Across America, the abuse of our civil justice system is tearing at the fabric of our communities. We’ve all heard of impossible — but true — examples of rampant lawsuit abuse.
Lesser known, however, is the extent to which the cost of judgments, settlements and legal fees are impacting America’s families and businesses.
The costs and compensation paid in the tort system in 2016 totaled $429 billion, siphoning off 2.3 percent of America’s gross domestic product (GDP), according to a recent study by the U.S. Chamber of Commerce’s Institute for Legal Reform. That works out to $3,329 per household in America.
For that kind of money, citizens deserve the Rolls Royce of legal systems. But shockingly, the study also finds that Americans are being shortchanged with a tort system in which only 57 percent of expenditures go toward plaintiff compensation, and that’s before contingency fees are subtracted.
While lawsuit abuse has contributed significantly to the current state of America’s tort system, things could be worse. The cautionary tale of Louisiana provides an example of abuses that exist in the absence of meaningful civil justice reforms.
A longtime culture of judicial misconduct has flourished in the Pelican State. For example, no fewer than 10 Louisiana judges have been removed or resigned their seats on the bench due to judicial misconduct since 2000. Many others have been sanctioned.
More than 40 Louisiana judges have been publicly disciplined by the high court over the last decade for violating their oaths and abusing their authority. Today, Louisiana judges routinely preside over cases litigated by the same trial lawyers who contributed to their election campaigns.
For years, Louisiana has had the distinction of having its judges and courts ranked number five among the nation’s worst in the American Tort Reform Foundation’s 2018-2019 Judicial Hellholes Report. Additionally, Louisiana came in dead last in the Institute for Legal Reform’s 2017 report on state legal climates. Abusive lawsuits are such a blight on the Pelican State that a 24/7 Wall St. survey declared, “No state is worse for business than Louisiana.”
Inevitably, this ethics-challenged judicial climate has resulted in unintended consequences; damage awards in the state have reached exorbitant levels. For example, at $50,000, Louisiana’s minimum for jury trial claims is the highest in the nation.
Throughout the state, a multitude of trial lawyer billboards promise jackpot justice, speaking to the proliferation of lawsuits and serving as glaring warning signs to companies potentially interested in doing business in Louisiana.
Thanks in large measure to the volume and size of damages being awarded in Louisiana’s courts, its drivers pay the second highest auto insurance rates in the country. The costs of litigation are passed on to Louisiana’s drivers. In fact, motorists living in Baton Rouge and New Orleans are among those paying the top five most expensive premiums of any American city.
A number of insurers have left Louisiana’s auto insurance market altogether, citing the inability to sustain profitability in so litigious a market. With less competition among the remaining insurers, rates have risen even higher.
A study released by Louisiana Lawsuit Abuse Watch in October found that the state’s flawed civil justice system is responsible for more than 15,000 lost jobs annually and is choking off state and local revenues. Excessive tort expenses cost the Louisiana economy an estimated $1.1 billion in annual direct costs and $1.5 billion in gross output each year, according to the study.
While trial lawyers seem to be doing a brisk trade, all major industry sectors are negatively affected, with the retail trade, business services and health services among the hardest hit. The State of Louisiana is deprived of $76.4 million in revenues each year while local governments must make do with $64 million less. All of that means less for schools, hospitals, firefighters, police protection, elder care and other essential services.
Gov. John Bel Edwards, himself a trial lawyer, has teamed up with fellow trial lawyers to pin Louisiana’s coastal land erosion problem solely on oil and gas companies providing local communities with high-paying jobs and fueling the economy. If successful, the awards could be in the billions of dollars, with trial lawyers receiving an exorbitant payout.
Louisianans, on the other hand, stand to lose an industry that has been an economic lifeline. The impact would be felt from those directly working in oil and gas production to suppliers and service providers to the families paying the costs, passed down in the form of higher prices for goods and services.
When functioning as designed, the judicial system provides a fundamental framework for resolving disputes, compensating plaintiffs who have been legitimately harmed and serving as a deterrent to undesirable behavior.
When the integrity of the civil justice system is compromised, as in the case of Louisiana, communities suffer. Those citizens have the burden of pressing lawmakers to take their state back from trial lawyers obstructing a fair and impartial civil justice system.
For the rest of the nation, Louisiana should serve as an eye-opener to the need to keep lawsuit abuse in check.
Lana Sonnier Venable is the executive director of Louisiana Lawsuit Abuse Watch.