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Subscribe by Email"Trial Lawyers Inc." report on lawsuit industry by Manhatten Institute
The Manhatten Institute has published a report entitled“Trial Lawyers Inc.” that contains aggregate data estimating the total costs of tort litigation in the US. While not necessarily covering employment law cases, certainly the fundamental points apply — it is very costly and vast sums go to an “industry” — trial lawyers.
“This report attempts to shed light on the size, scope, and inner workings of an industry poorly understood by the media and the general public. As we shall see, the lawsuit industry today is truly a behemoth, but—unlike the major corporations in our regular market economy—it remains financially opaque.”
“Trial Lawyers, Inc., while not an annual report per se, presents a snapshot of the lawsuit industry as it exists today. The picture is not pretty. Total tort costs today exceed $200 billion annually, or more than 2% of America’s gross domestic product—a significantly higher percentage than in any other developed nation. Moreover, even as the economy has stagnated and the stock market has plunged, the lawsuit industry’s revenues have continued to skyrocket: in 2001, the last year for which data are available, U.S. tort costs grew by 14.3%. Over the last 30 years, tort costs grew at a compound annual rate of 9.1%; by comparison, the U.S. population grew 1.1% annually, the consumer price index grew 5.0% annually, and the gross domestic product grew 7.6% annually during the same period.”
“Once upon a time, the average person blanched at lawyer fees that reached upward of $500 an hour at many of the best firms. But those high hourly fees are chump change compared with what Trial Lawyers, Inc. is raking in these days. From tobacco settlements to asbestos class action suits, the industry now boasts fees that can range as high as an astounding $30,000 an hour, turning some members of Trial Lawyers, Inc. into overnight billionaires and providing the capital to bankroll new lawsuit ventures in new markets.”
“For the lawsuit industry as a whole, less than half of all dollars actually go to plaintiffs, and less than a quarter of all dollars actually go to compensate plaintiffs’ economic damages. [I]n mass tort and class action claims, plaintiffs’ awards are typically divided among so many individuals that the only people who meaningfully profit are the plaintiffs’ lawyers themselves. And in capturing 19% of a $200 billion pie, Trial Lawyers, Inc. does handsomely indeed.”
No doubt all the details can be disputed to some extent. But this is a study worth looking at.
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