The American Property Casualty Insurance Association (APCIA) and Munich Reinsurance America, Inc. (Munich Re US) today released survey results on certain perceptions of the U.S. legal system. The online survey, conducted by The Harris Poll among more than 2,000 U.S. adults, revealed that a majority of Americans are not aware of the negative impact plaintiff lawyers’ tactics, including predatory advertising and the use of third party litigation funding, have on their household costs via the “tort tax”, whether or not the household is involved in civil litigation. Many Americans are also not aware that the plaintiff lawyer keeps a high percentage of a settlement or jury award, and a large amount may go to third party investors who have no relationship to the claimant, other than to profit from their misfortune. A majority of Americans agree state and federal lawmakers should address the abuses of the U.S. legal system. Click here to view the survey.
The key findings of the survey show that among over 2,000 U.S. adults:
- 65% are not aware every household pays an estimated “tort tax” that is an average of $3,621 per American household annually. The “tort tax” impacts consumers through the costs for everyday items like groceries and gasoline.
- 59% do not know that third parties, like hedge funds or foreign entities, who have no relationship to the plaintiff, often secretly finance litigation in exchange for a share of the jury award or settlement as a return on their investment.
- 47% are not aware the plaintiff lawyer in a civil lawsuit is likely to receive most of the jury award or settlement.
- 88% believe there should be full transparency and disclosure of all who have a financial stake in a civil lawsuit.
- 86% agree state and federal lawmakers should address abuses of the legal system (i.e., undisclosed third party funding and plaintiff lawyer advertising) to restore balance to the civil justice system.
According to a 2021 study from the Perryman Group, the toll of legal system abuse on the U.S. economy is staggering—resulting in the loss of 4.24 million jobs, $429.35 billion in output, and more than $110 billion in government revenues (federal, state, and local) annually.
Maura Freiwald, Head of Casualty, Munich Re US said: “This survey is an important step in raising awareness and educating the public about the tactics being used and the negative impacts of legal system abuse. This is not going away anytime soon. If left unchecked, it will lead to higher insurance costs, financial strain on insurers, depletion of municipal resources, and disincentives for businesses to take risks.”
Stef Zielezienski, Executive Vice President and Chief Legal Officer, APCIA added: “Legal system abuse is rampant and plaintiff lawyers’ use of predatory advertising tactics and third party litigation funding have turned the U.S. legal system into an investment market, benefiting secret funders rather than the victim. The survey results are clear – the majority of Americans agree state and federal lawmakers need to address these abuses of the legal system. Common-sense reforms, including full transparency and disclosure of all parties with an interest in the outcome of civil litigation, are needed to restore balance to the civil justice system.”
The survey method is available here.