James R. Copland, director of the Manhattan Institute’s Center for Legal Policy, has started a week of posts at PointofLaw.com on the Institute’s new contribution to its series on the excesses of the litigation industry, “Trial Lawyers, Inc. — K Street .” This edition focuses on the political and lobbying clout of the litigation industry and how it achieves its policy goals.
From Copland’s post today, he answers the question, why should we care? Quoting from the report:
The annual direct cost of American tort litigation–excluding much securities litigation, punitive damages, and the multibillion-dollar settlement reached between the tobacco companies and the states in 1998–exceeds $250 billion, almost 2 percent of gross domestic product. The indirect costs of excessive litigiousness (for example, the unnecessary tests and procedures characterizing the practice of “defensive” medicine, or the loss of the fruits of research never undertaken on account of the risk of abusive lawsuits) are probably much greater than the direct costs themselves.
Of course, tort litigation does do some good, and it does deter some bad behavior. The problem is that it deters a lot of good behavior, too. Indeed, the legal system does such a poor job of distinguishing between good and bad behavior that the high cost of litigation is effectively a “tort tax” paid by every American. The share of America’s economy devoted to lawsuits is far higher than that of other developed nations such as Germany and Japan. Yet America is hardly safer as a result.
See also Copland’s Wall Street Journal op-ed, “How the plaintiffs bar bought the Senate.”
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