SAN DIEGO -- Persons seeking to recover damages from people or corporations who injure them will soon be out of luck -- and money, a law professor from Cornell University will warn a conference of bankruptcy judges and lawyers in San Diego on Friday (Oct. 18).

An increasingly sophisticated array of judgment-proofing techniques will soon render meaningless lawsuits for damages under our current legal liability system, predicts Lynn M. LoPucki, the A. Robert Noll Professor of Law at the Cornell Law School. He will present his analysis of the legal liability system Friday at the annual meeting of the National Conference of Bankruptcy Judges to be held at the Marriott--San Diego.

"Judgment proofing will defeat the liability system," LoPucki said, explaining that, in both corporate and personal liability cases, the responsible parties' assets are being protected through a variety of legal techniques, with the result that people who are suing for damages can wind up with no monetary award, even though the entity being sued has assets.

"Corporations can operate profitably and make a lot of money for shareholders, yet have nothing left for creditors," LoPucki said. "A person being sued, for example O.J. Simpson, could put his assets in an offshore trust in the Jersey Islands, and under law, creditors could not touch his assets."

Congress is currently reviewing tort reform and debating a new bill, but lawmakers, according to LoPucki, are just "rearranging the deck chairs on the Titanic, since the whole liability system is going down."

Among the variety of judgment proofing techniques being utilized are secured debt strategies, ownership strategies, exemption strategies and foreign haven strategies, LoPucki said, adding that computerization has recently brought about dramatic reductions in the costs of pursuing these strategies, making them cost effective for more potential defendants.

"As use spreads, the cultural and political barriers to judgment proofing will decline, leading to wider use of the techniques and ultimately to system failure," he concludes.

LoPucki's paper on which he based his presentation will be published in the Yale Law Journal later this month. In the paper, he also examines a variety of strategies by which the system might respond to judgment proofing, including shareholder unlimited liability, involuntary creditor priority, asset provider liability, enterprise liability, mandatory insurance and financial responsibility laws.

Does LoPucki have advice for people who suffer damages and want to sue for monetary redress?

"Just hope you're not up against anybody sophisticated," he advises.