Louisiana loses almost 50,000 jobs annually and struggles with a “tort tax” of $1,200 per resident as a result of excessive civil court costs, according to data released this week by Louisiana Lawsuit Abuse Watch.
In the New Orleans area, excessive civil litigation leads to the annual loss of $2.5 billion in personal income, the loss of more than 36,400 jobs and a “tort tax” equaling more than $3,000 per year, according to the LLAW’s analysis, which is based on 2021 dollars. In Baton Rouge, excessive civil litigation leads to the annual loss of $690 million in personal income and the loss of more than 10,000 jobs, the report says.
In addition, the state’s legal climate results in yearly revenue losses to local governments amounting to nearly $225 million, while the state government loses about $270 million each year, according to the LLAW.
“Our civil justice system exists to determine liability and provide a means to settle legal disputes,” LLAW Executive Director Lana Venable said in a prepared statement, “but an overly aggressive system is damaging to our economy, creating impediments to productivity and economic development.”
Unfounded lawsuits and excessive plaintiff awards lead to costs in Louisiana that are passed down to families and enterprises in the form of higher prices for goods and services, Venable said.
The numbers are based on survey data, industry statistics and other materials compiled by the Texas-based Perryman Group.
LLAW continues to support legal reforms aimed at reducing excessive civil lawsuits. This year the group is supporting Senate Bill 196, authored by state Sen. Barrow Peacock (R-Bossier City), which calls on parties in civil cases to disclose to all litigants any third-party financing contracts.
“LLAW believes this important legislation will bring more transparency to Louisiana’s civil justice system and strongly supports its passage,” Venable told the Louisiana Record in an email.
Such funding contracts allow hedge funds, sovereign or foreign wealth funds and other financial entities to invest in lawsuits in exchange for a share of future damages awards.
“Because funders are not required to disclose agreements, no one knows how much control or influence funders have regarding strategic litigation decisions, like whether to settle or take a case to trial,” Venable said.
The bill passed the Louisiana Senate 27-12 earlier this month and is now being considered by House members.
The American Tort Reform Foundation ranked Louisiana seventh on its 2022-23 list of “Judicial Hellholes.”