by Lester Brickman
Cato Institute
November 30, 2004
Improving market competition is the primary key to stemming litigation costs that continue to burden American businesses and economic growth. Over the past four decades, the costs of the tort system have increased far in excess of the growth in the economy. The central cause of tort liability expansion is rooted in contingency fees. Such fees are assessed based on the amount of financial awards granted by the courts, typically running from 33 to 50 percent. Additional factors that have inhibited a competitive market include asymmetrical information with regard to the value of tort claims and the quality of legal services, prohibitive search costs, and the lack of price competition on legal services.



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