The trial lawyers have now enlisted themselves in the war against terror. One can imagine a parody--a team of wing-tipped attorneys parachuting into the wilds of Afghanistan, armed with subpoenas forcing Osama bin Laden to produce all relevant documents and secure his attendance at a 20-day videotaped deposition (damn the Geneva Conventions against torture). The legal and photocopying bills alone crush al Qaeda.

Resident Fellow Theodore Frank

The reality is more prosaic, and less amusing. For just as Willie Sutton legendarily said he robbed banks "because that's where the money is," plaintiffs' attorneys are weaving creative legal theories to hold legitimate third parties liable for the intentional acts of terrorists. This friendly fire could end up doing almost as much financial damage as the terrorists themselves, with the lawyers getting rich in the process.

The roots of this folly are in the 1970s, when many state courts began to decide that the intentional acts of criminals shouldn't bar plaintiffs from collecting money from others with deeper pockets. So if you are carjacked--sue the parking lot owner. Most legislatures have yet to reverse this radical legal change.

Thus trial lawyers, thanks to New York Supreme Court Justice Nicholas Figueroa's generous rulings and jury instructions, persuaded a jury in October last year that the terrorists who planted a truck bomb in the World Trade Center garage in 1993 were only 32% responsible, while the Port Authority of New York and New Jersey was 68% responsible--and therefore, under New York law, wholly on the hook for $1.8 billion in damages.

After 9/11, lawsuits would have bankrupted several corporate victims of the attacks were it not for a $7 billion, taxpayer-funded bailout of potential plaintiffs. Even so, several dozen claimants opted for litigation. Naturally, their lawyers have sued everyone from the airlines to Boeing to Motorola to New York City. Many of these cases are still in pre-trial proceedings. Attorneys are asking for billions of dollars in damages.

Banks are not immune from terrorist-related lawsuits, either. They're getting hauled into court because of who has accounts at their institutions.

Federal laws permit parties injured by an act of terrorism to recover treble damages and attorneys' fees in civil suits against terrorists. Fair enough. But an act of terrorism may also include "knowingly providing material support or resources to a foreign terrorist organization." The vagueness and breadth of this language is the source of the mischief: Following the 9/11 attacks, the U.S. started cracking down on front organizations for Islamic terror groups that posed as charities; and some of these faux-charities had accounts at international banks. Bingo. Lawsuits are pending now that claim, in effect, that the banks should have known then what the U.S. government did not decide until years later.

For example, on Aug. 22, 2003, the U.S. designated Interpal and Comité de Bienfaisance pour la Solidarité avec la Palestine (CBSP), among others, as international terrorist organizations. These two outfits channeled funds to the Orwellian-named "Union of the Good" militant group, which in turn supported Hamas. Three days before the designation, on Aug. 19, 2003, a Hamas suicide bomber, Raed Abdul Hamid Misk, blew himself up on the Egged No. 2 bus in Jerusalem, killing and wounding dozens.

The American victims and their families have sued over this and other attacks; but they have not sued Misk--who, now beyond earthly jurisdiction, will have to answer to a higher authority--nor Hamas, nor "Union of the Good," nor even Interpal or CBSP. Rather, the families are suing NatWest Bank,where Interpal happened to hold some of their bank accounts, and Credit Lyonnais, which once held CBSP money.

The complaint against Credit Lyonnais filed earlier this year spends most of its 79 pages listing heinous acts of Hamas and their consequences. So what does this have to do with Credit Lyonnais? A small section of the complaint claims that Credit Lyonnais was supposed to be monitoring Al Jazeera in case an official for one of its customers, such as CBSP, said something incriminating. Perversely, the fact that Credit Lyonnais reported suspicious banking activity to regulators is supposed to be evidence that the banks "knew" that the two charities were supporting terrorism.

The plaintiffs make much of the fact that Israel designated CBSP and Interpal unlawful organizations in the late 1990s. But the U.S. did not until 2003--and France and Britain have yet to do so, despite extensive investigation. The banking system will grind to a halt if a bank must scrutinize every customer to the degree plaintiffs argue should have been done for CBSP and Interpal--a degree of scrutiny greater than their own home countries have established.

France and Britain may well be wrong to assess these Hamas-affiliated organizations as "humanitarian": Money is fungible, and Hamas can readily shift its own funds from feeding constituents to making bombs. But criminal prosecutors, not contingency-fee-hunting trial lawyers, should chase terrorist financing. The latter are more interested in wealth than guilt: Trial lawyers have every motivation to attempt to attach blame to the deepest and most readily available pocket instead of the actual culpable parties. Nor do they bear the diplomatic consequences for the U.S. when they baselessly tread upon the wrong toes.

Both NatWest Bank and Credit Lyonnais filed motions before Judge Charles Sifton of the Eastern District of New York to dismiss the cases against them. In vain: The lawsuits go forward and are in the pre-trial discovery stage.

If courts are not going to apply the antiterrorism laws sensibly, Congress should amend them to make clear that civil liability is limited to those who commit criminal acts of international terrorism, and those who aid and abet with specific intent to commit terror. Otherwise, terrorists can damage the global economy simply by inducing fratricidal litigation.

Ted Frank is a resident fellow and director of the Liability Project at AEI.