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.

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. Read More...

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 trial 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 2017, New York City had to spend $722 million on civil litigation costs – which comes to approximately $85 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.

Suggested Resources

Research
  • Costs and Compensation of the U.S. Tort System

    Costs and Compensation of the U.S. Tort System

    October 24, 2018

    The tort system cost Americans $429 billion in 2016. That's the principal finding from ILR's new research, which arrives at that shocking figure by examining data on liability insurance premiums and estimates of the liability exposure of businesses and individuals that are uninsured or self-insured. The research also indicates that only 57 percent of the $429 billion went to plaintiff compensation. The rest went to lawyers' fees and other expenses. Read More

  • 2017 Lawsuit Climate Survey: Ranking the States

    2017 Lawsuit Climate Survey: Ranking the States

    September 12, 2017

    The 2017 Lawsuit Climate Survey: Ranking the States was conducted for the U.S. Chamber Institute for Legal Reform by Harris Poll to explore how fair and reasonable the states' liability systems are perceived to be by U.S. businesses. Read More

All Results for Lawsuit Abuse Impact

  1. Georgia High Court Ruling Curbs 'Gotcha' Bad Faith Cases

    March 14, 2019 | News

    Earlier this week, Georgia's Supreme Court ruled that an insurer can't be sued for failing to settle a claim against its policyholder within policy limits unless the insurer received a valid settlement offer, Law360 reports.... Read More

  2. Stop Fraud, PROTECT Asbestos Victims

    March 14, 2019 | Blogs

    Fraud and abuse have become entrenched in the nation's asbestos bankruptcy trust system. Lawmakers must act to fix it.... Read More

  3. In the News Today - March 8, 2019

    March 08, 2019 | News

    "What to Do If Your Small Business Gets Sued and How to Reduce the Threat"... Read More

  4. Waking the Litigation Monster: The Misuse of Public Nuisance

    March 06, 2019 | Research

    Local governments are increasingly teaming up with contingency fee lawyers to influence public policy issues through litigation, largely through attempts to expand the public nuisance doctrine. ILR's research outlines the origins and development of public nuisance litigation, shows the ongoing efforts of activists and attorneys to morph this theory into an all-purpose cause of action, and calls on courts to reject expanding judicial authority inappropriately into the legislative and executive branches. ... Read More

  5. Containing the Contagion: Proposals to Reform the Broken Securities Class Action System

    February 25, 2019 | Research

    Record-high numbers of securities class action filings are swamping the protections that Congress created in 1995. In fact, the likelihood that a public company will be sued has never been greater, and the bulk of these lawsuits show the classic signs of litigation abuse. However, solutions are at hand. This research proposes regulatory and legislative action to contain the securities litigation contagion.... Read More

  6. Risk and Reward: The Securities Fraud Class Action Lottery

    February 25, 2019 | Research

    Securities fraud class action lawyers are playing the "litigation lottery," filing often meritless cases against big companies on the off-chance of a big settlement. This research looks at all securities fraud class actions filed between 2005 and 2016 to reveal the true incentives that motivate plaintiffs' lawyers to roll the dice on these lawsuits, despite their high dismissal rate.... Read More

  7. Multidistrict Litigation Needs Intensive Care

    February 22, 2019 | News

    The 50-year-old multidistrict litigation (MDL) process is becoming increasingly unworkable and is in dire need of repair, writes Eli Lilly General Counsel Michael J. Harrington in Corporate Counsel.... Read More

  8. In the News Today - Februrary 13, 2019

    February 13, 2019 | News

    "Cooperation, Not Lawsuits, Right Way Forward for Florida on Climate"... Read More

  9. In the News Today - February 11, 2019

    February 11, 2019 | News

    "Driverless Car Bill Stalls In Congress, So States Gear Up"... Read More

  10. ILR's Harold Kim: Businesses Don't Think They'll Get a "Fair Shake" in Louisiana Courts

    January 25, 2019 | News

    Harold Kim, the chief operating officer of the U.S. Chamber Institute for Legal Reform (ILR), said businesses and their attorneys fear they won't get a "fair shake" in Louisiana courts.... Read More