The Perryman Group has announced that the U.S. economy incurs an annual loss of $557.8 billion due to $367.8 billion in excess tort costs.
According to the U.S. Chamber of Commerce Institute for Legal Reform, third-party litigation funding (TPLF) enables hedge funds and other financiers to invest in lawsuits in exchange for a portion of any settlement or judgment. While supporters argue it facilitates access to justice, critics claim that without disclosure requirements and other safeguards, these funders may dominate litigation and encourage unmeritorious lawsuits. The practice originated in Australia and has since spread to Europe and the United States, raising concerns about its impact on the legal system.
Enlyte reports that TPLF is contributing to a rise in "nuclear verdicts," defined as awards exceeding $10 million, and even "thermonuclear verdicts" over $100 million. For insurers, this trend poses a significant risk that could lead to increased claims costs. The growth of TPLF is viewed as indicative of deeper issues within the legal system that have been developing over decades.
The Perryman Group's analysis estimates that excessive tort costs result in an annual loss of $557.8 billion in gross product and more than 4.81 million jobs nationwide. These figures represent a notable increase from previous years, highlighting a growing economic impact. The study emphasizes the extensive effect of tort costs on various sectors of the economy.
The Perryman Group is a Texas-based economic and financial analysis firm led by Dr. M. Ray Perryman. The firm specializes in econometric modeling and provides consulting services to businesses, government entities, and policy groups with a team of experienced analysts offering insights into complex economic issues.