Tort law consumes 2.1% of the U.S. economy.
Many of those billions of dollars are wasted, extorted and taken from those who have done no wrong to enrich well-paid trial lawyers who do not lose their jobs when they bankrupt a company or devastate a town.
Tort law is one of the rare cases in which the United States does worse than other nations. We lead the world in wasteful, unfair and expensive lawsuits.
It is getting worse, not better.
The new invasive species is called “third-party litigation funding” (TPLF). There, “investors” target a company or industry and they fund the lawsuit. They handpick the target (rich, vulnerable, unwilling, unable to defend itself) and invent the “crime.”
What do the investors get? A percentage of the take. The “victim” loses control of his or her company and is at the mercy of the financial greed of the “investors.”
And this lucrative bad idea is now famous worldwide. Many of those investing in suing American industry are not Americans. They are foreigners. Who? Good question.
They have written the laws to keep their names and financial interests secret. A secret witness is not allowed to attack you in American courts – you have the right to confront your accusers. But here, the prime movers are kept secret. Why? Who benefits?
Something is rotten in the state of Denmark (or elsewhere, it is secret).
Since 2010, TPLF activity has exploded in popularity among progressive activists, foreign actors and Wall Street hedge-funds, although the reasons for their harassment of American businesses vary widely. An estimated $15.2 billion is currently invested in commercial litigation efforts.
Wealthy financiers funnel anywhere from $2.3 to $5 billion annually into TPLF campaigns, as do foreign firms that hold a vested interest in harvesting trade secrets from American companies through anonymous litigation.
The trial-lawyer grift machine takes money out of your wallet. The Institute for Legal Reform has found that tort law costs Americans $443 billion annually. That is the equivalent of $3,621 per household. Worse yet, rather than plaintiffs reaping the rewards of these settlements, trial lawyers and TPLF financiers absorb an estimated 88% of punitive damages. Trial lawyers and their anonymous paymasters reap a windfall from American families that pay the crippling “tort tax.”
State and federal lawmakers have begun to push back against the TPLF tidal wave.
In late 2022, 14 state attorneys general raised the alarm to U.S. AG Merrick Garland on the impacts of foreign TPLF activity to the American economy. Since then, Montana, Indiana and West Virginia have established rigorous standards for TPLF transparency, including mandatory disclosure requirements and prohibitions against trade secret harvesting. Kansas, Louisiana and Oklahoma are considering legislation for TPLF regulation as well.
Speaker Mike Johnson (R-La.) and Sen. John Kennedy (R-La.) have introduced the “Protecting Our Courts from Foreign Manipulation Act,” a bill banning foreign actors from anonymous TPLF activity. House Oversight Chair Republican Rep. James Comer of Kentucky recently held a hearing that examined how TPLFs are funded by left-wing activists seeking to undermine the legal system.
Republicans can build on this great work by enacting a federal standard for TPLF disclosure. This is why lawmakers should support the Litigation Transparency Act of 2024, introduced by Republican Rep. Darrell Issa of California, Chairman of the House Subcommittee on Courts, Intellectual Property and the Internet. This bill would require an identity disclosure for any TPLF investor who would stand to profit from the outcome of a civil proceeding. Any agreements concerning the right to receive payment would also need to be produced before the court.
For far too long, anonymous TPLF investors have bled businesses dry, forcing hardworking Americans to pay the “tort tax.” By demanding accountability for predatory legal schemes, the Litigation Transparency Act of 2024 will restore a balance to the scales of justice.
Grover Norquist is president of Americans for Tax Reform.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.
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