international comparisons of litigation costs

Download International Comparisons of Litigation Costs

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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.

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  • 1. 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
  • 2. 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
  • 3. NERAInternationalStudyKeyResults2011 Liability Costs as a Percent of GDP
  • 4. NERAInternationalStudyKeyResultsFrom 2008 to 2011, the UK saw a 47.7% increase in litigation costs47%
  • 5. 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
  • 6. 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
  • 7. 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.
  • 8. 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:
  • 9. 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 isKey ResultsVoters say there has been increased abuse of the legal system in the last decade.
  • 10. 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 lawsuitsMore than three-fourths of voters say lawyers benefit more than the people on whosebehalf class action lawsuits are filed.
  • 11. 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 lawsuitsFour-in-five voters who have been involved in a civil lawsuit say that lawyers benefitthe most.
  • 12. 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
  • 13. DefinitelyAcceptable 6%Probably NotAcceptable27%Dont 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 stoppedBy large margins, voters continue to say that third party financing of lawsuits is notacceptable.
  • 14. 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%.
  • 15. 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 themThat 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%
  • 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 themThat 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%
  • 17. 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%Dont Know/Refused9%Both/Mixed5%DefinitelyAcceptable10%Probably Acceptable20%Total Acceptable 30%Total Not Acceptable 56%
  • 18. 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 victimslawyers 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 th

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