Washington, D.C. – Late-night television commercials are notorious for their abundance of advertisements targeting potential victims of various products or treatments. However, behind the seemingly harmless nature of these ads lies a massive and costly legal phenomenon that continuously disrupts our economy.
Promoting their intention to assist the public, the lawyers responsible for these advertisements mainly benefit powerful law firms and their wealthy backers. Mass tort litigation or class-action lawsuits rely heavily on advertising to attract clients. These attorneys pour billions of dollars into ads between 2017 and 2021, casting a wide net to maximize their chances of finding potential claimants against large corporations. The increased number of sign-ups, regardless of the validity of their grievances, enhances the lawyers’ prospects of securing a profitable settlement or a lucrative judgment.
Large corporations targeted by these lawsuits often find it economically and temporally draining to defend themselves and opt to settle instead. The attorneys behind these massive lawsuits exploit this advantage, prolonging the litigation process to improve their odds of success.
Extensive research conducted by the American Tort Reform Association has identified three key components that drive this ethically questionable industry. These pillars are third-party litigation funding, trial-lawyer advertising, and the frequently unsubstantiated scientific evidence on which many lawsuits are based.
Outside investors, such as hedge funds or private equity firms, provide the initial financial support required for mass tort suits. In addition to covering costs, litigation financing actively stimulates the creation of lawsuits. By financing legal advertisements and the call centers managing resultant inquiries, these external backers contribute to the surge in claims regarding generic illnesses loosely associated with commonly used products. The mounting pressure on corporations to settle arises from every ad that connects the company to alleged injuries, whether genuine or fabricated, thereby diminishing their brand value.
The impact of mass tort litigation is not limited to the target companies alone. The entire economy suffers from reduced economic output and hindered job creation. A recent report estimates that excessive tort costs result in an annual loss of nearly $473 billion in economic output, leading to the elimination of over 4.4 million jobs.
Several states, including Florida, Kansas, and Louisiana, have taken measures to enact regulations that restrict the misuse of the court system and prevent misleading advertising by litigators. All states should closely analyze the cost of excessive mass tort legislation on their economies and take appropriate action.
Highlighted by the Chairman and Co-founder of Consumer Action for a Strong Economy/InsideSources, Gerard Scimeca, the urgent need for reasonable laws to curb the excesses of mass tort litigators is clear. Addressing this issue is vital to protect businesses, the economy, and every individual impacted by the repercussions of these lawsuits.