America: The Land of the Lawsuit?

May 27, 2013

In a competitive global economy, the United States has many clear advantages. We’ve got abundant energy resources, vast agricultural lands, vibrant capital markets, the world’s top labs and universities, a sophisticated and well-developed infrastructure system, and an entrepreneurial culture that drives innovation and advancement—and that’s just naming a few.

While America may be the envy of the world for many reasons, our legal system is not one of them. The U.S. Chamber of Commerce Institute for Legal Reform just released a study by NERA Economic Consulting showing that the United States has the world’s costliest legal system as a share of its economy. The U.S. legal system costs 150% more than the Eurozone average and 50% more than the United Kingdom.

American businesses, organizations, and consumers bear the burden of our costly legal system. It enables a handful of unscrupulous plaintiffs’ lawyers to pursue frivolous lawsuits and huge paydays, often at the expense of their clients. This excessive litigation creates enormous costs for companies—especially small businesses, many of which can go bankrupt due to a single suit. And a rising tide of lawsuits sinks all boats. When a few members of the trial bar are able to game a flawed legal system, they destroy jobs and stifle growth across the economy.

It’s not just business that’s concerned about systemic lawsuit abuse in the United States. American voters are skeptical of the U.S. legal system as well. According to a new poll sponsored by the Institute for Legal Reform, 87% of voters think that the number of lawsuits in the country is a problem, and 69% believe that abuse in the legal system has risen sharply over the past decade. One-in-three voters have either been threatened with or involved in a civil lawsuit, and 43% of small businesses have faced litigation or the threat of legal action.

We need a commonsense system that preserves recourse and redress in the courts. It should allow disputes to be settled and those who have been legitimately wronged to be compensated. But that’s hardly the system we’ve got today.  

The Chamber and the Institute for Legal Reform will continue to fight to reform the U.S. legal system so that it is an instrument for justice—not a tool for abuse. If we allow our system to continue to foster frivolous lawsuits, it will not only drive companies out of the country or out of business, but it will diminish our competitive standing in the world.

To read the full report on the enormous costs of the U.S. legal system, and to learn more about our efforts to curb lawsuit abuse, visit www.InstituteForLegalReform.com.

 

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