New Report: Third-Party Litigation Financing Is Undermining Affordability Nationwide
FOR IMMEDIATE RELEASE
January 20, 2025
CONTACT:
Victor Gomez
New Report: Third-Party Litigation Financing Is Undermining Affordability Nationwide
Analysis shows higher prices, lost income, and lost tax revenue tied to exploitative lawsuit investment practices
(WASHINGTON, DC) – Today, Citizens Against Lawsuit Abuse (CALA) released a new report detailing how third-party litigation financing (TPLF) is driving up costs for American consumers and families at a time when affordability remains a top concern across the country.
The report, The Impact of Third-Party Litigation Funding on U.S. Business Activity and Consumers, prepared by The Perryman Group, examines how outside foreign and sovereign entities that are financing lawsuits in exchange for a share of the payout are distorting the civil justice system and passing exorbitant costs onto households through inflated prices and reduced economic growth.
“Third-party litigation financing has quietly become a significant burden on American families,” said Victor Gomez, Executive Director of Citizens Against Lawsuit Abuse. “When Wall Street-style investors bankroll lawsuits for profit, the costs are not constrained to the courtroom. Americans are facing these consequences through increased prices, higher premiums, job losses, and reduced purchasing power for everyday consumers.”
This highly unregulated and purposefully opaque practice turns America’s courtrooms into casinos that are open for business to investors at the expense of American citizens and businesses. Adding insult to injury, foreign investors can often avoid paying taxes on their profits.
According to the report, the economic impact of third-party litigation financing is significant:
Over $607 per household per year in lost earnings and reduced purchasing power due to higher inflation and slower economic growth
$192.79 per person annually in direct consumer costs tied to TPLF-driven litigation inefficiencies
More than $31 billion in added inflationary pressure across the economy, driven in part by higher insurance and liability-related costs
Over $54 billion in lost economic output annually, weakening job growth and income gains that families rely on to keep up with rising costs
An estimated 454,450 jobs are lost every year as businesses struggle to absorb the rising costs and uncertainty created by third-party litigation financing
Upwards of $15 billion in annual tax receipts are lost across Federal, State, and Local Governments due to excessive TPLF litigation.
“These findings confirm what we are already feeling at the checkout counter and when paying our monthly bills,” Gomez added. “TPLF fuels the wave of frivolous litigation that raises costs across the economy, leaving families with less money in their pockets and fewer opportunities to get ahead while these wealthy outside investors earn millions in tax-free profits.”
CALA released the report as part of its ongoing efforts to highlight how lawsuit abuse and predatory litigation undermine affordability, economic stability, and fairness for consumers nationwide. CALA emphasizes that while a fair civil justice system is essential, practices that inject profit-driven incentives into litigation can create ripple effects that hurt households and economic viability long after a case is filed.
The full report is available through Citizens Against Lawsuit Abuse and provides a comprehensive analysis of the economic and consumer impacts of third-party litigation financing in the United States.
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About Citizens Against Lawsuit Abuse (CALA)
Citizens Against Lawsuit Abuse (CALA) is a nonpartisan, grassroots movement working to end rampant lawsuit abuse across the United States. CALA advocates for commonsense legal reform measures by educating the public about the devastating, real-world costs of lawsuit abuse on working families and small businesses.
About The Perryman Group (TPG)
An economic and financial analysis firm, The Perryman Group (TPG), provides clients with well-documented, carefully considered answers to even the most complex questions. For more than 30 years, The Perryman Group has met the challenges of thousands of clients through a systematic approach and a level of performance that assures a consistent standard of excellence. The firm has been involved in scores of major events shaping the economic landscape, from crucial corporate locations to landmark legislation to important regulatory policies to notable judicial decisions.