Two more months and this year is done, 2018 is over, and 2019 begins. It’s time to start making resolutions for the new year.
If you’re like most people, your resolutions will include spending less money. You’ll tally up your expenses for the year ending and look for places to cut in the one to come. You’ve got mortgage payments or rent, car notes and repair costs, various insurance policies, tuition for the kids, utility payments, grocery bills, etc. To get your total annual budget, you just add up the costs of all those things and then add $3,300.
$3,300? Whoa! Hang on a minute! $3,300 for what? Where’d that $3,300 come from?
That’s the average yearly cost of litigation for every household in America – the cost per household whether the inhabitants are engaged in litigation or not. You may have left that figure out of your calculations, but you shouldn’t have, because you and everybody else in America are paying that price per household for living in a hyper-litigious society.
According to a new study released by the U.S. Chamber of Commerce’s Institute for Legal Reform, the cost of tort litigation nationwide in 2016 was $429 billion, or 2.3 percent of U.S. gross domestic product. That’s about three-quarters the size of the U.S. defense budget and $100 billion more than Americans spent on retail drugs in 2016. A little over half of that lucre went to compensate plaintiffs. The rest got eaten up by lawyers' fees and insurance and administrative costs.
What does any of this have to do with you? How do you wind up on the hook? The costs incurred by the targets of lawsuits and by all businesses paying for insurance to protect against lawsuits are passed on, to some extent, in the prices consumers pay for products and services.
So, actually, when you calculate your annual budget, you don’t need to add $3,300 to the total. It’s already in there. But it’s too high, and it has to be cut.