All Americans are paying for mass tort lawsuits — even those who have never heard of this type of litigation. These profit-driven legal maneuvers can make attorneys wealthy, but they drain everyone else’s economic resources.
Mass tort litigations are lawsuits that involve multiple individual plaintiffs, sometimes thousands of them, seeking damages from defendants, usually corporations, over real or imagined harms caused by some product. Although some cases are legitimate, many are instigated by attorneys, not the allegedly injured parties, who use giant advertising campaigns to locate people they can claim have suffered harm. It’s a complete reversal of the normal legal process, which begins with the injured party going to an attorney for help.
Some mass tort litigations are well-known cases that target major manufacturers or healthcare businesses. They frequently rely on junk science that doesn’t really back up the claims of damage but is vague enough to get litigation started.
Once the ball is rolling, anything can happen. Even innocent companies frequently find it cheaper and easier to just give in and settle, knowing that a victory in the courtroom won’t undo the damage done to their public image and reputation by baseless but well-publicized allegations.
This type of litigation is growing rapidly, driven in great part by the increasing involvement of third-party funders. Investors provide the upfront cash needed to advertise on television, social media, and other platforms; engage companies that specialize in lead generation; and cover the other costs of bringing legal action. Wall Street funding for this litigation more than doubled from 2017 to 2021, supporting the astounding $6.8 billion that was spent on 77 million legal ads aired on television.
These massive cash injections and the gigantic advertising campaigns they bankroll help litigators find potential claimants and publicize the cases. This can both influence juries and put more pressure on defendant companies to settle. The more litigators spend, the more likely they are to win judgments or gain settlements, which the attorneys and investors divvy up before any money filters down to individual claimants. The people who should benefit from the lawsuits often receive as little as a few dollars each, while lawyers walk away with millions.
All of this comes at a huge economic cost, which is borne by the public at large in the form of inflated prices. Industries that supply consumers with products in diverse fields including medicine, automotive manufacturing, and agriculture are forced to build potential liability damages into the cost of their goods. They know that even frivolous litigation will involve expensive attorney’s fees and can result in expensive settlements. Annual tort costs are estimated to be nearly $500 billion, equivalent to more than 2% of U.S. GDP.
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The unchecked abuses of the tort system grew at an annual rate of 6% year-over-year between 2016 and 2020. That breaks down to a “tort tax” of roughly $1,300 per year paid by every person in America.
Mass tort litigation has gotten out of control because the regulations governing it do not promote accountability — quite the opposite. This includes lax rules that allow third-party funders to remain anonymous, pulling the strings that manipulate cases yet staying free from disclosure and responsibility. Until state and federal lawmakers and regulators recognize this expensive drain on our economy and take action to rein it in, all Americans will continue to pay.
David Williams is the president of the Taxpayers Protection Alliance.