Beware of a recent study conducted by the biased U.S. Chamber Institute for Legal Reform claiming the costs and compensation paid for the U.S. tort system totaled $429 billion for 2016. In an effort to incite public outcry it implies it is scandalous that plaintiffs receive only 57 cents on every dollar paid in compensation.
In all of its hyperbole, the headlines ignore what the study does not reveal. First, let’s deal with the alleged amount of money that goes into plaintiffs’ pockets: 57%, leaving 43% for attorneys’ fees and litigation costs.
Plaintiff’s attorneys work on a contingency fee basis which ensures all citizens, not just the rich ones, have access to our justice system. The typical fee is 33% of the amount recovered plus costs of litigation. For complicated cases, the fee could be up to 40%. This means litigation costs, i.e. expert witness fees, transcripts, record production costs, account for the last 3-10% that did not go to plaintiffs. The figure appears to include insurance costs, which would include defense costs, including defendant’s attorney’s fees.
Remember, contingency fees provide that plaintiff’s attorneys get zero if the plaintiff does not recover any money, defense attorneys get paid by the hour, win or lose. In other words, the 57 cent figure, even if it is true, is deceptive.
Those who seek legal reform unfairly seek to marginalize plaintiff’s attorneys and ignore other significant facts. For instance, medical error is the third leading cause of the death in the U.S. The ability to sue health care providers who commit negligence has created a reasonable standard of care. While mistakes are not wholly unexpected, health care providers know the stakes are high in their profession. With life and limb on the line, if they make a mistake, that is what insurance is for (a $1.2 trillion industry according to 2017 statistics).
The public derives tremendous benefit from our current tort system that is rooted in our constitutional rights, including freedom of speech and unfettered access to a civil jury trial. Major corporations and health care providers wield tremendous power. They are for-profit entities concerned with the bottom line. Our tort system creates a necessary tension between serving the bottom line and serving the patient or consumer, while giving access to all, not just the rich and powerful.
Critics always ignore the successes, the demonstrable evidence the system works. For example, if it weren’t for our current system, companies would still be putting asbestos into buildings despite evidence that established they knew five decades ago it was detrimental to human health. It wasn’t until people suffering from a specific form of cancer started suing that the practices changed. There are countless incidents of litigation that resulted in positive change for the public.
Maybe legal reformers should be looking to the potential perpetrators, demanding proactivity, transparency, even apologies and swift action when they discover a defective product or professional negligence. Accountability is the key to lowering tort related costs. Through this lens, Plaintiff’s attorneys are the human equivalent of the body camera, exposing wrongs, and seeking justice for injured victims.