Heavy toll: Excessive litigation costs Louisiana $3.2 billion, 46,000 lost jobs

Louisiana Lawsuit Abuse Watch is highlighting the economic costs of excessive tort litigation in Louisiana as lawmakers prepare for the regular legislative session that begins this week.

The data stems from a study conducted by The Perryman Group for Citizens Against Lawsuit Abuse titled "Economic Benefits of Tort Reform," and Louisiana Lawsuit Abuse Watch (LLAW) zeroed in on direct costs in two regions of the state: the Greater New Orleans area and the Capital region.

Overall, excessive tort litigation in Louisiana results in direct costs of more than $3.2 billion, state gross product losses of nearly $4.7 billion and more than 46,000 lost jobs. Those costs are on top of state government losses of nearly $244 million and more than $203 million in losses for local governments each year, according to the report.

“This new data shows the continued impact of lawsuit abuse on Louisiana’s citizens, businesses, and overall economy – specifically in its two largest (metropolitan areas). Unfounded lawsuits and exorbitant plaintiff awards impact everyone, as these associated costs are passed down to families and businesses through higher prices for goods and services,” LLAW Executive Director Lana Venable said. “These impacts are resonating now, more than ever, as residents continue to recover from the devastating effects of recent hurricanes and COVID-19 and the global economy is becoming more uncertain.”

Excessive tort litigation costs residents in the Greater New Orleans area more than $2.2 billion in personal income and 34,620 jobs each year. LLAW reports the costs translate into an annual “tort tax” of about $2,763 per person. Data suggests residents and businesses absorb more than $2.4 billion annually, while more than $3.5 billion in gross product is lost to litigation costs, according to the report.

In the Capital Region, residents are losing more than $626 million in personal income and 9,709 jobs per year. The “tort tax” costs folks in the Capital region about $1,152 per person. Residents and businesses in the Capital region absorb more than $674 million in direct costs and $984 million in lost gross product each year, LLAW reports.

“As a result of continuing local involvement in coastal lawsuits and Louisiana citizens being constantly hounded by lawyers’ advertising, the culture of excessive lawsuits continues to be a drain on Louisiana’s residents and economy,” said Louisiana Legal Reform Coalition Executive Director Karen Eddlemon.

“Louisiana can do better for its citizens.”

LLAW also pointed to a statewide study last fall that calculated excessive litigation translates to $1.1 billion in annual direct costs and $1.5 billion in lost gross product per year, as well as thousands of lost jobs.

“All major industry groups are negatively impacted, with retail trade, business services, health services and other service industries showing the greatest losses,” according to LLAW. “As of 2018, yearly fiscal losses are estimated at $76.4 million in state revenues and $64.3 million to local governments. These effects are based on the current size of the state’s population and economy and can be expected to rise over time in the absence of meaningful civil justice reforms.”

LLAW noted that Louisiana was ranked 49th in the U.S. Chamber Institute for Legal Reform’s Lawsuit Abuse Climate Survey, and offered several reforms lawmakers should consider to address frivolous lawsuits and the economic impacts that comes with them.

“Civil justice reforms that have resulted in the greatest reduction in losses are those aimed at reducing frivolous lawsuits, capping appeal bonds, setting negligence standards and limiting non-economic damages,” LLAW reports. “These reforms have been shown to enhance innovation and increase productivity, as well as to improve judicial efficiency and economic performance.”