In September 2003, the Manhattan Institute’s Center for Legal Policy released Trial Lawyers, Inc.: A Report on the Lawsuit Industry in America. Structured as an annual report, Trial Lawyers, Inc. was our attempt to shed light on the size, scope, and inner workings of the litigation industry.

The report found that the plaintiffs’ bar had developed an increasingly sophisticated business model and was taking for itself an increasingly large share of national income. Beginning with asbestos litigation and exploding after the multistate tobacco litigation, trial lawyers’ fees were skyrocketing, with leading plaintiffs’ attorneys raking in as much as a billion dollars, at exorbitant rates as high as $30,000 per hour. Viewed in the aggregate as a single business, Trial Lawyers, Inc. was among the most profitable businesses in the world, and its lobbying influence was unparalleled. Given the trial bar’s unique access to the government’s monopoly on the use of force—unlike normal businesses, Trial Lawyers, Inc. reaps its profits from unwilling customers—the litigation industry’s growth and sophistication seemed deeply troubling.

A year and a half later, we find our concerns validated by subsequent events. The "tort tax," or share of the American economy consumed by tort litigation, has continued to grow faster than the overall economy. Trial Lawyers, Inc.’s revenues have risen to a staggering $46 billion. Over the past three years for which data are available, the litigation industry’s revenues grew by 11.1 percent annually, as compared with 3.9 percent growth in gross domestic product, 2.2 percent growth in inflation, and a 5.6 percent annual decline in the stock market.

Read PDF