https://www.wsj.com/articles/how-lawsuits-cost-you-3-600-a-year-tort-system-chamber-of-commerce-institute-for-legal-reform-report-11670460820?mod=opinion_lead_pos4
We always knew trial lawyers were filling their pockets, but it’s still a surprise to learn how much they’ve been emptying ours. The total economic cost of the U.S. tort system in 2020 was $443 billion, according to a recent study by the Chamber of Commerce Institute for Legal Reform. That’s 2.1% of GDP, and it works out to $3,621 per household.
Only a small percentage of American families are involved in tort cases or class-action lawsuits in a given year, but the burden of jackpot payouts is carried by nearly everyone. The costs spread through the economy in the form of higher insurance premiums that fall on nearly every family, either directly (car insurance) or indirectly (medical malpractice or product-liability insurance).
And costs are rising. Between 2016 and 2020 the tort system grew 6% a year, the study says, more than inflation and GDP growth. Commercial liability grew the fastest, at 7% a year. Also alarming is that only half the money goes to injured parties. “We estimate that only 53 percent of the total expenditures of the tort system were paid to claimants,” the authors write. In other words, “for every dollar paid in compensation to claimants, 88 cents were paid in legal and other costs.”
The boom in tort costs is owing to the boom in litigation financing, in which investors fund lawsuits and then claim a portion of the winnings.