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Manhattan Institute

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Trial Lawyers, Inc.: Wheels of Fortune — A Report on the Litigation Industry's Disability Practice

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Trial Lawyers, Inc.: Wheels of Fortune — A Report on the Litigation Industry's Disability Practice

November 21, 2014
Legal ReformOther

The notion that the government of an advanced industrial democracy should help take care of citizens who cannot care for themselves is not controversial.[1] Acting on this concept, in 1956, Congress amended the Social Security Act to establish what would become the Social Security Disability Insurance program (SSDI),[2] which awards Social Security payments to those whose disability makes them unemployable.

In 1990, Congress further expanded the federal government’s role in assisting the disabled by passing the Americans with Disabilities Act (ADA),[3] which requires employers, public entities, and commercial facilities to make reasonable accommodations for disabled individuals. These two legislative schemes are, in theory, complementary: the federal approach is designed to facilitate the active lives and employment prospects of disabled individuals to the extent possible, while offering a safety net to those unable to work on account of their disability.

If the overarching legislative scheme of federal disability law makes some sense, plaintiffs’ attorneys—whom we at the Manhattan Institute like to call Trial Lawyers, Inc.[4]—have found ways to exploit legal rules in disability statutes to their personal benefit, fleecing taxpayers and business owners alike in the process. SSDI litigation has become a booming business line for Trial Lawyers, Inc., as attorneys advertise aggressively to attract individuals to “go on” disability—and win a fee from the federal government for each claimant successfully placed on the public dole.[5]

Trial Lawyers, Inc. rakes in over $1.2 billion annually from the federal government in SSDI-related fees. That’s triple the revenues paid through the program to the litigation industry at the turn of the century (Figure 1).[6] The cost of SSDI to taxpayers today is more than federal payments for welfare, housing subsidies, food stamps, and school lunches combined.[7]

Although the total costs of lawsuits under the ADA are harder to quantify, litigation under this statute is also a significant and growing business line for Trial Lawyers, Inc. Yearly ADA-related payouts paid through employment-discrimination claims filed with the federal Equal Employment Opportunities Commission (EEOC) exceed $100 million and have grown at an annualized rate of more than 12 percent over the last seven years (Figure 2),[8] a period when overall tort-litigation costs in the U.S. have fallen.[9] These payouts, moreover, understate the true cost of such litigation, which almost always settles, given that the expected expense of defending against an ADA lawsuit to the employer tops $250,000.[10]

In addition, nearly 3,000 cases are filed annually in federal courts under Titles II and III of the ADA, which govern public transportation and accommodations,[11] and which permit attorneys to win “bounties” in lawsuits filed against businesses for technical violations of the accomodation provisions.[12] The number of these lawsuits has grown more than 17 percent annually, on average, over the last seven years (Figure 3).[13] (The total number of lawsuits filed represents only a fraction of the businesses threatened with legal action by letters from “lawsuit mill” plaintiffs’ firms demanding payment.)[14]

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