Saturday, January 15, 2005

True Cost of Tort

Yesterday, I wrote about the ends that companies will go to in order to try to avoid litigation from trial lawyers. The cost of tort in this country is incredible, even though most people don’t see the true cost of it in their everyday lives. I seldom get questions about tort reform during my talks, especially compared to the number of questions I get about Wal-Mart. Let me show you the difference.

The lack of meaningful tort reform is costing our country approximately $230 billion per year, equivalent to $3000 for every family of four in the country. This cost is reflected not just in legal actions but also in the added costs built into products to avoid or pay for expected litigation.

Compare that to Wal-Mart’s domestic profit at $8 billion, or $100 for a family of four in this country.

I look at my own family and question the value we get from spending $3000 per year for tort compared to $100 in profits to Wal-Mart. It’s not even close. We definitely get over $100 in value from the products we purchase from Wal-Mart, but don’t from the added costs built into products due to the lack of tort reform.

I’m very hopeful that we will see meaningful tort reform in our country very soon.

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