Lawsuit Abuse Impact
America has the world’s costliest legal system. As a percentage of our economy, U.S. legal liability costs are double those of the UK, three times higher than those in France and five times higher than those in Japan. Our nation’s litigation addiction hurts families, businesses, communities, and America's ability to compete for jobs and investment in a global economy. read more...
Just as important, lawsuit abuse harms workers and communities across the United States. Consider: Litigation costs small businesses in America over $100 billion per year. One in three small business owners report that they have been sued or threatened with a lawsuit – and if sued, more than two-thirds say they would likely have to pass legal costs on to consumers, reduce employee benefits and hold off on hiring new employees.
In other words, the ultimate victims of lawsuit abuse are consumers (in the form of higher prices) and workers (in the form of lost jobs and benefits).
Consider one example of how lawsuit abuse destroyed a business, killed jobs and decimated a community.
For nearly fifty years, gasoline can manufacturer Blitz USA was a pillar of the small town of Miami, Oklahoma. They produced 75% of all portable gas cans sold in the United States, and more than 100 families depended on Blitz for their livelihoods.
But then a small group of plaintiffs’ lawyers put Blitz USA out of business. These trail lawyers concocted a legal theory that sought to blame Blitz for the handful of injuries caused by misuse of gas cans. The resulting lawsuits forced the company to close its doors. Over a hundred workers lost their jobs and benefits, and the town of Miami lost one of its most important employers – while the lawyers made millions. The factory has since reopened under foreign ownership but with fewer jobs.
It’s not just businesses that suffer from frivolous litigation. In Huntington, West Virginia, the local school district removed swings from elementary school playgrounds following a lawsuit. In Rancho Cordova, California, a local community center was forced to close because of an abusive lawsuit. In 2011, New York City had to spend $550 million on lawsuit costs – which comes to approximately $70 for every resident of the city.
From workers on a gas can assembly line to kids in a West Virginia playground, the victims of lawsuit abuse are all around us. Little wonder, then, that nine out of ten American voters believe there are too many meritless lawsuits. Policymakers should take note and enact commonsense reforms to improve America’s lawsuit climate.