According to a study published by the Institute for Legal Reform, the tort system in the United States cost $429 billion in 2016, which was 2.3% of the U.S. GDP. While not all states contribute greatly to this total, Louisiana’s tort system costs in 2016 totaled $7 billion.
The study found that the average burden of an American family was $3,329 per household, but as it varies state to state, it comes as no surprise that the average Louisiana household is negatively impacted by excessive litigation, with the average household burden totaling $4,000.
Louisiana Association of Business and Industry is concerned about what this burden means for the economic climate of the state and families in Louisiana, as it ranks in the top five states in the nation for the highest litigation costs.
According to ILR, the tort system has been allowed to become corrupt through a lack of routine measurements and reports regarding the litigations and the fact that meaningful reform has been lacking.
Automobile accidents make up the largest portion of Louisiana’s tort costs with them totaling nearly $3.4 billion in 2016 alone. While Louisiana Association of Business and Industry has been pushing for reform bills in the Louisiana Legislature for years, bringing about these changes has been hard to execute, due to a great deal of pushback from the opposition.
CEO of Louisiana Association of Business and Industry, Stephen Waguespack, commented on the need to bring about reform, regardless of the opposition in a press release.
“The costs of lawsuits profoundly impacts the ability of Louisiana employers to create jobs and for workers to keep more of their own hard-earned money,” Waguespack said. “Reform to Louisiana’s legal system is a top priority going into next year’s important state election cycle.”
According to ILR, the tort system costs are harmful to the economy for a number of reasons.
“The risk of frivolous or abusive litigation can discourage the development and sale of new products and can slow innovation; High liability costs can also make businesses in the United States less competitive internationally,” the study states.
Waguespack also believes that Louisianans need to realize what these high litigation costs mean to the state’s economy, as well as to individual families residing and working in the state.
“Louisiana must take the opportunity to learn from this latest report. Not just about how our state can be stronger, but what these costs mean for Louisiana wallets and what other states are doing in this arena to ensure plaintiffs have access to a fair system without penalizing all businesses and households,” Waguespack said. “The reality is that lawsuits are not just a technical issue that dies in the state legislature every year; this is a real-world problem that our businesses and families are fighting every day.”
According to the press release from the Louisiana Association of Business and Industry, Louisiana was ranked 51st in the country following District of Columbia in the rating of the worst legal climate in the U.S.