NEWS

Cost of civil litigation in the U.S. continues to rise, study reveals

 U.S. financial crisis will only increase already escalating the number of civil suits and resulting costs for all taxpayers

According to the annual study, 2008 Update on Tort Cost Trends, the rising number of civil suits in the tort system costs totaled $252 billion in 2007, or about $835 per person, $9 more than the cost per person in 2006.  Overall, the cost of civil litigation in the rose by 2.1 percent, or about $5.1 billion in 2007, this is the first escalation in costs since 2005 and follows a significant decline in 2006.

“The plaintiffs’ bar continues to chip away at our legal climate, in we have experienced the fiscal impacts of the rise of civil litigation firsthand here,” said William Large, president of the Florida Justice Reform Institute.

Florida’s legal climate was ranked 42^nd in the nation, according to an assessment of state liability systems released by the U.S. Chamber’s Institute for Legal Reform (ILR) and conducted by Harris Interactive in 2008.  The state’s legal climate has slipped from 36^th just last year, leaving only eight states with worse legal climates than Florida.

“In these tough economic times we need to be focusing on increasing our nation’s gross domestic product, not gross domestic plaintiffs,” Large said.

The Towers study also projects that costs will only continue to rise in future years, projecting a 4 percent increase in 2008, and an additional 5 percent increase in both 2008 and 2010.  “The current global economic crisis could very well lead to a surge in tort activity here in the ,” according to Russ Sutter, a Towers Perrin principal and author of the report.

The study also notes that the list of potential defendants that could be targeted for civil suits could see significant growth as a result of the weakening economy, noting that mortgage brokers, appraisers, investment bankers are likely to be targets for civil litigation as well as “peripheral defendants” such as auditing firms and even attorneys who advise the firms.

Traditionally, as economies recess, the number of civil disputes increases.  The weakening housing market has already flooded courts with mortgage foreclosure cases.  In the number of cases on court dockets has soared by 365 percent over the last two years, according to the Office of the State Court Administrator.

“As economies weaken, it is more imperative than ever that our judicial system continues to function efficiently and that already jammed court dockets are not further burdened by meritless claims,” Large said. “As this study shows, the continued growth of civil litigation is a product of a civil justice system that provides incentives to sue.”

The full Towers Perrin study can be found here.

The Florida Justice Reform Institute’s mission is to fight wasteful civil litigation through legislation promote fair and equitable legal practices, and provide information about the state of civil justice in . To facilitate these goals, the Institute employs research and advocacy in support of meaningful tort reform legislation.