In the society we live in, it has become increasingly popular and more common to sue. Whether we see it in the media, talk about it amongst ourselves, or are actually the ones doing the suing, (or being sued) we deal with lawsuits every day. Now, we've all heard the story about the grandmother who spilled hot coffee on herself and successfully sued McDonald's for nearly $2.9 million, or the man who sued Winnebago and won $1.75 million after crashing his motor home off the freeway. But few of us ever question what these and all the other outrageous rewards for senseless lawsuits do to the economy. Have we ever wondered if they have a negative effect? Have we asked ourselves how they impact us, as consumers? Have we asked how they impact American business? The answer to all those questions is this: Frivolous lawsuits destroy the American economy.
Frivolous lawsuits can damage the economy in many ways. They can force companies out of business, increase the cost of financing and insurance, and cost millions of dollars every year in lost time, court awards, and legal fees. Also, litigation can increase the cost of products for consumers, up to 2.5% on an average (Abraham NP). David Bernstein, a law professor at George Mason University estimates that "
consumer prices could be reduced by 20% if actions are taken to reform the lawsuit process" (Javers 25). In addition, the time that is taken to prosecute, defend, settle, and try lawsuits, along with the costs of paying damages, can place a huge tab on the economy, with an estimated $132 billion lost in 1991 alone (Abraham NP). On top of all that, the threat of lawsuits often causes financial markets to overreact, and credit-rating agencies become likely to downgrade firms facing the threat of litigation. This in turn increases the cost of financing. Aside from spending and losing more money, immense awards for often ridiculous lawsuits can force businesses into bankruptcy, and cause large and small companies alike...
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