A new Economic Benefits of Tort Reform report released by Louisiana Lawsuit Abuse Watch (LLAW) reveals civil court costs deriving from excessive litigation is gravely impacting the state economy.
Conducted by the Perryman Group for Citizens Against Lawsuit Abuse, the study found that Louisiana is losing both jobs and revenue due to the state’s civil justice system. Perryman Group based its analysis on comparisons made with Ohio, a state that has undergone extensive tort reform in recent times.
Researchers estimate the overall impact of excessive tort costs on the Louisiana economy checks in at somewhere in the neighborhood of $1.1 billion in annual direct costs and an even more staggering $1.5 billion in output (gross product). In addition, roughly 16,000 jobs are estimated to be lost when all factors are considered.
Data shows the hit is felt across a number of different sectors, including retail trade, business services, health services and other service industries. As of 2018, fiscal losses are estimated to be around $76.4 million in state revenues and $64.3 million to local governments.
“These findings clearly show that civil justice reform must be a priority in Louisiana," LLAW Executive Director Lana Venable said in a press release. "Frivolous lawsuits and exorbitant plaintiff awards impact all sectors of our economy and hurt Louisiana families, as costs are ultimately passed down to them in the form of higher prices for goods and services.”
Indeed, researchers concluded that an inadequately balanced justice system can have adverse effects.
“A system that generates exorbitant levels of damages or numbers of awards may result in negative impacts through the misallocation of society’s scarce economic and human resources,” the report detailed, highlighting that some of the negative impact could include raised costs and dangers for doing business in a particular area; disincentives for innovations; and enhanced incentives to file frivolous lawsuits.
Meanwhile, civil justice reforms that have been known to make an impact have included such measures as reducing frivolous lawsuits, capping appeal bonds and limiting non-economic damages, all of which have helped lead to improved judicial efficiency and economic performance.
“A healthy legal system should ensure fairness for both truly impaired individuals and small and large businesses operating in Louisiana,” Louisiana Coalition for Common Sense Executive Director Jim Harris said. “Imbalances in the system lead to unpredictability for consumers and businesses, costing jobs and resulting in constrained economic growth.”
In the 2017 U.S. Chamber Institute for Legal Reform Lawsuit Climate Survey that gauges the reasonability and balance of each state’s tort liability system, Louisiana ranked 50th in the country. The state also infamously earned the No. 8 ranking in the American Tort Reform Foundation’s 2017-18 Judicial Hellholes Report, which measures the “systematic application of civil laws and court procedures.”