It's the classic fight -- again -- between the insurers and the trial lawyers, and while it is capturing little attention now, the struggle is all but certain to result in major legislation when lawmakers return to work in January.

Representatives of the lawyers and insurers have held three secret meetings since the summer to try to work out their differences on two key issues -- low-cost auto insurance and bad-faith lawsuits. The two issues involve hundreds of millions of dollars and affect the pocketbooks of millions of Californians. Both of these lobbies wield tremendous influence through their campaign contributions, so their dispute has a ripple effect felt throughout both houses of the Legislature.

First, the auto insurance.

For years, automobile insurers have sought some form of "no-fault" coverage in California, in which a driver's insurer pays damages in most cases, regardless of who's to blame for the accident. No-fault exists in 11 states, and insurers contend it lowers the cost of auto insurance because claims are settled speedily by the companies rather than in court between lawyers representing opposing interests. Insurers say the high cost of auto insurance is due, in part, to the cost of litigation; limit the litigation and you limit the costs, they argue.

Not surprisingly, lawyers see the issue differently. Limiting the right to sue means limiting a person's access to the courts. In many cases, lawyers take such disputes on a contingency basis, which they note often represents the only opportunity moderate- and low-income clients have of obtaining good counsel -- and paying the lawyers' fees. Therefore, the lawyers have been adamantly opposed to no-fault.

The dispute over no-fault, among others, has divided the lawyers and insurers for years.

But at the last meeting, which took place at a Los Angeles hotel, the insurers offered a compromise: scrap the no-fault plan, and instead offer a bare-bones policy that provides minimum coverage and still satisfies California's law, which requires motorists to show proof of coverage when they register their vehicles. Such a policy might cost $300 or $400 annually. The trial lawyers have yet to respond.

Second, the bad-faith lawsuits.

At one time it was the law in California that bad-faith, third-party lawsuits were allowed under the so-called "Royal Globe" doctrine, in which insurers were almost automatically sued if a party -- such as a lawyer working on a contingency basis -- felt that an insurer hadn't speedily settled a claim in good faith. Those suits drove up the cost of insurance and hit the insurers where it hurt the most -- in their pocket books.

After a fierce political fight, "Royal Globe" ultimately was repealed. But during the past decade, the trial lawyers have attempted repeatedly to reinstate it. Legislation currently exists in the Capitol to do just that, but the bill has been shunted to the sidelines while the lawyers and insurers attempt to work out their differences. Both the insurers and trial lawyers have identified "Royal Globe" as their No. 1 legislative priority next year, and both -- like scorpions in a bottle -- are putting together campaign war chests in case the negotiations fall apart.

Both sides readily acknowledge that Republican Gov. Pete Wilson is certain to veto any reinstatement of "Royal Globe" if it got as far as his desk.

But what about the next governor, who takes office in January 1999, little more than a year from now? At this hour, the frontrunner in that race is U.S. Sen. Dianne Feinstein -- and she is believed to be sympathetic to bringing "Royal Globe" back.

Dear Editor,

I enjoy your Capitol Enquiry newsletter.

As for today's issue [Nov. 10], I was left a bit surprised after reading it. Did you really mean to say that Susan Golding is the "likely" Republican nominee against Boxer? I think you will find some eager takers for that bet!

Sincerely, Brian J. Todd

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