Excessive litigation in the New Orleans-Metairie area results in a “tort tax” of $3,039 per person, while the Baton Rouge area residents carry a burden of $1,263 per person, new economic reports show.
The recently released reports from the Texas-based Perryman Group indicated that in the New Orleans metro area, direct costs resulting from judicial system flaws, exorbitant damages awards and inconsistent legal outcomes amount to $2.65 billion. This translates to a loss of 36,410 jobs in the New Orleans region last year and a loss of $2.46 billion in personal income annually, according to the report.
In the Baton Rouge region, the direct annual costs for excessive tort litigation was estimated at $742.4 million last year, while the loss in personal income per year was put at $689.8 million due to the loss of 10,211 jobs, the report states.
“Tort reform can lead to substantial economic benefits, and states which have implemented reforms have seen improved judicial efficiency and measurable advancement in economic performance,” the report states.
In the whole of Louisiana, the direct cost of excessive litigation was estimated at $3.5 billion last year, with state government revenues taking a hit of $268.6 million and local government revenues reduced by $224.2 million, according to the Perryman report. Total job losses in 2023 numbered 48,696.
Based on statistics such as these, it’s no wonder why Louisiana continues to earn a place on the national Judicial Hellholes report published annually by the American Tort Reform Federation (ATRF), according to Lana Venable, executive director of Louisiana Lawsuit Abuse Watch (LLAW).
“While the numbers have improved over last year, we still have a very long way to go in reducing costs associated with abuses of Louisiana’s civil justice system,” Venable said in an email to the Louisiana Record. “We simply can’t afford to continue to lose any jobs or income to costs associated with unfounded lawsuits.”
Businesses are currently absorbing these costs, which lead to high prices for consumers on products such as food and clothing, she said.
“LLAW is hopeful that more will be done to address these important issues with Louisiana’s new administration and Legislature, and we stand ready to help with our network of nearly 20,000 advocates across the state,” Venable said.
In the 2023 Judicial Hellholes report from the ATRF, Louisiana was ranked the seventh-worst civil justice jurisdiction in the nation, marking the 14th year the state has been listed in the report, which estimates the statewide average tort tax at $1,100 per resident.
The LLAW has cited former Gov. John Bel Edwards’ veto of a bill that would have required disclosure of third-party litigation-financing contracts in civil lawsuits as a lost opportunity to improve transparency in the state’s judicial system. The nonprofit group has also blamed hurricane-related property insurance litigation and litigation financing as major problems for the state over the past year.
“This is well-evidenced by hurricane-related insurance schemes in Louisiana, which were backed by litigation funders,” the LLAW said in a recent news release. “Between 2020 and 2022, nearly 12,000 insurance cases were filed in Louisiana’s U.S. district courts – more than one-quarter of the national total. These claims resulted in more than $23 billion in payouts, significantly affecting the state's insurance market.”