The facts are alarming. Lawsuit abuse is a huge problem growing
out of control. The severe damage it's causing to American small
business owners, taxpayers, consumers, retirees and working
families is shocking. And it's getting worse every day.
Who loses in our current legal system? YOU DO...
Lawsuit abuse is strangling our justice system...
Forcing hundreds of dollars in hidden taxes...
Raising health care costs...
Crippling businesses and industry and taking away jobs...
Dampening needed scientific innovation and research...
Making the U.S. the lawsuit leader...
Where does all the money go?
Who loses in our current legal system? YOU DO...
Nearly everyone in America is hurt badly by the lawsuit abuse crisis.
Consumers and small business are hit hardest.
In a personal injury lawsuit, the average cost to defend
yourself in a nonautomotive case is about $7,500 - money you
lose, even if you win your case. And if your company or business
is sued, it can cost tens of thousands of dollars for a legal defense,
even if you win.
The cost of lawsuits passed on to consumers add up to
nearly $1,200 per year for every person in America today.
Every year, Americans spend tens of billions of dollars on
legal fees, court costs, and individual time and effort in litigation.
Yet, less than half of the liability dollar ever goes to anyone
injured - the rest goes to lawyer fees and court costs.
back to top
Lawsuit abuse is strangling our justice system...
America's justice system used to be the envy of the world, but the
lawsuit crisis is clogging our courts with meritless lawsuits. Most
personal injury lawyers take cases on a contingency fee basis,
collecting one-third or more of jury awards. Under this system,
plaintiffs do not have to pay anything to file lawsuits. With nothing
to lose, some people abuse our legal system by filing frivolous
lawsuits to get their hands on large awards, delaying justice for
those who truly need it.
In 1991, nearly 19 million new civil suits - including divorce
cases, personal injury lawsuits, and other civil actions - were
filed in America's state courts. That's more than one new lawsuit
for every ten adults.
It takes at least a year to resolve most lawsuits, and delays
of three to five years are not uncommon. Unfortunately, injured
people with legitimate claims can wait years before their cases
go to trial.
In 37 percent of all new personal injury cases that go to
trial, the jury awards the claimant nothing!
back to top
Forcing hundreds of dollars in hidden taxes on each California taxpayer...
The lawsuit crisis is adding a hidden tax we all pay for goods and
services. Businesses raise prices to cover their costs or hiring lawyers,
fighting lawsuits, and paying out excessively large awards.
Here are just a few everyday examples of how the hidden
lawsuit tax raises the price of consumer goods:
- One-half of the price of a $200 football helmet is
liability insurance.
- If you buy a $100 step ladder, the liability insurance
represents about $20 of the cost.
- Up to $500 can be added to the cost of a car because
of the litigation costs passed on by the manufacturer.
back to top
Raising health care costs...
Lawsuit abuse is one of the major contributors to America's
worsening health care crisis.
An estimated $20 billion per year is spent on unnecessary
test procedures designed only to guard doctors and hospitals
against malpractice claims.
Almost half of the money spent by physician insurers
goes towards defending cases that ultimately are closed
without any compensation paid to the claimant.
Some other examples of the hidden "lawsuit tax"
built into the price of health care services and goods:
- The price of a heart pacemaker averages
$18,000...$3,000 of which is the lawsuit tax.
- On average, the cost of a motorized wheelchair
is $1,000...$170 of which is the lawsuit tax.
- The doctor's fee for a tonsillectomy averages
$578...$191 of which is the lawsuit tax.
- A two-day maternity stay averages $3,367...
$500 of which is the lawsuit tax.
- Eight dollars of an $11.50 dose of DPT
childhood vaccine is liability insurance.
back to top
Crippling businesses and industry and taking away jobs...
American companies have been paying liability insurance
premiums that are 20 to 50 times higher than those paid by foreign
firms.
As one example, the general aviation industry
manufactured 18,000 aircraft in 1978, but produced only 547
in 1993, primarily because of the high cost of insurance. Up
to one-third of the purchase price of a new small airplane goes
toward the manufacture's liability insurance. Other industries
such as sporting goods manufacturers and machine tool
manufacturers have also been damaged.
back to top
Dampening needed scientific innovation and research...
Product liability and litigation concerns have led
several companies and laboratories to postpone or cancel
altogether their testing of promising AIDS vaccines.
In the 1970's, there were thirteen U.S. based
pharmaceutical companies conducting research in fertility
and contraception. By 1988, there was only one.
back to top
Making the U.S. the lawsuit leader...
The U.S. has 30 times more lawsuits per person than
Japan, and 20 times the number of lawyers.
There are 70,000 product liability lawsuits in the United
States annually, and only 200 in the United Kingdom.
back to top
Where does all the money go?
Contingency fees received by personal injury trial lawyers
exceed $10 billion annually.
From 1974 to 1985, the average jury award in product
liability cases has jumped from almost $500,000 to over $1.6
million. Yet it is estimated that only one third of the award
money is likely to get to the injured party; the remainder
goes to cover attorney fees and court costs.
Plaintiff lawyer contingency fees seldom amount to less
than 33% of recoveries when cases are settled without trial,
40% if cases go to trial, and 50% if appeals are necessary.
In personal injury litigation alone, over $96 billion is
spent or lost each year in America to deliver $41 billion in
compensation to injured parties and their attorneys.
