America’s $367 Billion Lawsuit Epidemic

America’s $367 Billion Lawsuit Epidemic

Blog | April 7, 2025

The Hidden Tax Crushing Families and Businesses

Imagine paying an extra $1,666 every year without realizing it. That’s the hidden “tort tax” every American shoulders due to excessive litigation costs. For a family of four, it’s over $6,664 annually — money that could go toward groceries, education, or savings. While national leaders look to cut excessive costs and increase government efficiency, the cost of the country’s lawsuit epidemic cannot be overlooked.

This staggering figure is just one of the findings from the American Tort Reform Foundation’s latest Judicial Hellholes® report, which exposes how lawsuit abuse drains our economy and hurts hardworking Americans — especially those who are unfortunate enough to live in one of the nation’s Top 10 worst “Judicial Hellholes®.”

Judicial Hellholes® are the nation’s worst legal systems — places where fairness and justice are replaced by jackpot verdicts and junk science. Topping the latest list is Pennsylvania, followed by New York City and South Carolina’s asbestos docket. These jurisdictions aren’t just legal outliers; they’re economic disasters. Excessive litigation costs the U.S. economy $367.8 billion every year, eliminates 4.8 million jobs, and stifles innovation at a time when we need it most.

The Cost of Lawsuit Abuse

Lawsuit abuse doesn’t just harm businesses — it hits every consumer in America. When trial lawyers secure billion-dollar verdicts based on questionable evidence, those costs are passed down to all of us through higher prices for goods and services, fewer jobs, and reduced access to critical products. For example, in Philadelphia — a perennial Judicial Hellhole®— a court recently tacked on $90 million to bring the total verdict to a staggering more than $815 million in a chemical exposure case. Cases like these don’t just bankrupt companies; they ripple through the economy, forcing businesses to close their doors or relocate to states with fairer legal systems.

The problem isn’t limited to Pennsylvania. New York City — the second-worst Judicial Hellhole® in the country — is facing a “fraudemic” in its courts. Complex fraud schemes target various industries, with staged construction site accidents and commercial vehicle accidents as a main ploy. The majority insurer for rideshare and taxis in New York City is facing collapse due to more than $700 million in losses from insurance fraud and rising settlement costs.

A Threat to Innovation

The consequences of lawsuit abuse extend far beyond courtrooms. Take baby formula lawsuits, for instance. Trial lawyers are now targeting manufacturers with claims based on junk science, threatening to undermine established medical research. If these lawsuits succeed, they could jeopardize access to life-saving products for premature infants who rely on specialized formulas. Similarly, lawsuits over plastics recycling in California — another mainstay on the Judicial Hellholes® list — could derail efforts to innovate sustainable solutions for our environment.

When businesses face constant legal threats, they’re less likely to invest in new technologies or expand operations. Instead of creating jobs or developing breakthrough products, they’re forced to divert resources toward defending against frivolous lawsuits.

Who Pays the Price?

A Delaware judge decided in late 2024 that the trial lawyers in a case involving Elon Musk’s company Tesla will receive a record-setting $345 million in attorneys’ fees — for going after one of the most productive sectors of the U.S. economy.

While trial lawyers rake in millions from these cases, it’s ordinary Americans who bear the brunt of lawsuit abuse. The hidden tort tax affects everyone — from small business owners struggling to stay afloat to families grappling with rising costs. And it’s not just about money; excessive litigation erodes trust in our legal system and undermines its integrity.

It’s Time for Accountability

It doesn’t have to be this way. States that prioritize legal reforms have shown it’s possible to protect legitimate plaintiffs while curbing abuse. It’s time to hold judges, elected officials, and unscrupulous trial lawyers accountable for exploiting our legal system at everyone else’s expense. By enacting common-sense reforms, like stricter rules on expert evidence, we can restore fairness and balance to our courts.

America’s courts should resolve legitimate grievances — not be a playground for trial lawyers seeking their next payday. The stakes are too high to ignore: our economy, our innovation, and our trust in justice depend on it.

Curious about the potential impact of these Judicial Hellholes® on your business operations? Contact us to explore how joining ATRA can play a pivotal role in rebalancing our legal system to ensure fairness and equity for all.

Stay informed, stay engaged, and let’s chart a course through the ever-evolving legal terrain together.