Lawsuit Lenders, Serial Plaintiffs Prey on Vulnerable New Yorkers and Small Businesses

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Residents pay $1,875 ‘tort tax’ each year in fourth-worst Judicial Hellhole

New York was named the fourth-worst “Judicial Hellhole®” in the country today, according to a new report from the American Tort Reform Foundation (ATRF).

“Lawsuit lending contributes to an overall climate of lawsuit abuse in New York and leads to eye-popping, nuclear verdicts,” American Tort Reform Association President Tiger Joyce said. “Meanwhile, serial plaintiffs file practically duplicate, no-injury lawsuits related to accessibility, food and beverage products, and more.”

The ATRF report says third-party litigation financing leads to predatory lawsuit lending in New York and is a contributing factor to the state’s Judicial Hellholes® status.

“The litigation finance industry’s lobby is stopping bills from moving forward in the state legislature that would regulate the industry and protect vulnerable consumers and impoverished communities,” Joyce said. “This predatory business practice increases litigation and provides benefits to trial lawyers while preying on consumers.”

Financers act as payday lenders to often-times vulnerable plaintiffs, awaiting potentially larger payouts from future awards or settlement funds. There have been reports of New York City third party litigation finance firms, which operate like payday lenders, encouraging vulnerable individuals to file lawsuits and then charging as high as a 124% interest rate.

Accessibility lawsuits that fail to claim any real injury are another blight on New York, this year’s Judicial Hellholes® report says.

“Entrepreneurial trial lawyers find ways to nitpick at small businesses by claiming they’ve violated the Americans with Disabilities Act in some minor way,” Joyce said. “Most times, with these predatory lawsuits, businesses aren’t given a warning or even a customer complaint about noncompliance until the lawsuit is filed.”

Specifically, website accessibility lawsuits have increased in New York. Last year, more than 70% of website accessibility lawsuits nationwide were filed in New York’s federal courts. ATRF says most are filed by firms and serial plaintiffs who file numerous, practically duplicate lawsuits with vague allegations about the inaccessibility of websites and the plaintiffs’ struggles.

New York is also home to more food and beverage lawsuit filings than anywhere else in the country – most of which, similar to the accessibility claims, are no-injury lawsuits. What’s more, food and beverage lawsuit have more than tripled in New York since 2017.

“These are really your classic frivolous lawsuits,” Joyce said. “Trial lawyers will make some outlandish claim about how a product’s package could’ve fit more chips or how the label’s description didn’t quite meet expectations, all while failing to claim any real injury or harm.”

ATRF further cites concerns with a surge in nuclear verdicts – damage awards greater than $10 million.

“Nuclear verdicts directly impact all New Yorkers, as they lead to higher insurance rates, higher costs on consumer goods, and fewer jobs,” Joyce said.

As inflation is at an all-time high, New York residents pay a “tort tax” of $1,875 per person and 358,217 jobs are lost each year due to excessive tort costs.

The state also saw a record-breaking noneconomic damage award in November 2021 when a Manhattan jury awarded $59 million against the City. With public entities subject to these awards, nuclear verdicts put taxpayers on the hook and can place city services at risk.

New York has the highest medical malpractice award payout amounts per capita, the most expensive annual medical malpractice liability insurance rates, and was recently named the second-worst state in the country to be a doctor.

“Last year, New York legislators stripped COVID-19 liability protections for healthcare providers, but now the Intermediate Appellate Court is deciding whether that repeal will be retroactive,” Joyce said. “This disheartening move could make being a doctor in New York even more difficult.”

The report makes sure to note that New York’s drop in the rankings from No. 2 to No. 4 this year has nothing to do with progress made in the state, but instead is a reflection of how poorly things are going in other states’ civil justice systems.

The 21st edition of the annual report published by ATRF names eight Judicial Hellholes® in total, deemed the most unjust local courts and state civil justice systems in the country:

  1. Georgia
  2. The Supreme Court of Pennsylvania and the Philadelphia Court of Common Pleas
  3. California
  4. New York
  5. Cook County, Illinois
  6. South Carolina Asbestos Litigation
  7. Louisiana
  8. St. Louis

The full report is available at

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