The U.S. Chamber Institute for Legal Reform (ILR) released this study by NERA Economic Consulting showing that the U.S. has the world’s most costly legal system as a share of its economy. The study compared liability costs as a percentage of GDP using general liability insurance sold to companies in Canada, Eurozone countries, and the U.S. because it covers similar types of costs in each country. Data shows that as a percentage of its economy, the U.S. legal system costs over 150 percent more than the Eurozone average, and over 50 percent more than the United Kingdom.
Welcome• US Chamber Institute for Legal Reform• United States Legal System• United Kingdom Context• Mission of the ILR in the United Kingdom and the European Union
• Examined general liability insurance data• The countries for which sufficient data exist constitute over 83 percentof Eurozone GDP, plus the US, Canada and the UK• Research controlled for other factors that might lead to costdifferences:• Differences in the mix of business in a country• Spending on government social programs• The cost of private healthcare• Features of the legal environment in each country are highly correlatedwith litigation costs, implying that changes to the liability system mayhave a substantial effect on costsNERAInternationalStudyMethodology
NERAInternationalStudy–KeyResults2011 Liability Costs as a Percent of GDP
NERAInternationalStudy–KeyResultsFrom 2008 to 2011, the UK saw a 47.7% increase in litigation costs47%
US Consumer ResearchKey Data from National U.S. Survey: Collective Action LawsuitsApril 7-10, 2013#13117Methodology:• National survey of 800 voters throughout the United States• Interviews conducted April 7-10, 2013, on both cell and landline phones• Margin of error of + 3.46% overall; margins of error for sub-groups will vary bypopulation size• Some comparisons made to national voter surveys conducted on behalf ofILR from 2001 – 2012
Key ResultsConsistent with what we measured last year, voters view the number of lawsuits as aserious problem.Question: “Do you think the number of lawsuits is a very serious problem, a somewhat serious problem, a not-so-serious problem, or a not-at-all serious problem?”84% 87%14% 11%2012 2013Total Serious Problem Total Not Serious ProblemNumber of Lawsuits Serious/Not Serious Problem
Key ResultsQuestion: “2001: And, to the best of your knowledge, have you ever received something in the mail sayingthat you may qualify to be a member of a class in a class action lawsuit? | 2013: Have you ever received anotice in the mail or via e-mail that advises you that you are, or could become, a plaintiff in a class actionlawsuit?”57% 61%42% 38%2001 2013Yes No+15% +23%Received Notice They Qualify for Class in Class Action LawsuitThree-in-five American voters say they have received notice they qualify for a classaction lawsuit - slightly more than 12 years ago.
Key ResultsQuestion: “And, thinking about any notices you have received in the last two or three years, did you receivefrom the settlement of those cases something of meaningful value, considering your effort to comply with thenotices, or not?”Very few of those who participated in a lawsuit recently report receiving something ofmeaningful value as a result.Received Something of Valuefrom Class Action Settlement:
More abuse of the legal system 69%Less abuse of the legal system 2%The level of abuse has stayedabout the same25%Question: “Thinking back over the last ten years, would you say there is…”Key ResultsVoters say there has been increased abuse of the legal system in the last decade.
The lawyers who file thelawsuit76%The people on whose behalfthe lawsuit is filed14%Key ResultsQuestion: “And more specifically, who do you think most benefits from class action lawsuits…”More than three-fourths of voters say lawyers benefit more than the people on whosebehalf class action lawsuits are filed.
12% 15%80% 76%Involved in Civil Suit(21%)Not Involved in Civil Suit(77%)The People The LawyersBenefits from Class Action Lawsuits by Involved in Civil SuitKey ResultsQuestion: “And more specifically, who do you think most benefits from class action lawsuits…”Four-in-five voters who have been involved in a civil lawsuit say that lawyers benefitthe most.
In fact, the overwhelming majority say it is a problem that the people suing end up withlittle of the money. Lawyers end up keeping most of the money awarded in thesecases, while the people suing end up with little of the money.Question: “Still thinking only about class action lawsuits...the following are a few issues some people have saidare problems while others have not. For each one, please tell me whether you think this is a...”Significant ProblemTotal ProblemKey Results
DefinitelyAcceptable 6%Probably NotAcceptable27%Don’t Know10%ProbablyAcceptable13%Definitely NotAcceptable44%Total Acceptable 19%Total Not Acceptable 71%Key ResultsQuestion: “Would you say this is an acceptable practice that should be allowed or not an acceptable practicethat should be stopped”By large margins, voters continue to say that third party financing of lawsuits is notacceptable.
UK Consumer ResearchKey Data from National U.K. Survey: Collective Action LawsuitsIpsos-MORI May 3-5, 2013#13117Methodology:• 1,036 adults (18+) throughout the United Kingdom.• Questions added to the omnibus regularly conducted by Ipsos MORI. Quotaswere set on age, sex, and standard geographical regions.• The data is also weighted against the profile of the UK to provide arepresentative sample.• Interviewing via telephone May 3-5, 2013.• Bipartisan team of Public Opinion Strategies and Penn Schoen Berlandconstructed the questions with guidance on wording from Ipsos MORI.• The margin of error is + 3.1%.
Key ResultsBy a three-and-a-half-to-one margin, U.K. residents are more likely to adviseU.K. decision-makers to avoid making changes similar to the U.S. system thanto model it.Question: “Decision makers in the U.K. are considering changing the U.K.’s civil legal system tobe more like the U.S. system because they say it will help the U.K. consumer more than underthe current system. As a consumer in the U.K., if you could offer some advice to your leaders asthey consider making changes, would you tell them…”That the American system hasmore problems than the U.K.system and they should NOTmake changes to be more likethe American system.57%That the American system hasmore advantages than the U.K.system and they SHOULD makechanges to be more like theAmerican system.16%
Key ResultsBy a four-to-one margin, U.K. residents are more likely to advise E.U.decision-makers to avoid making changes similar to the U.S. system than tomodel it.Question: “Recently, some European Union decision makers in Brussels have proposedchanges that could result in national legal systems containing more elements of the UnitedStates system. If you could offer some advice to leaders in Brussels as they considermaking changes, would you tell them…”That the American system hasmore problems and they shouldNOT make changes to be morelike the American system.60%That the American system hasmore advantages and theySHOULD make changes to bemore like the American system.14%
Key ResultsBy large margins, respondents continue to say that third party financing of lawsuitsis not acceptable.Question: “Would you say this is an acceptable practice that should be allowed or not anacceptable practice that should be stopped?”Probably NotAcceptable25%Definitely NotAcceptable31%Don’t Know/Refused9%Both/Mixed5%DefinitelyAcceptable10%Probably Acceptable20%Total Acceptable 30%Total Not Acceptable 56%
Key ResultsA number of features of the U.S. civil litigation systemmake U.K. residents less inclined to model it.Only about one-half of the money awarded in the U.S. systemgoes to actual victims—lawyers end up with the remainder.A recent study comparing the cost of the U.S. lawsuit systemas a percentage of their economy to other nations shows thatthe U.S. system is the world’s most expensive—50% more asa cost to the economy than the U.K. system, and more thantwice as expensive as most other E.U. Nations.Question: “Taking a step back…here are some things you might hear about the American civil lawsuit system. Foreach one, please indicate if this makes you more inclined to want to change the U.K.’s current system to includeelements of the U.S. system, less inclined to want to change the current system, or does it not make muchdifference in your opinion.”Lawsuits cost America’s small businesses billons of dollars eachyear: money that could go to creating new jobs, or providing workerswith better health care or retirement benefits.Courts are clogged with frivolous lawsuits, and that leaves peoplewith serious injuries having to wait to receive their faircompensation.U.S. class action lawsuits make it easier to bring courtactions, and this is a good development for the U.K.Lawsuits help ensure that companies are careful and thatproducts are safe for consumers.Less InclinedNo DifferenceMore Inclined9%7%18%23%28%39%16%18%18%21%29%33%72%71%61%52%36%23%
Further InformationFor further information, please contact:LondonRaj Aujla: email@example.com T: +44 20 7395 7176 M: 07710301679Ben Baruch: firstname.lastname@example.org T: +44 20 7395 7076 M: +44 07912 578 213Washington DCBryan Quigley: bquigley@USChamber.com T: +1 202 463 5569US CHAMBER INSTITUTE FOR LEGAL REFORMThe U.S. Chamber of Commerce Institute for Legal Reform (ILR) represents the interests of over 3million businesses of all sizes, many of which operate in the UK, and some of which are British-ownedand operate in the US.The ILR was founded by the U.S. Chamber of Commerce in 1998 to address Americas rapid expansionof litigation, with the aim of making the legal system simpler, fairer and faster for everyone. It nowseeks to share its experiences with UK policymakers, helping to protect the integrity of the Britishjustice system against the worst aspects of U.S. litigation culture.