For years, New York State has ranked among the most litigation-friendly places in America. (Those unlucky enough to get caught up in the state’s civil justice system call it “Sue” York.) Lawsuit reform has bypassed New York largely because one of the state’s most powerful politicians, former assembly speaker Sheldon Silver, was himself a plaintiff’s attorney who benefited from the system he helped create. Over the years, Silver not only blocked attempts to change unique features of New York’s civil justice system, but he also appointed other trial lawyers to key legislative positions, including on the crucial Assembly Judiciary Committee. So it’s not shocking that when Silver himself finally fell from grace, the case revolved around state grants Silver arranged to a cancer researcher, who then referred mesothelioma patients back to the former speaker’s law firm so that they could become clients in the lucrative asbestos-litigation business.
Silver was convicted by a Manhattan jury on Monday on seven counts of corruption. “Today, Sheldon Silver got justice, and at long last, so did the people of New York,” said United States attorney Preet Bharara. The emphasis should be on the “at long last.” Silver served in the state legislature for 39 years, including 21 as speaker. He ruled with an iron grip during one of the most corrupt periods in Albany’s history. It was during Silver’s reign that New Yorkers came to refer almost habitually to Albany as a dysfunctional place, and cynicism of state government reached epic proportions. Much of the credit—or blame—falls to Silver.
Silver thought the people’s money was his money. For years, he helped lead a regime in which legislators from both parties received millions of dollars to distribute as “earmarks”—money handed out directly by elected officials to favored organizations outside of the state’s regular contracting or granting process. The New York Times dubbed Silver the “king of earmarks” because he used them as a way of exercising power over members of his political caucus. In doing so, Silver was accountable to no one. He handed out millions of dollars of state money, for instance, to the Metropolitan Council on Jewish Poverty, an organization run by William Rapfogel, the husband of Silver’s longtime chief of staff. Judy Rapfogel sat in on meetings about funding for her husband’s group, according to press accounts. In 2013, William pled guilty to stealing some $3 million over a nearly 20-year period from the largely government-funded Met Council. He served 14 months of a 3- to 10-year sentence in an upstate prison and recently entered a supervised work-release program.
In New York, the earmark process is so corrupt that politicians can create their own nonprofits and then finance them with taxpayer money—a remarkably blatant display of conflict-of-interest. In 2013, then-state senator Shirley Huntley of Queens pled guilty to charges that she pilfered $87,000 from a nonprofit she had started. The group took money for services it never performed. A week after Huntley was sentenced, federal prosecutors charged Brooklyn assemblyman William Boyland, Jr. with directing a nonprofit to spend funding from the New York State Office for the Aging on political events. Boyland was sentenced to 14 years in prison for that and other crimes. The following year, a Brooklyn federal judge sentenced former state senator Pedro Espada, Jr. to jail for siphoning hundreds of thousands of dollars out of a Bronx nonprofit that he controlled. His son, an official at the nonprofit, also went to jail. Silver regularly helped block efforts to reform this egregious system, and as his own trial demonstrates, he benefited from the state money he was able to funnel to an ally who in turn handed his law firm a generous business.
And what a business the lawsuit racket is in New York. Last year, the American Tort Reform Foundation dubbed the state its top “judicial hellhole” because of the very asbestos litigation that was at the heart of the Silver trial. Leading the charge has been Silver’s law firm, the politically powerful Weitz & Luxenberg, which has won nearly 90 percent of the $313 million awarded in New York asbestos cases over the last four years. One distinctive feature of the New York court hearing these cases: judges here have reintroduced the notion of punitive damages, a move that has driven local awards sky high. (Most other courts around the country stopped granting those awards in asbestos cases years ago.) The move has particularly benefited Silver’s firm, as the Wall Street Journal reported earlier this year: “[D]ozens of defense attorneys . . . say New York’s asbestos docket has been rigged to favor one tort firm: Weitz & Luxenberg, the same powerhouse asbestos firm that benefited from an association with Mr. Silver.” The U.S. attorney claimed during the Silver trial that the firm paid the former speaker some $3.3 million for the referral of mesothelioma patients—a good deal judging by the size of the firm’s take in asbestos court.
The economic consequences of Silver’s stranglehold on New York’s legislative process have often been direct and ruinous. For years, for instance, New York was one of the only states in the country that still allowed what’s known as vicarious liability in auto accidents—a law that held the owner of a car ultimately responsible for an accident, regardless of who is driving. Not only was the law particularly burdensome to rental companies, which had to pay up when renters crashed their vehicles, but it also created chaos when leasing began to replace car buying in the 1990s. After getting stuck with a number of big lawsuits, car companies and banks that financed leases pulled out of New York, hurting business, sending dealerships into a financial tailspin, and forcing many residents to spend thousands more to purchase cars that they could no longer lease. The total additional cost to New Yorkers was estimated at $130 million annually. For two years, even as other states changed their laws, Silver blocked reform, and New Yorkers only got relief when the federal government stepped in with legislation outlawing the concept of vicarious liability for auto-leasing firms.
Silver played his ultimate game of obstruction on ethics reform, where he balked at legislation requiring elected officials to disclose their outside income. His blocking of reform may have helped lead to his downfall, as Bharara—eyeing a state capital rife with conflicts and unwilling to fix itself—stepped up his investigations, until he finally nailed Silver himself. The good news is that Sheldon Silver is finally gone. The bad news is that it took so long and cost the state so much to be rid of him.