What happened: Tort inflation is financially burdening job creators, consumers and the legal system, with the average cost per U.S. household reaching $3,621 in 2020.
What it is: Tort inflation refers to the rising costs of lawsuits—driven by rising damage awards, nuclear verdicts and third-party litigation funding—which is often “baked” into the cost of products and services we buy.
By the Numbers: The tort system cost $443 billion in 2020, averaging $3,621 per household.
- The median nuclear verdict was $21 million between 2013 and 2022.
- 42% of tort cases were influenced by third-party litigation funding, significantly raising case costs.
How we got here: Aggressive trial lawyer advertising and misleading courtroom tactics like the “reptile theory” and jury anchoring are also major contributors to tort inflation.
- These tactics distort jurors’ perceptions and inflate verdicts, making it more and more expensive to resolve litigation.
TLR Thoughts: Texas has both a nuclear verdict problem and an inflated settlement problem. Without curbing the misleading litigation tactics that fuel these lawsuits, businesses face increased costs that are passed down to consumers. The Legislature has an important opportunity next session to protect Texas’ economy from this Tort Tax.
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