had to cope with volumes of business regulations or serious, potentially crippling lawsuits. The simplistic notion that business people can "play by the rules" betrays an ignorance about managing a company in modern America. The disturbing reality is that there are so many rules today that compliance often is impossible.

In August, 1993, the National Law Journal and Arthur Andersen Environmental Services surveyed more than 200 corporate attorneys on environmental law issues. Most anonymously confided that their firms had violated a Federal or state environmental law in 1992. An even more startling finding was that nearly 70% of the respondents believed that total compliance with all the state and Federal regulations simply was unachievable. As one general counsel said, "The cost of compliance (100%) would drive [the company out of business." Another explained that there were "too many regulations. Some are in conflict. Some are unclear."

The legal climate in the environmental area is so treacherous that the lawyers themselves are encountering difficulties. San Francisco attorney William Scherer was indicted for a felony because of the advice he gave to a client company. When his client was evicted from one of its warehouses, it apparently left behind some 55-gallon drums of radioactive waste. After the landlord executed a writ of possession against the warehouse and demanded the removal of the drums, Scherer replied that his client recently had filed for bankruptcy and could not pay for the removal because such an action would constitute a violation of bankruptcy law. The frustrated landlord turned to the state environmental agency, and an investigation was launched. Despite the absence of environmental damage, the Solano County District Attorney's Office charged Scherer with a felony - for the illegal disposal of hazardous waste.

Crime in the inner city has created a legal nightmare for rental property owners and managers. Victims of violent crime successfully are suing commercial businesses and landlords for inadequate security. A study by Liability Consultants Inc. found the average jury verdict for a rape on a business premises to be $1,800,000. For a death, jurors awarded 2,200,000. To avoid liability, many businesses have hired security guards and invested in expensive security systems. If those guards mistakenly should harass an innocent person instead of a gang member or drug dealer, the firm could be sued for civil rights violations.

Some rental managers are winding up in court because they invested in the wrong technology. A New York City landlord installed state-of-the-art electronic doors and locks for his apartment building. The system proved to be very effective, but the landlord subsequently was sued for religious housing discrimination. Some of his tenants are Orthodox Jews and they can't use the lobby key on the Sabbath or certain religious holidays because Judaic law condemns the destruction of an electric current on those days. The landlord could incur the expense of removing the electronic system to accommodate those tenants, but he is aware that, if any of his other tenants are injured thereafter by an intruder, the legal system will blame him for installing an inferior security system. …