Litigation Decline

Business Week examines the decline of the lawsuit industry:

What has happened in Texas is not unique. In state after state, the tide has turned in one of the most protracted, hard-fought political struggles of the past two decades—the battle over so-called tort reform. Few other business issues have generated more controversy, polemics, and campaign spending than the effort to scale back the types of lawsuits people can file and how much they can recover. In a speech on Nov. 20, for example, Treasury Secretary Henry M. Paulson Jr. charged that "the broken tort system is an Achilles' heel for our economy" and exhorted his audience to tackle "one challenge that will take a concerted effort over the long term to correct—the need for reform of our legal system."

But what Paulson and others have overlooked is that in large areas of the country, that "reform" has taken place, and business has emerged triumphant. The American Lawyer, an influential trade publication, recently declared an end to the era of mass-injury class actions, but the changes are far broader than that. Courthouse doors have slammed shut on a wide variety of claims. Michigan, for example, has virtually wiped out all lawsuits against drugmakers in the state. Six states have passed laws seriously restricting the kinds of asbestos suits that can be filed, and 23 now have statutes saying you can't sue the likes of McDonald's (MCD ) for making you fat. Damage limits in many states have rendered medical malpractice litigation nearly comatose.