Tort law, the business of civil courts, used to mean determining compensation to injured parties when others breached their duties toward them, while denying compensation to those who assumed risks or engaged in negligent conduct that contributed to injury.

During the last 30 years, tort law in the United States has become a no-fault "social insurance" system interested in transferring vast resources from actors to passive victims, according to many legal scholars.

For example, lawyers claiming to represent stockholders are suing companies for business forecasts that didn't pan out. As a result,

• One out of eight companies listed on the New York Stock Exchange has been accused of fraud.

• Half of the high-technology companies in the United States have been sued for fraud.

• More than 80 percent of the cases are settled out of court, typically for pennies on the dollar.

• Overall, more than 50 cents of every dollar paid into the tort system goes to lawyers and the legal system itself, not the injured parties.

Proposed reforms include a "safe harbor" for statements about the future in securities transactions. Experts have also suggested changing the law to allow for proportionate liability, instead of "joint and several" liability that holds each party that contributed to a harm responsible for the total damages. Also, legislation proposed at the state and federal level would strengthen sanctions against attorneys and require losers to pay court costs.

Source: Leslie Lenkowsky, et al., "Tort Reform on Trial," Hudson Briefing Paper No. 187, March 1996, Hudson Institute, Herman Kahn Center, P.O. Box 26-919, Indianapolis, IN 46226, (317) 545-1000.

The U.S. liability system costs more than it did just a dozen years ago, and much more than the systems of other countries. Lawsuits impose higher costs in the United States than in other nations.

• As of 1994, total costs of the U.S. tort system were estimated at $152 billion -- 2.2 percent of Gross Domestic Product (GDP).

• This compares to an average cost of 0.9 percent of GDP for 11 other industrialized nations, including the U.K., France, Australia and West Germany.

• The highest-cost country outside the U.S. is Italy -- in which lawsuits cost only 1.3 percent of GDP.

Experts estimate that the waste in our present tort system costs each U.S. household $500 to $900 per year in higher costs for goods and services, as well as higher insurance premiums. However, reform opponents killed one major reform effort in the Senate last year, and Congress had to override a Presidential veto of a much narrower reform bill.

Even as the House of Representatives was failing last week in its efforts to override President Clinton's veto of a bill to limit damages in product liability suits, studies were surfacing that show the present tort system hurts consumers. Many consumers can't get to court, have to wait a long time for the case to be decided, and if they win, don't get as much as their lawyers.

First, the problem in obtaining legal representation:

• Many plaintiffs' attorneys won't even take cases with claims of less than $300,000, according to those in the field.

• A study from the University of Wisconsin established that attorneys in product liability cases only accept roughly one-half the cases offered them.

• Half the lawyers interviewed said "inadequate damages" were the reason they refused cases.

• In 1976, 10 percent of product liability jury awards were for $1 million or more -- climbing to 30 percent in 1994-95.

Next, for consumers fortunate enough to get an attorney, the wait:

• Data from the Jury Verdict Research Series shows that in 1995 plaintiffs waited a median of 47 months from the date of filing suit until trial -- up from 29 months in 1990.

• In injury cases, victims waited a median of 65 months to go to trial last year -- 15 months longer than in 1990.

Finally, lawyers' fees:

In most contingency fee cases, plaintiffs must pay lawyers' expenses. then attorneys get their share of the award -- typically one-third. Some analysts say this fee and expense structure sets up incentives to delay getting to trial.

Also, the worse an injury the lower the payoff is likely to be. Plaintiffs with losses of $1 to $1,000 received an average of 9 1/2 times the amount of their losses. Those with losses over $1 million got back an average just 15 percent -- before paying lawyers' fees.

The growth in liability cases and awards has put a "liability premium" on the price of goods and services, experts say. Estimates have put the premium on safety devices like helmets as high as 50 percent. In some cases, goods and services have been removed from the market due to the threat of lawsuits.

Source: Daniel J. Murphy, "Trial Lawyers Vs. the Consumer," Investor's Business Daily, May 13, 1996.

A number of researchers are studying how tort reform could bring down the cost of auto insurance for consumers. They have identified several areas that could reduce insurance premiums by as much as 30% to 40% in some states.

The changes being discussed are:

• A "choice to consumers" option that would allow consumers to save on premium payments by electing to forgo the right to sue for pain and suffering damages.

• An "early offer" provision by which plaintiffs would supply defendants with an estimate of economic losses, and the defendants would have 60 days to make an offer - thus limiting some fees to lawyers.

California voters may see both options on their state ballots next March. Proponents there say the measures would cut down on injury fraud, which comes in two forms - claiming injury where none exists, or purposefully exaggerating the injury.

• Taken together these two frauds add between $2.8 billion and $3.5 billion to consumers' insurance bills in California alone.

• Between 25% and 32% of the $11 billion a year Californians spend on auto insurance can be traced to bodily injury fraud claims.

• Litigation costs - even when no fraud is involved - add to insurance bills.

The California initiative attempts to deal with this through a strict no-fault system - which would end lawsuits while still allowing redress for economic losses.

A study by the Rand Corporation found that low-income motorists stand to benefit the most from a consumer choice reform. Almost 49% of the cost of premiums could be saved by low-income drivers, compared with 31.4% for all drivers.

Source: Jeff A. Taylor, "Tax Cuts Through Tort Reform?" Investor's Business Daily, October 20, 1995.

Although serious tort reform has fallen by the wayside in Washington, some states are moving forward on their own. Indiana, Illinois, Texas, Arizona and others have passed tort reform packages. Now California is about to consider Proposition 220, a no-fault auto insurance provision, which is expected to end most accident lawsuits and reduce auto insurance costs.

• A 1995 Rand Corp. study predicted that no-fault would cut the average California motorist's premiums by one-third.

• Bogus claims there are rampant, with 99 out of every 100 accidents in Los Angeles County alone leading to claims for bodily injury.

• Fully 40 percent of premium growth from 1980 to 1991 was a result of an increase in the number and size of claims -- even while the number of accidents was declining.

• Some 35 to 42 percent of all medical costs claimed in California auto accidents are false or padded.

Because of fake claims and excess litigation, legal costs account for one-fifth of all premium dollars.

Another measure, Proposition 201, would discourage lawsuits by shareholders when a company's stock drops -- by imposing a loser-pays rule.

Proposition 202 would cap lawyers' contingency fees at 15 percent for suits settled in 60 days -- rather than allowing the current fees of 30 to 40 percent.

These initiatives in the nation's most populous state have national implications, since reforms that pass there often signal trends for the rest of the country.

Source: Editorial, "Golden State Legal Reform War," Investor's Business Daily, January 26, 1996.

Critics cite this case: a driver who had been drinking, was not using his seatbelt and fell asleep at the wheel was recently awarded $50 million in actual damages and $100 million in punitive damages from General Motors by an Alabama jury.

• From 1987 to 1993, Alabama juries awarded more than $100 million -- six times the amount awarded in Georgia, Mississippi and Tennessee combined.

• In 1994 alone, the figure had grown to $200 million.

• Critics charge that huge punitive damages in cases where little harm has been done are almost commonplace in Alabama now.

According to one legal scholar, "There is nothing like Alabama in the history of the American legal system. I have studied jury verdicts for twenty years, and I believe the situation in Alabama is very close to being out of control."

Advocates of tort reform nationwide point to the fact that U. S. injury claims cost $152 billion in 1994.

• Between 1930 and 1994, U. S. tort costs rose four times the rate of growth in economic output.

• The most rapid growth in tort costs occurred between 1950 and 1985, when they grew an average of 12 percent annually.

• The U. S. tort system gobbles up 2.2 percent of GDP -- two-and-one-half times the average of industrialized countries.

But of every dollar awarded, less than 50 cents goes to victims.

Source: Former Pennsylvania Gov. Dick Thornburg, "Want to Win a Big Suit? Go to Alabama," USA Today, June 27, 1996.