The Costly Legal Iceberg: How Mass Tort Litigation is Impacting the Economy and Job Creation

Bethesda, MD – Late-night television viewers are all too familiar with the barrage of ads that aim to recruit potential victims for various products and treatments. These commercials, though seemingly harmless, are just the tip of a much larger issue that plagues our economy. The underlying goal of these advertisements, according to the lawyers behind them, is to help people. However, the real beneficiaries of these lawsuits are the mega-law firms and their well-financed supporters.

Attorneys specializing in mass tort litigation or class-action lawsuits heavily rely on advertising as their main source of income. They pour billions of dollars (almost $7 billion from 2017 to 2021) into ads, casting a wide net to capture as many potential claimants against large corporations as possible. While the number of sign-ups matters more to them than the validity of the claims, having a substantial pool of potential plaintiffs increases their chances of securing a lucrative judgment or a profitable settlement.

This strategy often overwhelms companies, prompting many of them to settle rather than face the high costs and time-consuming nature of defending a mass tort claim. Attorneys handling these massive lawsuits exploit this advantage, prolonging the process to improve their odds of success. Recognizing the ethical issues surrounding this industry, the American Tort Reform Association has delved into the three main pillars supporting it: third-party litigation funding, trial-lawyer advertising, and the lack of credible scientific evidence on which many of these lawsuits are based.

Third-party financing plays a significant role in mass tort suits, as hedge funds and private equity companies provide the initial financial backing for lawsuits, with hopes of reaping significant gains. However, these financiers do more than cover costs; they actually help create lawsuits. By funding legal advertising and the call centers that field inquiries, outside investors generate thousands of claims for generic illnesses supposedly linked to common products. The pressure these claims exert often forces a settlement, as mounting a defense saps a company’s time, finances, and legal resources. Moreover, every ad associating a corporation with an alleged injury, regardless of its veracity, tarnishes its brand.

The impact of mass tort litigation extends beyond targeted companies, hurting the economy and stifling job creation. One recent report estimates that the excessive costs associated with such lawsuits result in an annual economic output loss of nearly $473 billion, leading to over 4.4 million fewer jobs. To address these issues, state legislatures have started implementing regulations to curb the abuses of mass tort litigators. Florida, Kansas, and Louisiana have already taken steps to make it more challenging for lawyers to exploit the court system or deceive people with misleading advertising. It is vital for all states to consider the detrimental effects of excessive mass tort legislation and take appropriate action.

The prevalence and impact of mass tort litigation call for a closer examination of the practices and policies surrounding it. While the attorneys may claim to be champions for justice, it is essential to recognize the ulterior motives that often drive their actions. Striking a balance between protecting consumers and preventing the exploitation of the legal system is crucial for a healthy economy and a fair and just society.