Lawyers, Liability, and Law Reform: Effects on American Economic Growth and Trade Competitiveness

Abstract

This Article addresses in simple analytic terms the strong allegations of recent years that various features of our modern legal system—an oversupply of lawyers, increased litigiousness, expanded standards of liability, and growth in governmental regulation—have reduced economic growth and harmed American competitiveness in foreign and domestic trade. Over the past few years, steadily accelerating complaints have been raised about lawyers and about the structure and substance of American law, especially modern tort and environmental law. It is well known that, over the past three decades, the absolute number of lawyers and the proportion of lawyers per capita have increased substantially in the United States. Over the same period, courts have significantly expanded standards of tort and environmental liability, increasing the liability exposure of virtually everyone in the society, but especially of manufacturers, insurers and governmental entities. Similarly, both state and federal governments have expanded direct regulation of the environment and, in more limited cases, of safety with respect to specific products. These legal developments have increased insurance costs and non-insured liability payouts as well as the costs of regulatory compliance. Not surprisingly, there has been increasing criticism of lawyers and serious opposition to the developing direction of the law. The most outspoken critics claim variously that the expansion of liability and regulation levies a huge tax on American enterprise, reduces economic growth, and, more generally, diminishes U.S. trade competitiveness. Lawyers, obviously, are the instruments through which this damage is inflicted.