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ILR/NERA study: Tort Liability Costs for Small Business

The tort liability price tag for small businesses was $133.4 billion in the US in 2008, according to a new study from the Institute for Legal Reform performed by NERA (press release). The methodology appears to be piggybacking off of the Towers Perrin study.

The $133.4 billion number is both an overestimate and an underestimate. On the one hand, no one is proposing eliminating the liability system entirely, so there is always going to be some baseline of liability expense for business; on the other, this study, like the Towers Perrin study, only measures the direct expense of litigation, and does not measure the indirect expenses that almost certainly overwhelm the impact of the direct expenses. An earlier ILR poll discussed, though did not attempt to quantify, some of these indirect expenses. In 2009, I gave a rough quantification that suggested the costs of excessive liability, once the indirect costs were considered, could easily be more than $600 billion a year.

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Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.