Mass tort litigation too often fails to fairly compensate victims. Rather, the most common outcome of these cases is that it forces productive businesses to waste time and money defending themselves against claims that typically lack merit. The capital that mass torts extract from the U.S. economy is making the United States a less prosperous nation.

Mass tort litigations often involve a procedural process known as multidistrict litigation (MDL). This process was conceived to more efficiently move large numbers of related civil lawsuits through the federal court system by consolidating them into one case. However, instead of making the process easier, they have become a cash cow for trial attorneys and their financial backers. These lawsuits clog courtrooms with frequently baseless claims of personal injury. As of 2023, MDLs make up 65 percent of the federal civil caseload, a far bigger share than the 38 percent a decade ago.

The dollar figures associated with the various aspects of MDLs and mass tort litigation are staggering. In fact, billions of dollars have been allocated towards legal advertising over just the last few years. Much of it is aimed at identifying potential clients for mass tort suits and is financed in large part by outside financial backers who have no legal connection to the case itself.

Hedge funds and other investment companies finance mass media legal advertising campaigns. They also frequently cover the other costs of pursuing tort cases in exchange for a healthy share of court awards or settlements.

The mass tort suits promoted by profit-motivated legal firms and financed by outside investors extract money from the general economy. They drain capital that could be put to more productive use in the private sector. Every dollar spent on such a suit is one that could not be used towards supporting economic growth, business expansion, and job creation.

Third-party litigation funding (TPLF) has grown in just a few years into a multi-billion industry of its own. This has notably shaped mass torts and MDLs. The fact that so many third-party funders find it lucrative to involve their capital in these suits is a symptom of real rot within the American legal system. Regardless of whether a prospective defendant has a legitimate case, the current system incentivizes lawsuits. Those incentives have ballooned into the economically draining cottage industry it has become today.

The concerns behind these criticisms—namely the dangers of incentivizing third parties to manipulate litigation for profit—are just as relevant today, particularly in the context of mass torts and MDLs.

When cases are consolidated into MDLs, they draw in the interest of funders seeking high returns on investment. However, this financial involvement can distort the litigation process. Funders, driven by profit rather than justice, may often push for prolonged litigation or settlements that benefit their profits, rather than working towards resolutions that serve the claimant’s best interest.

Mass torts also diminish tax revenues, shifting more of the burden of paying for government expenditures to taxpayers. A study calculated those losses to be $77.4 billion in annual federal revenues, $24.3 billion in annual state revenues, and $20.5 billion in annual local government revenues.

The unnecessary financial and societal costs of excessive mass tort litigations could be greatly reduced by state and/or federal regulations that impose reasonable rules on litigators. In response to an epidemic of homeowner insurance lawsuits, Florida passed a tort reform measure in 2023 that rapidly cut in half the number of monthly filings to initiate litigation. Other states, and Congress, should consider similar legislative initiatives to rein in the out-of-control costs of mass tort litigations.

In addition to these reforms, courts should also consider revisiting the standards for consolidating cases under MDLs and mass torts to reduce profit-driven funders clogging the courts. This would help restore ethical boundaries within our legal system while protecting people from the economic drain caused by frivolous litigation.