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Study: U.S. has world's most costly legal system

By Jessica M. Karmasek | May 17, 2013

WASHINGTON (Legal Newsline) -- A study released this week shows that the United States has the world's most costly legal system.

The study, released by the U.S. Chamber's Institute for Legal Reform Tuesday, compared liability costs as a percentage of Gross Domestic Product, or GDP, using general liability insurance sold to companies in Canada, Eurozone countries and the U.S.

ILR owns Legal Newsline.

GDP is defined as the market value of all officially recognized final goods and services produced within a country in a given period of time.

Often, GDP per capita is considered an indicator of a country's standard of living.

According to the study by New York-based NERA Economic Consulting, data shows that as a percentage of its economy the U.S. legal system costs more than 150 percent more than the Eurozone average and more than 50 percent more than the United Kingdom.

"America is known as the land of the free, but it is also the land of unnecessary lawsuits," ILR President Lisa Rickard said in a statement.

"As the U.S. experience has shown, excessive litigation creates enormous costs for businesses, workers, consumers and the overall economy."

The ILR study controlled for factors across countries that could account for significant differences in liability costs, including the mix of businesses in a country, spending on government social programs and the cost of private health care.

Also this week, ILR unveiled the results of a national survey showing that voters view the civil legal system negatively, see it as more abuse-prone than a decade ago and are concerned that it primarily benefits lawyers.

The survey of voters was conducted in April by polling firms Penn Schoen Berland and Public Opinion Strategies.

The poll showed that 87 percent of voters view the number of lawsuits in the country as a problem and that 69 percent say there has been increased abuse of the legal system over the past decade.

Also, the poll found that one-in-three voters -- and 43 percent of small business owners -- have either been threatened with or involved in a civil lawsuit.

In addition, only 14 percent of those who were part of a class action lawsuit reported having received something of meaningful value, such as a cashed check or redeemed coupon, as a result of the suit, the survey found.

Four-in-five voters involved in a civil lawsuit said they believe lawyers benefit the most from class action lawsuits.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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