Who pays the damages for Sept. 11?

Lawyers grapple with one of history's most complex liability cases

This time, the lawyers ran away from the ambulances.

One day after planes first hit the World Trade Center, the Association of Trial Lawyers of America urged attorneys to avoid bringing lawsuits related to the attacks.

But with thousands of casualties and tens of billions in damages at stake, neither victims nor lawyers who specialize in "mass torts" are likely to hold back for long.

"It won't continue," says Federal District Court Judge Jack Weinstein of the Eastern District of New York. "There's too much money."

Victims' families are already retaining attorneys who handled previous disasters, including the Pan Am Flight 103 explosion over Lockerbie, Scotland, and the 1993 World Trade Center bombing.

This attack - with defendants ranging from airlines to a trail of terror suspects around the globe - promises to fuel some of the most complex litigation ever brought in the United States.

The first World Trade Center bombing killed six people, yet resulted in 500 lawsuits by 700 individuals, businesses, and insurance companies, asking for $500 million in damages, says Blair Fensterstock, lead attorney in the case. Eight years later, the case is still not finished.

In this instance, legal experts say the government must fashion faster recovery methods that ensure victims' families can collect quickly and the courts don't get clogged.

Last week, Congress voted to give victims or their families the choice of recovering from a pool of private insurance and government money administered by the Department of Justice or by suing in federal court in Manhattan.

Capping airlines' liability

American and United Airlines each had its liability capped at the level of insurance coverage held on the day the planes were hijacked. Taxpayers will pay the rest of the money paid out of the Department of Justice fund.

Families who opt for the fund will probably get money faster but will likely receive money under an undetermined formula based on each victim's income and insurance. Victims who go to court could recover more, but risk getting nothing if the airlines run out of insurance money or go bankrupt.

Even after the airlines' money is exhausted, a lengthy roster of potential defendants remains. Osama bin Laden and countries that support his network top the list. Federal law allows terrorist victims to recover from countries that support the terrorists. Provisions of the law provide for huge money judgments designed to deter future terrorist attacks.

Former hostages in Lebanon and the families of terrorist victims have won judgments totaling more than $1 billion against Iran. Former Beirut hostage Terry Anderson was awarded $340 million last year.

The US government gives plaintiffs cash for the compensatory damages while holding assets of terrorist sponsors as a deposit until the country actually pays up. Anderson collected $40 million from the US Treasury, which now holds the claim against Iran. The US now has the rights to the other $300 million. It is holding Iranian assets as a security deposit until it recovers funds from the government of Iran, but hasn't actually seized the assets.

The US State Department could quickly open the doors to additional suits by adding Afghanistan or other countries implicated to the list of states sponsoring terrorism, says attorney Stuart H. Newberger, who represents the American victims of the 1999 bombings of the US Embassy in Nairobi, Kenya.

American assets of 27 terrorist organizations, individuals, and companies frozen Monday by President Bush could also be used for compensation, Newberger says.

Victims will also probably sue airport operators, contractors that provide security, and the federal government for inadequate security, says Charles Slepian, an attorney and airport security consultant. Any recovery from those responsible for airport security may be more complicated for the estimated 10,000 dead and injured victims on the ground.

Slepian says it's not clear how the courts will weigh in on whether security providers owed people on the ground the same duty of care they owe passengers boarding planes. "This is a whole new area," Slepian says.

Other potential targets: Florida flight schools where some of the hijackers trained, the World Trade Center's architects, and the World Trade Center building managers who told evacuees to return to their offices after the planes hit.

And insurance companies, which may owe tens of billions of dollars in claims, could face suits if they invoke "act of war" exclusions to avoid paying benefits. As of now though, no insurers have opted to use such clauses.

So far, trial lawyers have trodden carefully, fearful of taking the focus away from the victims' suffering or the manhunt for suspects. "We're not starting any lawsuits in the near future. It's unseemly," says Lee Kreindler, lead attorney in the 1988 Pan Am bombing suit.

Still, Mr. Kreinick and other attorneys are laying the groundwork for future suits by investigating victims' lost income.

"Beyond the sorrow and the grief and the sense of loss is the utter destruction of the family unit and the economic loss that is completely devastating," says Chicago attorney Donald Nolan, who has been approached by a dozen families of victims on all four hijacked planes. "That needs to be addressed to help these people heal."

Delay may actually benefit lawyers in complicated cases such as this one, in which all the parties responsible are not yet identified, says Geoffrey Hazard Jr, a professor at the University of Pennsylvania Law School. "As the dust settles, you'll have a clearer idea and begin to have suits," Dr. Hazard says.

Digging up new information

When suits do commence, lawyers say they sometimes dig up valuable information or witnesses that law enforcement agencies miss during a criminal investigation. Kreindler says the civil case in the Pan Am bombings discovered a crucial airport witness who was able to help investigators piece together how the explosives got onto the plane.

Whatever their value, the attorneys say they may find it prudent to limit their fees.

In the WTC case, Fensterstock says attorneys limited their fees to 6 percent, instead of the 33 percent that is the norm. Or, as in the case of medical malpractice, legislators may enact laws limiting attorney fees.

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