Close Menu

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

The U.S. legal system is the world’s most costly, according to a study released this week [PDF] by the U.S. Chamber Institute for Legal Reform (ILR). The study, conducted by NERA Economic Consulting, showed that the American system costs about one and half times more than the Eurozone average.

The NERA study compared liability costs as a percentage of a country’s gross domestic product. The 13 countries included in the study have similar levels of regulation and legal protection, leading analysts to conclude that higher costs could be attributed to more frequent and/or costly claims.

The U.S. costs were about 1.7 percent of GDP. Countries on the low end of the range—the Netherlands, Belgium, and Portugal—had costs around 0.4 percent. Legal liability costs in the U.S. were found to be about 50 percent more than costs in the U.K.

ILR president Lisa Rickard says excessive litigation is putting U.S. companies at a competitive disadvantage globally. Lawsuits create high costs for businesses, she says, and they affect consumers, employees, and the overall economy.

“The worse a litigation system becomes in a country,” says Rickard, “the more companies think twice about whether or not to do business there, to locate there, to expand there.”

A Reuters article Thursday cited antitrust plaintiffs lawyers Douglas Richards and Michael Eisenkraft, who counter the ILR survey’s conclusions. The lawyers central argument is that many of the pro-business procedures, “made on an ad hoc basis rather than through a formal rule process, have compounded ‘the problems of cost and delay that they often were ostensibly intended to solve.’ "

ILR also released the results of a survey of 800 registered U.S. voters’ views on class action lawsuits [PDF]. Sixty-nine percent of respondents said they thought there had been an increase in abuse of the legal system over the last decade.

The U.S. Chamber of Commerce represents businesses of all sizes, and problems with the legal system are worrisome for all members, according to Rickard. “It doesn’t matter if you’re the largest company in the world or a one-person solo proprietor,” she says. “There is an equal level of concern about this country’s lawsuit abuse.”

Smaller business may be just one lawsuit away from shutting down, she says. But larger, deep-pocketed companies are usually the targets of plaintiffs lawyers. “Entrepreneurial trial lawyers target them, particularly in class action litigation,” she says, “because they know at the end of the day the company will end up settling because it’s just not worth the time, expense, and impact on shareholder value to litigate those cases.”

ILR promotes reform to the civil justice system. Rickard says there have been some recent improvements to the litigation system in the U.S., including the Class Action Fairness Act of 2005, which expanded federal jurisdiction over many large class action lawsuits. But if the litigation system is to become competitive with other industrialized nations from a cost perspective, she says that more reforms are needed.

The voter poll on class action suits raised similar concerns in the civil justice system. Eighty-nine percent of voters surveyed found it at least somewhat problematic that lawyers, not plaintiffs, receive most of the money paid out in class action lawsuits. Sixty-one percent found the practice to be a significant problem.

Of the respondents who had joined a class action lawsuit in the past, only 14 percent reported having received anything of value as a result.

Plaintiffs lawyers argue that civil lawsuits, particularly class action suits, are necessary to ensure products sold are safe for consumers. Sixty percent of respondents acknowledged that lawsuits offer at least some benefit in that respect, but just 19 percent said the benefit was significant.

“Far from helping consumers, the U.S. litigation experience really does show that consumers are not better off in terms of their pursuit of justice,” says Rickard, “and that the system really benefits the lawyers that control it more than it does the consumers.”

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

Reprints & Licensing
Mentioned in a story?

License our industry-leading legal content to extend your thought leadership and build your brand.

More From ALM

Premium Subscription

With this subscription you will receive unlimited access to high quality, online, on-demand premium content from well-respected faculty in the legal industry. This is perfect for attorneys licensed in multiple jurisdictions or for attorneys that have fulfilled their CLE requirement but need to access resourceful information for their practice areas.
View Now

Team Accounts

Our Team Account subscription service is for legal teams of four or more attorneys. Each attorney is granted unlimited access to high quality, on-demand premium content from well-respected faculty in the legal industry along with administrative access to easily manage CLE for the entire team.
View Now

Bundle Subscriptions

Gain access to some of the most knowledgeable and experienced attorneys with our 2 bundle options! Our Compliance bundles are curated by CLE Counselors and include current legal topics and challenges within the industry. Our second option allows you to build your bundle and strategically select the content that pertains to your needs. Both options are priced the same.
View Now

Legalweek(year) 2021

February 02, 2021 - July 14, 2021

Legalweek(year) will bring together thousands of legal professionals for a series of 5 innovative virtual legal events.


General Counsel Conference Midwest: SuperConference 2021

July 26, 2021 - July 27, 2021
Chicago, IL

GCC Midwest addresses today's legal issues facing companies by providing general counsel with insight and best practices.


General Counsel Summit (GCS) 2021

September 07, 2021 - September 08, 2021

General Counsel Summit is the premier event for in-house counsel, hosting esteemed legal minds from all sectors of the economy.


Temp Contracts Attorney supporting Supply Chain/IT. Healthcare background a PLUS.

Manhattan, New York, United States

TEMPORARY / FULL-TIME (NY05132021): A University-Related Hospital in New York state has an IMMEDIATE NEED for a Temporary/Full-Time attorney...

Apply Now ›

PA Workers Comp Attorney

Philadelphia, Pennsylvania, United States

Workers' Compensation Associate Attorney ________________________________________   A growing, friendly, worker’s compensation...

Apply Now ›

T&E Attorney

New Haven, Connecticut, United States

Neubert, Pepe & Monteith, P.C., a full-service mid-sized law firm with offices in New Haven, Hartford, Fairfield, Connecticut is seeking...

Apply Now ›


DR Web


View Announcement ›



IN MEMORIAM - The lawyers of Mintz & Gold LLP mourn the loss of our friend and partner Kevin W. Goering

View Announcement ›



Kolsby, Gordon, Robin & Shore, P.C. Announce with great sadness the loss of our beloved founding partner, a renowned trial lawyer, community leader and distinguished professor.

View Announcement ›

Subscribe to Corporate Counsel

Don't miss the crucial news and insights you need to make informed legal decisions. Join Corporate Counsel now!

Unlimited access to Corporate Counsel
Access to additional free ALM publications
1 free article* across the ALM subscription network every 30 days
Exclusive discounts on ALM events and publications
Join Corporate Counsel

Already have an account? Sign In