The American legal system is supposed to protect Americans, not line the coffers of special interests.
Unscrupulous trial lawyers are making a killing exploiting our legal system, fleecing victims in the process and delivering a windfall for their investors that include progressive activists, foreign governments, and Wall Street hedge funds. Fortunately, federal and state lawmakers are putting an end to the trial lawyer lobby’s grift.
Trial lawyer abuse of the American legal system is nothing new, but the trial lawyer lobby is more organized than ever at pillaging the system for their own financial gain. First, trial lawyers identify a “hook” for a lawsuit aimed at a deep-pocketed defendant, no matter how far-fetched the claim may be. Second, they launch well-funded advertising campaigns to generate more plaintiffs, and bundle junk science to use later in court.
The third and final step is filing the lawsuit and taking the defendant to court. Trial lawyers bundle claims from multiple individuals into a single civil case, called “mass tort litigation” (MTL). Bundling claims as MTLs streamlines the process for trial lawyers, allowing them to settle quickly and move onto new cases faster, reaping a windfall in the process.
MTLs allow trial lawyers to flood the courts with cases in the hopes of securing favorable verdicts or settlements. It ultimately does not matter if a case has merit – companies afraid of reputational damage might decide to issue large settlements just to make the case go away. This allows the trial lawyer lobby to cash in without having to prove that a targeted company did anything wrong.
All of us bear the ultimate cost of the trial lawyer lobby’s greed. A 2022 study pegged tort costs at an eye-watering $443 billion per year, 2.1 percent of our total gross domestic product amounting to $3,621 per household. If you think this money is going to victims, think again. The study shows that trial lawyers hoover up 88 cents out of every dollar paid by defendants, leaving just 12 cents for the plaintiffs.
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It takes a lot of money to prop up the trial lawyer lobby, so who pays for it? It’s complicated. The Government Accountability Office notes that third-party litigation funding more than doubled between 2017 and 2021. We know for certain that Wall Street financiers and hedge funds kick in between $2.3 and $5 billion annually for plaintiff generation campaigns. Foreign governments that have a vested interest in weakening American companies also fund MTLs, which could allow them to access trade secrets that are more valuable than a return on their financial investment in the MTL.
Progressive activists also fund MTLs so they can attack industries they dislike and push policies that they have failed to enact through legislation. In a recent hearing on third-party litigation funding, House Oversight and Government Reform Committee Chairman James Comer (R-Ky.) said “these activists…pour millions into claims against energy, mining, and manufacturing companies…all in the name of political activism.” This progressive crusade has a real impact on American workers – one witness said that litigation hampers project development in the energy sector, an industry that supports 350,000 American jobs.
Trial lawyer abuse of our legal system is a significant – and growing – problem. Lawmakers have taken notice and are actively working to clamp down on the third-party litigation funding industry.
Sens. John Kennedy (R-La.) and Joe Manchin (D-W.V.) have introduced the “Protecting Our Courts From Foreign Interference Act,” a bill that bans sovereign wealth funds and foreign governments from funding third-party litigation. Speaker Mike Johnson (R-La.) has introduced companion legislation in the House of Representatives. Indiana and West Virginia have also passed legislation to promote transparency and prevent foreign manipulation of our legal system through MTLs.
As we continue to learn more about the trial lawyer lobby’s weaponization of MTLs, a bipartisan array of state and federal lawmakers will continue to embrace tort reform that brings balance back to our legal system. Trial lawyers and the special interests that spend billions to enable their venality should be on notice – your gravy train is ending soon.
Tom Hebert is the Director of Competition and Regulatory Policy at Americans for Tax Reform and executive director of the Open Competition Center.
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