Lawsuit Abuse Impact

The United States is the world leader in lawsuits, which cost the U.S. economy $264 billion per year – or about $850 per year for every man, woman and child in the United States.  That hurts families, businesses, local communities – and America’s ability to compete in the global economy. 

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 harms 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.


Frequent Filers: The Problems of Shareholder Lawsuits and the Path to Reform

February 27, 2014 | Frequent filers - professional plaintiff investors who file lawsuit after lawsuit - have been a long-standing phenomenon in shareholder litigation in both state and federal courts. Nearly twenty years ago, Congress attempted to remove professional plaintiffs from federal securities class actions by adopting the Private Securities Litigation Reform Act (PSLRA) of 1995. Yet, this legislation fell short of achieving its goal of eliminating professional plaintiffs.

What's Wrong with Securities Class Action Lawsuits?

February 05, 2014 | The Halliburton v. Erica P. John Fund case now before the Supreme Court involves the validity of the "fraud on the market" principle, which relieves a plaintiff of the obligation to prove reliance on a false statement - a legally required element of securities fraud - by creating a presumption of reliance based on economic theories regarding the assumed efficiency of securities markets.

Additional Resources

All Results for Lawsuit Abuse Impact

An Election Night Wave for Legal Reform

Author: Lisa A. Rickard | November 06, 2014 | Insights

On Tuesday, voters went to the polls across the country. They delivered a clear message that they want a new direction, one focused on jobs and economic growth. Read More »

Tags: Lawsuit Abuse Impact

In The News Today - November 6, 2014

November 06, 2014 | Insights

An op-ed in the Wall Street Journal by House Speaker John Boehner and Senate Minority Leader Mitch McConnell highlights "excessive regulations and frivolous lawsuits that are driving up costs for families and preventing the economy from growing" as one of the top priorities for reform under the newly elected Republican majority in the House and Senate. Read More »

Tags: Lawsuit Abuse Impact, Legal Ethics, Medical Liability, California

Lawsuit Abuse? There's an App for That

Author: Harold Kim | October 29, 2014 | Insights

"Block Calls Get Cash"-an Android app being marketed by Lemberg Law, a self-described consumer protection law firm. The firm says the app can help those who download it determine whether they have a claim under the Telephone Consumer Protection Act (TCPA), in which case they could win up to $1,500 per robodial or debt collection call. Read More »

Tags: Legal Ethics, Lawsuit Abuse Impact

The High Cost of Lawsuit Abuse

October 14, 2014 | Insights

The United States has the world's costliest legal system. What's driving up the costs? Read More »

Tags: Lawsuit Abuse Impact

Fmr. FBI Director: Order Return of $240K in Questionable Oil Spill Settlement Cash

October 09, 2014 | Insights

Former FBI director Louis Freeh, who is serving as a special master overseeing "potential fraud" in the BP Gulf oil spill claims process, has asked a federal judge to "order the return of nearly $240,000 paid to an Alabama boat captain he accused of reporting fake losses in shrimping revenue" caused by the spill. Read More »

Tags: Lawsuit Abuse Impact, Legal Ethics

Law Of The Jungle: The Book On Chevron And Lawsuit Fraud

September 23, 2014 | Insights

"If there are any doubts that mass torts are often the breeding ground for mass fraud, veteran journalist Paul Barrett's new book Law of the Jungle should put them to rest." Read More »

Tags: Legal Ethics, Lawsuit Abuse Impact

In The News Today - August 26, 2014

August 26, 2014 | Insights

Melissa Landry of Louisiana Lawsuit Abuse Watch discussed Louisiana's "judicial hellhole" ranking, arguing that the state's businesses and individuals are "in the front lines of lawsuit abuse every day." Read More »

Tags: Lawsuit Abuse Impact, Louisiana

Legal tide turning against lawyers who profit illegally from class-action lawsuits

August 19, 2014 | Insights

This month, justice found 'former plaintiffs' superlawyer' Stanely Chesley. Read More »

Tags: Legal Ethics, Lawsuit Abuse Impact, Ohio

In the News Today - May 20, 2014

May 20, 2014 | Insights

"This is about our justice system becoming a mechanism of high finance," said ILR's Bryan Quigley, quoted in an article in The Tennessean regarding the growing controversy over Third Party Litigation Funding. Read More »

Tags: Third Party Litigation Funding, Lawsuit Abuse Impact

Tennessee Enacts Law to Rein in Lawsuit Lending Abuses

Author: Lisa A. Rickard, President, U.S. Chamber Institute for Legal Reform | April 30, 2014 | Insights

Following Oklahoma last year, Tennessee yesterday became the second state nationally to enact a law to rein in lawsuit lending abuses. Read More »

Tags: Lawsuit Lending, Lawsuit Abuse Impact, Tennessee

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