ISSUE FOCUS

ECONOMIC IMPACT

Lawsuit abuse has a real economic impact on Louisiana families and businesses.

Louisiana’s legal climate was ranked second-worst in the nation in the 2019 Lawsuit Climate Survey by the US Chamber Institute for Legal Reform:
 

  • Families and businesses in Louisiana were forced to pay nearly $7 billion in expenses related to tort litigation in 2016 – equivalent to more than $4,000 for every Louisiana household.

  • The impact of this hidden “tort tax” on the Louisiana economy ranks among the top five states in the nation, with litigation costs equating to almost 3 percent of the state’s Gross Domestic Product (GDP).

  • Lawsuit abuse costs totaled $429 billion nationwide in 2016, with costs in Louisiana among the highest of any state.

 

Louisiana came in a #5 on the list of the nation’s Judicial Hellholes in the American Tort Reform Foundations 2020-21 Report:
 

  • From a tractor-trailer accident scam to the sagas of coastal lawsuits and allegations of judicial misconduct, Louisiana continues to be plagued by lawsuit abuse. COVID-19 has brought new unfounded lawsuits; prolific trial lawyer advertising continues to blanket our highways and airwaves.

  • Despite recent legislative reforms, Louisiana moved down one spot from last year. These reforms became effective in January 2021 but it will take time to determine effectiveness. More work is necessary to improve Louisiana’s climate of lawsuit abuse.

 

A 2019 Perryman Group Study for Citizens Against Lawsuit Abuse benchmarked Louisiana against Ohio and found the following:
 

  • The total current impact of excessive tort costs on the Louisiana economy amounts to estimated losses of $1.9 billion in annual output (gross product) annually.

  • This amounts to about 19,800 lost jobs and losses of $1.2 billion annually in personal income for hardworking Louisiana citizens.

  • The resulting reduction in business activity due to civil justice costs leads to lower-than-expected gross product, which results in a hidden “tort tax” of more $400 per person.

  • All major industry groups are negatively impacted, with retail trade, business services, health services and other service industries showing the greatest losses.

  • The yearly fiscal losses (as of 2019) are estimated at $100.3 million in state revenues and $84 million to local governments.

  • Reforms resulting in the greatest reduction are those aimed at reducing frivolous lawsuits, capping appeal bonds, setting negligence standards and limiting noneconomic damages.

  • Economic benefits occur because legal reform enhances the efficiency, fairness and predictability of the civil justice system.

  • A flawed civil justice system that generates exorbitant levels of damages or numbers of awards and is unpredictable in its outcomes may result in negative impacts through the misallocation of both economic and human resources.

  • States that have implemented reforms have seen improved judicial efficiency and measurable improvement in economic performance.