EDITORIAL : DOWN BUT NOT OUT NEED FOR TORT REFORM PERSISTS.

THE defeat Tuesday of what many members of the legal fraternity termed ``the terrible two hundreds'' (propositions 200, 201 and 202) was disappointing but hardly surprising.

The sponsors of the three measures had a tough sell from the beginning. One reason is that voters in this era of increasingly dysfunctional government are suspicious of measures that seem to reduce their rights - in this instance the right to sue.

The sponsors of propositions 200 (no-fault insurance), 201 (shareholder litigation) and 202 (lawyers' contingent fees) failed to convince enough voters that the measures were, on balance, better for consumers than the status quo. Supporters of the propositions also were outgunned in the media - especially on television - by the opposition's low-road negative advertising.

Nevertheless, the need for tort and insurance reform won't go away simply because the three propositions failed. Change is essential.

One reason is that the courts are overloaded with litigation, partly because there are few disincentives for filing frivolous lawsuits. Reform is needed to keep the system functioning.

If nothing is done, deserving plaintiffs will be among the first to suffer, since their cases may be put on hold while the courts deal with the explosion in higher-priority criminal cases triggered by the passage of the ``three strikes'' law.

Especially pressing is the need for auto insurance reform.

Opponents of Proposition 200 bombarded the voters with propaganda charging that the measure conflicted with the need to hold people responsible for their own actions.

But what they left unsaid was that a lot of irresponsible people are on the road. California has an estimated 5 million uninsured drivers - and they cause a disproportionate share of the accidents that cause deaths, injuries and property damages.

As it stands now, victims of such accidents often stand little chance of recovering anything unless they pay extra for insurance protecting them from property damage and injuries caused by uninsured motorists. Such protection would have become automatic under Proposition 200, since motorists would have been covered by their own insurance.

Tom Proulx, chairman for the Alliance to Revitalize California, said that his group believes that the campaign for the propositions ``will pave the way for responsible legal reform in the Legislature.''

We certainly hope he is right. California's tort-liability laws are too friendly to lawyers and too hostile to businesses - and responsible motorists. It's time to level the playing field.