Fast Facts on Lawsuit Abuse Impact | Institute for Legal Reform

Fast Facts on Lawsuit Abuse Impact

America’s civil justice system is the world’s most expensive, with a direct cost in 2005 of $261 billion, or 2.09 percent of GDP. [Tillinghast-Towers Perrin, December 2006.]

Tort costs were $880 per U.S. citizen in 2005, meaning the average American family of four paid a “litigation tax” of more than $3,500 due to increased costs from lawsuits and other liability expenses that force businesses to raise the price of products and services. That cost is equivalent to nearly an 8 percent tax on wages. [Tillinghast-Towers Perrin, December 2006; U.S. Census Bureau, August 2006]

The U.S. civil justice system is estimated to return to claimants less than 50 cents on the dollar and less than 22 cents for actual economic losses. [Tillinghast-Towers Perrin, February 2003]

Tort costs are divided: 24 percent for noneconomic losses – such as pain and suffering; 22 percent for economic losses; 21 percent for administration; 19 percent for plaintiffs’ lawyers; and 14 percent for defendants’ costs. [Tillinghast-Towers Perrin, February 2003]

The growth in U.S. tort costs since 1950 has well exceeded the nation’s growth, after adjusting for inflation; in 1950 tort cost per person was $96; in 2005 the number grew to $880 per person. [Tillinghast-Towers Perrin, December 2006]

Small businesses are responsible for 60 to 80 percent of all new jobs created in the U.S economy. More employee benefits could be provided if the average small business earning $1 million in revenue didn’t have to spend $20,000 each year on an out of control lawsuit system. [Tort Liability Costs for Small Business]

Lawsuit abuse affects every business and every American. Small businesses bear 69% of the $143 billion annual costs that the tort system imposes on businesses, but take in only 19% of business revenue. [Tort Liability Costs for Small Business]

Because many small businesses don’t have the money to buy insurance, they are hurt the most by lawsuit abuse. Small businesses pay $20 billion in tort liability costs out of their own pockets each year. [Tort Liability Costs for Small Business]

59% of voters agree with the statement: “You know the legal system has gone too far when parks remove teeter-totters and swing sets, and schools won’t let kids play tag, for fear of someone getting hurt and filing a lawsuit.” [National survey of 800 voters conducted on December 14-18, 2006 by Public Opinion Strategies]

via Fast Facts on Lawsuit Abuse Impact | Institute for Legal Reform.