NEED FOR LAWSUIT REFORM: THE DATA

WHY IT’S IMPORTANT:? The costs of lawsuits burden our economy, cost jobs, and threaten our industry according to two studies.? The costs of lawsuits in 2022 found by those studies greatly exceeded the costs of natural disasters in that year.

These studies present the economic crisis caused by tort costs.? It bolsters the response to the “fairness fallacy” presented by those who oppose reforms (but that is for another day).

THE STUDIES:? The studies are as follows:

Tort Costs in America-U.S. Chamber of Commerce:? In November, 2024 the Chamber released a study concluding, “The costs of our lawsuit system are a hidden burden that affects every American, and that burden is growing.”

Economic Benefits of Tort Reform—The Perryman Group:? Released in October, 2023, the study calculated the “excessive tort costs”.? It calculated “excessive costs” based on a comparison of costs as a percentage of GDP of other in other developed areas with a similar standard of living and well-developed judicial systems, such as the European Union.

Together, the studies present the burden of lawsuits on our economy and the need for reform.? Compare these studies’ 2022 numbers in relation to the costs of US natural disaster that year which totaled $270 Billion according to Munich RE.? Natural disaster risks - Rising trend in losses | Munich Re

THE NUMBERS--CHAMBER REPORT:

????????? $529 Billion—Costs and compensation paid in the U.S. tort system in 2022;

-Understates total as the calculation is based on state insurance data, thus only including costs that are insurable.

????????? $4,200—Cost per household;

????????? 2.1%--National GDP equivalent;

????????? 7.1%--Increase in tort costs from 2016 to 2022

???????????????????? -compare to inflation (3.4%) and GDP growth (5.4%) during that period

You can get the study at Tort Costs in America: An Empirical Analysis of Costs and Compensation of the U.S. Tort System - Third Edition - ILR

THE NUMBERS—THE PERRYMAN GROUP REPORT:

????????? $230.3 Billion—estimate of US tort system outlays that were “necessary”;

????????? $342.9 Billion—“excessive” burden of tort system in 2022;

???????????????????? $313.7 Billion—“excessive" burden of tort system in 2021;

$520.2 Billion—estimated loss of economic output (gross product) each year due to the excessive tort costs;

????????? -$472.9 Billion—estimated 2021 loss of economic output

$3,965—“Tort Tax” cost per household from reduction of output

$1,561—“Tort Tax” cost per person from reduction of output

4.8 Million—estimated loss of jobs due to excessive tort costs

????????? 4.5 Million-estimated loss of jobs due to excessive tort costs in 2021

$96.2 Billion--estimated loss of federal revenues due to excessive tort costs

$26.8 Billion—estimated loss of state revenues

$22.5 Billion--estimated loss of local revenues

The study breaks down the estimated loss on a state-by-state basis.? You can get the study at Perryman-Tort-Reform-Impact-12-20-2022-1.pdf

BOTTOM LINE:? There is a lawsuit crisis in America.? These studies provide the economic impact on business, government,…and each and everyone of us.