The Hidden Costs of Lawsuits Continue to Grow

Lawsuits Are Out of Control

The costs of lawsuits, specifically tort cases, are massive and rising. According to the latest research from the U.S. Chamber's Institute for Legal Reform (ILR), costs and compensation in the U.S. tort system amounted to $529 billion in 2022, equivalent to 2.1 percent of U.S. GDP and $4,207 per American household.

The average annual tort cost growth rate has reached 7.1% since we began measuring in 2016, and that figure rises to 8.7% when looking only at cases involving businesses. If current trends continue, the costs of lawsuits will continue to skyrocket, with overall tort costs rising to over $900 billion by 2030.

What is the "Tort System?"

The "tort system" is the legal system in the United States that provides businesses and individuals with the means to obtain civil remedies for harm caused by others in the form of monetary damages and penalties. This essential mechanism includes a wide array of individuals and institutions involved in adjudicating claims of harm, whether in federal, state, or local courts, in arbitrations or mediations, or other settings.

While the tort system is designed to provide justice for real harms, some plaintiffs' lawyers are focused on exploiting it. These lawyers may file abusive lawsuits, use deceptive advertising, or involve third-party funders who finance the litigation but reduce the plaintiffs' recoveries. This exploitation turns a system meant to compensate injured parties into a tool for personal gain, often at the expense of not just defendants but those it was designed to protect as well.

The costs of lawsuits in the tort system are large and continue to grow. As shown on the map below, these costs vary by state.

For details on how tort costs are playing out per household by state, select a state in the map below.

*Figures drawn from Brattle analysis of data from Verisk's MarketStance and the National Association of Insurance Commissioners (NAIC)

The tort cost figures and the report describing the methods used to develop those figures are the work product of David McKnight and Paul Hinton of the Brattle Group. The commentary on this page is the work of the U.S. Chamber Institute for Legal Reform.

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