Excessive civil tort costs take a toll on Louisiana's taxpayers and economy
FOR IMMEDIATE RELEASE – March 10, 2022
Excessive civil tort costs take a toll on Louisiana’s taxpayers and economy
New data shows lost jobs and revenue in state’s major metropolitan areas
Baton Rouge, LA — Prior to the start of the legislative session next week, Louisiana Lawsuit Abuse Watch (LLAW) released data measuring the impact of excessive civil court costs on the state’s overall economy and in the New Orleans and Baton Rouge Metropolitan Statistical Areas, specifically. These impacts were derived from the Economic Benefits of Tort Reform study conducted by The Perryman Group for Citizens Against Lawsuit Abuse using extensive survey data, industry information and a variety of corroborative source material. The results are clear – Louisiana continues to lose jobs and revenue because of the state’s civil justice system.
Excessive tort litigation in Louisiana resulted in annual average direct costs of more than $3.2 billion, state gross product losses of nearly $4.7 billion and more than 46,000 lost jobs. Additionally, state government losses total nearly $244 million, with local governments losing more than $203 million on average, annually.
In the Greater New Orleans Area, excessive tort litigation costs residents in excess of $2.2 billion in personal income annually and results in a loss of 34,620 jobs each year. Excessive costs result in an annual “tort tax” amounting to about $2,763 per person. Direct costs absorbed by residents and businesses amount to more than $2.4 billion annually and more than $3.5 billion in gross product is lost due to litigation costs.
The Capital Region is also paying the price for excessive civil litigation, with residents losing more than $626 million annually in personal income. Additionally, 9,709 jobs are lost every year and residents pay an annual “tort tax” of about $1,152 per person. Residents and businesses also absorb more than $674 million in direct costs annually and in excess of $984 million is lost in annual gross product due to tort costs.
“This new data shows the continued impact of lawsuit abuse on Louisiana’s citizens, businesses, and overall economy – specifically in its two largest MSAs. Unfounded lawsuits and exorbitant plaintiff awards impact everyone, as these associated costs are passed down to families and businesses through higher prices for goods and services,” said LLAW Executive Director Lana Venable. “These impacts are resonating now, more than ever, as residents continue to recover from the devastating effects of recent hurricanes and Covid-19 and the global economy is becoming more uncertain.”
As the statewide study last fall found, the total current impact of excessive tort costs on the Louisiana economy amounts to estimated losses of $1.1 billion in annual direct costs and $1.5 billion in output (gross product) annually. About 15,556 jobs are lostwhen changes in the economic system over time are considered. All major industry groups are negatively impacted, with retail trade, business services, health services and other service industries showing the greatest losses. As of 2018, yearly fiscal losses are estimated at $76.4 million in state revenues and $64.3 million to local governments. These effects are based on the current size of the state’s population and economy and can be expected to rise over time in the absence of meaningful civil justice reforms.
“As a result of continuing local involvement in coastal lawsuits and Louisiana citizens being constantly hounded by lawyers’ advertising , the culture of excessive lawsuits continues to be a drain on Louisiana’s residents and economy,” said Louisiana Legal Reform Coalition Executive Director Karen Eddlemon. “Louisiana can do better for its citizens.”
According to the report, “tort reform can lead to substantial economic benefits, and states that have implemented reforms have seen improved judicial efficiency and measurable advancement in economic performance.” Civil justice reforms that have resulted in the greatest reduction in losses are those aimed at reducing frivolous lawsuits, capping appeal bonds, setting negligence standards and limiting non-economic damages. These reforms have been shown to enhance innovation and increase productivity, as well as to improve judicial efficiency and economic performance.
Louisiana was ranked 49th in the US Chamber Institute for Legal Reform’s most recent Lawsuit Abuse Climate Survey, which measures the reasonability and balance of each states’ tort liability systems. Louisiana also continues to be ranked among the top Judicial Hellholes in the country, coming in at number six in the 2021-22 Judicial Hellholes Report issued by the American Tort Reform Foundation.
About Louisiana Lawsuit Abuse Watch (LLAW)
Louisiana Lawsuit Abuse Watch (LLAW) is a high-impact watchdog group with nearly 20,000 supporters across the state dedicated to fixing Louisiana’s broken legal system through transparency, accountability, and lawsuit reform. Visit us on Facebook, Twitter (@ReformLouisiana) and www.llaw.org.
About the Louisiana Legal Reform Coalition (LLRC)
The Louisiana Legal Reform Coalition (LLRC)is a group of professional associations, companies and individuals committed to ensuring a fair legal climate for both truly impaired individuals and small and large businesses operating in Louisiana.
About The Perryman Group (TPG)
An economic and financial analysis firm, The Perryman Group (TPG provides clients with well-documented, carefully considered answers to even the most complex questions. For more than 30 years, The Perryman Group has met the challenges of thousands of clients through a systematic approach and a level of performance that assures a consistent standard of excellence. The firm has been involved in scores of major events shaping the economic landscape, from crucial corporate locations to landmark legislation to important regulatory policies to notable judicial decisions.