Trial lawyers have been the bane of U.S. employers for many decades, sucking blood out of the economy like a swarm of mosquitoes.
The most famous case was back in the 1990s when the courts awarded a $500,000 judgment to a McDonald’s customer who claimed she was burned by coffee that was too scalding hot. Then there was the Washington man who sued a dry cleaner for $50 million for losing a pair of pants.
My favorite was the lawsuit against Buffalo Wild Wings alleging that their “boneless wings” weren’t actually made from deboned chicken wings. Buffalo Wild Wings retorted: “Our hamburgers contain no ham. Our buffalo wings are 0% buffalo.” A federal judge dismissed the class action lawsuit.
Trial lawyers are often “ambulance chasers” who profit from others’ misery and misfortune, often through class action suits that make tens of millions of dollars for themselves but only a fraction of that for the injured parties. What a deal.
A famous RAND study found that roughly 80 cents of every dollar in damages paid to class action victims were absorbed by legal and administrative costs, and less than 20 cents made its way to the plaintiffs.
Excessive litigation is estimated to shrink the U.S. productive economy by up to $500 billion a year. Tort costs have exploded in recent years at an annual rate of 7.1%, more than twice the inflation rate.
Yes, victims deserve to be compensated for corporate bad behavior, as a matter of justice and to deter dangerous and unlawful behavior.
But just because you have an injured party doesn’t mean you have a company villain. If everyone who breaks a leg skiing could sue the manufacturer of the skis, there would be no skiing.
Back in the 1990s, Republicans put a muzzle on the most rapacious lawyers and passed laws to protect businesses from the most outrageous harassment lawsuits. Lawsuit reform was part of the Republicans’ 1994 “Contract with America.” At that time, about 80% or more of the trial lawyers’ political contributions went into the coffers of the Democratic Party.
But now trial lawyers are courting the GOP and conservative leaders with a spate of lawsuits against Big Tech and Big Media, two industries that conservatives have traditionally felt are hostile to free markets and conservative values.
Compounding the problem is the new scam called “third-party litigation funding,” which allows law firms to court investors who will fund lawsuits in exchange for getting a share of the judgment if there is a guilty verdict.
Under this practice, unknown investors secretly bankroll lawsuits with “dark money” in the hopes of scoring big verdicts. What’s really nefarious is that the third-party investors, not the injured party, often walk away with the bulk of the jackpot awards.
These lawsuit investment funds are growing rapidly and have captured more than $2 billion in new financing agreements for 2024. The total assets of these funds have grown to $16.1 billion.
This method of encouraging and funding lawsuits is of questionable legality. But it most certainly should be transparent so that defendants and the public know the real economic interests behind those suing employers.
The problem with these arrangements is that juries think they are aiding the victim, when the jackpot award for damages can just as readily be directed to the bank accounts of the investment funds.
The good news is that Rep. Darrell Issa (R-Calif.) has sponsored the Litigation Transparency Act, which would require disclosure of these agreements in federal civil cases.
Some conservative groups are worried that this means they would have to disclose their donors, which could discourage giving. Issa tells us that this is absolutely not the case – donors don’t receive compensation, so they wouldn’t be disclosed in such cases.
Frivolous lawsuits make us all poorer – not just the company that gets targeted. This reduces investment, wages, and risk-taking.
Florida Gov. Ron DeSantis just recently announced billions of dollars in insurance premium savings, in part due to curtailing frivolous lawsuits advanced by trial lawyer sharks. In other words, a good way to increase affordability is to reduce legal costs and the trial lawyer tax.
The rest of the country should emulate Florida and end the scams behind third-party litigation.
Stephen Moore is a former Trump senior economic adviser and the cofounder of Unleash Prosperity, which advocates for education freedom for all children.
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I believe the best solution would be changing the laws to provide that the loser pays all costs. As it is, companies generally decide to settle because the cost of litigating the issue exceeds the settlement. Attorneys charge a % of the settlement/judgment, and the “victims” pay nothing in the absence of those funds. If the “victims” were responsible for the attorneys fees of their own attorney as well as that of the companies, and people, they sue, that would put a stop to much of the litigation explosion.
Lawyers get more on one case than most people earn in a year. Their fees should be caped at no more than 5 time the average wage. They probably handle a couple dozen cases a year and that would still make them fat cats.
If I recall correctlyThe award in the mcdonald’s case was three hundred thousand dollars , and a judge reduced that to something closer to 1 hundred thousand dollars. At the time that represented about two days worth of mcdonald’s coffee sales world wide. No big deal to them.McDonald’s executives admitted at trial they made a conscious decision to serve their coffee at one hundred and ninety degrees which is enough to cause third degree burns which it did.I’m really sick of people throwing this case out there 30 years later, who have no idea what they’re talking about and present no context whatsoever.That being said I have a lawsuit going against a former employer. The lawyer is charging me forty percent and i’m responsible for all cost over and above that. This is in ohio. When Iworked as a paralegal in Connecticut, lawyers only charged thirty three and one third percent.Ohio in not a labor friendly state.
This is why everything costs more!
Outrageous awards pushed by greedy lawyers/firms.
I think the deal is in Great Britain the loser pays all legal costs. That should be the law of the land in the U.S. Would cut down on frivolous cases to the “Nth” degree. Plaintiff attorneys would be more likely “not” to recommend pursuing “iffy” cases if they were acting in the best interests of a potential client. Would lead to “cherry picking” of cases that are cut and dried but that’s o.k. in my book.
Now cases that are cut and dried would be negotiated out of Court anyways as they’ve been doing for years. The Court may have to have one session to rubber stamp the negotiations but the litigation doesn’t go on for years and years.
As far as passing a law in the U.S. Congress to “get the loser to pay” will NOT happen in a million years as most of Congress is made up of attorneys and they don’t or will not want to hurt “their Brethren attorneys” on the ability to make a living!!!!! The current laws are fine as they are as far as they’re concerned. May they roast in the place where the devil lives.
Scrap trial lawyers place into Defense or Prosecution .
“What a great country, guilty as hell and free as a bird”… we have a video of a killer killing someone. We identify the killer, we arrest him, we have evidence but before we convict him we’re going to go through millions of dollars proving he’s guilty. Then there is an appeal process where we go through the whole trial over again. And at any time during this process if there is an error of any sort there will be a mistrial declared and the killer will go free as a bird… I guess if that was Trumps fault we’d be hell bent for leather to get that changed, there would be protest and riots in the streets, they would break store windows and loots stores in protest – but since it’s not we’ll just let it be….
Trump has used lawyers for most of his life & his rash of lawsuits the last couple of years have only emboldened & cheered on the trial lawyers. Trump is setting a bad example for this nation & the worst problem today is that he is using taxpayer money to pay his lawyers to go after people that have hurt his feelings in the past. Trump is even blatant and posts that he wants to go after people. Then he bashes all the judges that have a ruling or prosecution that he does not like.