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Legal services suppl - CLASS ACTION LAWSUITS HURT ECONOMY Class action lawsuits hurt competitiveness by increasing costs for businesses in three

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CLASS ACTION LAWSUITS HURT ECONOMY Class action lawsuits hurt competitiveness by increasing costs for businesses in three ways Kane, Schaefer, and Fraser 04 (Tim Kane, Ph.D., Brett D. Schaefer, and Alison Acosta Fraser. “Myths and Realities: The False Crisis of Outsourcing”. May 13, 2004. The Heritage Foundation. http://www.heritage.org/Research/Economy/bg1757.cfm ) Ending lawsuit abuse. Frivolous lawsuits cost the U. S. economy between $180 billion[29] and $233 billion in 2003,[30] which is enough to pay 1.8 million to 2.3 million additional six-figure salaries. According to one study, this is up 13.3 percent over 2002, following a 14.4 percent increase over 2001, and strongly suggests continued double-digit growth unless steps are taken to end frivolous and abusive lawsuits.[31] Congress should take steps to reform class-action lawsuits and restrain the growth of medical malpractice lawsuits. Since one-third of the increase in tort costs is driven by increasingly broad asbestos awards , lawmakers should limit damages for non-sick claimants. Businesses pay these costs in three ways beyond payment of tort claims: through increasing product and general liability insurance, higher employee health-care benefits due to medical liability costs, and legal fees. The burden these costs impose on the economy is more than two times greater than the burden on some major U.S. trading partners (e.g., Japan and Canada), putting American businesses at a competitive disadvantage .[32] Class action lawsuits drain labor from key companies while failing to stop the frauds that their cards talk about Trejos, 09 (Nancy Trejos-Washington Post Staff Writer. “Livid Investors Launch A Volley of Lawsuits”. January 18, 2009. http://www.washingtonpost.com/wp-dyn/content/article/2009/01/17/AR2009011700360.html ) That said, many of the companies being sued are on the verge of bankruptcy or have been gobbled up by other firms . "Defendants with 'deep pockets' are the ones who can afford big settlements," Plancich said. "However, the credit crisis has dramatically shrunk the size of many defendants' pockets . The financial distress faced by defendant companies could therefore pull median settlement values down ." Whatever the outcomes of these cases, Grundfest argues that class-action lawsuits do not fulfill one of their missions: to deter securities fraud. Others argue that such lawsuits drain cash and manpower from already beleaguered companies, thus hurting existing shareholders and investors. "It's important to stop securities fraud. I'm the first person to say that," he said. "By the same token, we also need to keep an open mind and ask whether the multibillion-dollar securities fraud industry has been effective in achieving that result. Or has it been more effective at generating revenue for lawyers on the defendant and plaintiff side?" Lawsuits have spread to all sectors of the US economy and cause bankruptcies Hensler et al, 02 (Stephen J. Carroll, Deborah Hensler, Allan Abrahamse, Jennifer Gross, Michelle White, Scott Ashwood
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This note was uploaded on 12/20/2010 for the course K 101 taught by Professor Staff during the Fall '10 term at UMass Lowell.

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Legal services suppl - CLASS ACTION LAWSUITS HURT ECONOMY Class action lawsuits hurt competitiveness by increasing costs for businesses in three

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