Lawyers Attorneys Reform Information

Improving the American Legal System:
The Economic Benefits of Tort Reform
Executive Summary

      The economic and legal condition of America's contemporary tort system has come under increasing criticism for being far too costly and incapable of administering fair and prompt awards. A recent actuarial study by Tillinghast-Towers Perrin indicates that tort costs rose from $67 billion in 1984 to $152 billion in 1994, an increase of 125 percent. Increased litigation costs have burdened American families and businesses with higher auto insurance premiums, reduced incentives for auto safety features, and contributed to higher medical costs. In addition, plaintiffs are often forced to accept a 33 percent toll just to have access to the current American tort system.

      The economic effects of such a huge tort burden on the American economy are hard to measure directly, but are nonetheless significant. Individuals suffer from the high price of insurance and the increased cost of goods and services. Businesses are hurt by the higher prices they must charge to pay their insurance costs. The overall economy also suffers when productivity and growth are slowed by excessive litigation, which discourages risk-taking and slows the introduction of new products and technologies.