The U.S. legal system is the world’s most costly, according to a study released this week [PDF] by the U.S. Chamber Institute for Legal Reform (ILR). The study, conducted by NERA Economic Consulting, shows that the American system costs about one and half times more than the Eurozone average. I would be remiss if I did not mention that the ILR may have a political agenda.
The NERA study compared liability costs as a percentage of a country’s gross domestic product. The 13 countries included in the study have similar levels of regulation and legal protection, leading analysts to conclude that higher costs could be attributed to more frequent and/or costly claims.
According to the NERA study, the U.S. costs were about 1.7 percent of GDP. For our $13 trillion economy, that finding would say that “liability costs” consume on the order of $221 billion. That amount includes outside counsel costs, but also many point items.
Countries on the low end of the range—the Netherlands, Belgium, and Portugal—had costs around 0.4 percent. Legal liability costs in the U.S. were found to be about 50 percent more than costs in the U.K.