Is it Time to Give Tort Reform Another Look?
While everyone is legally entitled to their day in court, there are definite costs to our legal system as it operates. Lawsuits are a drag on the economy and raise the costs of doing business. Here are some considerations as they relate to tort reform in the U.S.
The US is the Most Litigious Society on Earth
Legally Mine explains that 94% of the world’s lawsuits are filed in the United States. Not only that, but the U.S. has the highest percentage of its gross domestic product that goes to litigation costs. Further, 80 percent of the world’s lawyers live in the U.S. All of this adds up to a self-sustaining system that leads to litigation as a way of life in this country. The American mentality considers lawsuits as the solution to practically every problem. This adds up to increased costs that are spread throughout the economy.
Tort Costs Are Increasing
Medical Liability Monitor explains that in 2009, the cost of the U.S. tort system was estimated at a quarter of a trillion dollars. These numbers continue to increase since then at a rate far faster than that of inflation. These costs impact not only the corporations, but they also impact the consumer because the costs of this system end up being passed along to the customer in the form of higher prices. It is estimated that the cost of this system exceeds $1,000 per every America for each year. The system impacts not only large companies, but it also can drive small businesses out of businesses as well.
The Benefits of Tort Reform
If the tort system is reformed, it will lower the cost of doing business in the United States and encourage innovation. Vitanna explains that tort reform would not close off the justice system to litigants. Instead, it would shift some of the costs to unsuccessful litigants and discourage frivolous litigation. Beyond helping businesses, it will also help improve the health care system since malpractice lawsuits impede the delivery of health care services by driving doctors out of business. Any litigation costs that are avoided will help companies become more profitable and either lower prices or pay their workers better wages.
The U.S. legal system has simply become out of control and needs to be limited in a way that respects the rights of litigants while lower the costs of doing business for the corporations who struggle with the high costs.