Legal system abuse takes many forms. It includes the staged crash in which a driver is intentionally rammed by a car that cuts her off. It is the misleading billboard lawyer advertising that blankets highways and television screens with promises of massive paydays, while failing to disclose that attorneys’ fees, litigation funders, and medical liens may consume a significant share of a settlement. Or it can be unnecessary medical treatments and tests that can be used to inflate the value of a claim. And there are many more examples.
These practices may look different, but they often share the same underlying incentive: maximizing profits through the legal system rather than resolving legitimate claims fairly and efficiently.
Politicians across Washington spend a lot of time talking about lowering costs for American families. They debate grocery prices, housing costs, healthcare expenses, and inflation. Yet one of the fastest-growing drivers of higher costs remains largely absent from the conversation: legal system abuse.
For too many Americans, the civil justice system no longer appears to be designed solely to compensate people who have been harmed. Increasingly, it has become a profit center for a growing network of actors who benefit when lawsuits grow larger, more numerous, and more expensive.
While these practices differ in form, they often share the same underlying incentive: maximizing financial returns through the legal process rather than efficiently resolving legitimate claims.
Every dollar extracted through these abusive practices ultimately gets paid by someone. In most cases, that someone is an American consumer.
When claims become more expensive to resolve, those costs ripple throughout the economy. Businesses face higher litigation expenses. Insurance costs rise. The price of goods and services increase. Employers have fewer resources to invest in hiring, wages, and expansion.
In short, legal system abuse is not just a legal issue. It is a cost-of-living issue.
The burden falls especially heavily on small businesses. Unlike large corporations, small businesses often lack dedicated legal teams and large financial reserves. A single lawsuit can have devastating consequences for a family-owned business.
One particularly troubling trend is the rapid expansion of third-party litigation funding (TPLF).
TPLF allows outside investors, including foreign governments and sovereign wealth funds, to finance lawsuits in exchange for a share of a future settlement or judgment, raising transparency concerns about who ultimately profits from litigation.
In many cases, courts, defendants, and even consumers have limited visibility into who is financing a lawsuit, how much influence investors may have over litigation decisions, and how much of any eventual recovery will ultimately flow to outside financiers.
This matters because litigation funding often operates within a broader ecosystem of legal system abuse that can increase claim values, lengthen litigation, and create incentives for prolonged disputes.
The civil justice system should exist to resolve disputes fairly and compensate those who have been harmed. It should not become another financial marketplace where investors place bets on the outcome of lawsuits.
That is why lawmakers are examining TPLF more closely. States across the country have enacted reforms to improve transparency and oversight. At the federal level, proposals such as the Protecting Our Courts from Foreign Manipulation Act would require disclosure of foreign TPLF and ban foreign governments or sovereign wealth funds from investing in litigation funding, and the Tackling Predatory Litigation Funding Act would impose a higher tax on profits earned by outside investors in civil lawsuits. These measures are critical to protecting consumers.
These efforts represent a common-sense principle: when outside investors, including foreign entities, have a financial interest in litigation, courts and parties should know about it.
If policymakers are serious about addressing affordability and reducing financial pressures on working families, legal system abuse deserves a seat at the table. And for millions of Americans feeling the squeeze of rising costs, it is long overdue.
Jenn Pellegrino is the founder of Defend Forgotten America Action, which works to empower state and local leaders — the true engines of self-government — and ensure Washington elites can no longer ignore the voices of America’s heartland.
