NCPA - National Center for Policy Analysis

Trial Lawyers, Inc.

September 23, 2003

The lawsuit industry today is truly a behemoth, says the Manhattan Institute in its new report, "Trial Lawyers, Inc.: A Report on the Lawsuit Industry in America 2003." But unlike the major corporations in our regular market economy, says the Institute, it remains financially opaque. Also, where public corporations must disclose their financials in 10-Ks according to the Security and Exchange Commission (SEC) regulations, trial lawyers practice in private partnerships that, under the guise of attorney-client privilege, have shielded their financials from public scrutiny.

Trial Lawyers, Inc., while not an annual report per se, presents a snapshot of the lawsuit industry, and the picture is not pretty:

  • Total tort costs today exceed $200 billion annually, or more than 2 percent of America's gross domestic product -- a significantly higher percentage than in any other developed nation.
  • Even as the economy has stagnated and the stock market has plunged, the lawsuit industry's revenues have continued to skyrocket: in 2001, the last year for which data are available, U.S. tort costs grew by 14.3 percent.
  • Over the last 30 years, tort costs grew at a compound annual rate of 9.1 percent; by comparison, the U.S. population grew 1.1 percent annually, the consumer price index grew 5 percent annually, and the gross domestic product grew 7.6 percent annually during the same period.

While many Americans may understand that the lawsuit industry in America has run amok -- most people could quote anecdotal examples of silly cases generated by our "lawsuit culture" -- the public tends not to appreciate that the litigation industry is nothing but Big Business, says the Institute.

Given that 19 percent of all tort costs go to plaintiffs' attorneys, Trial Lawyers, Inc. rakes in almost $40 billion per year in revenues -- 50 percent more than Microsoft or Intel and twice those of Coca-Cola. The lawsuit industry's lack of transparency prevents an accurate profit estimate, but if its margins are as high as suspected, Trial Lawyers, Inc. might well be the most profitable business in the world.

Source: "Trial Lawyers, Inc.: A Report on the Lawsuit Industry in America 2003," Manhattan Institute, September 23, 2003.

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