How Rising Lawsuit Costs Affect Virginia Homeowners — And What States Are Doing About It

If you’ve ever wondered why everyday expenses keep creeping up, you’re not alone — and the answer may be coming from an unexpected place: America’s lawsuit system.

Recent national reports show that the growing volume and cost of lawsuits — often driven by aggressive legal advertising and increasingly complex litigation — are adding billions to the cost of living for families across the country. While the tort system plays an important role in holding wrongdoers accountable, many experts say it’s now expanding in ways that strain household budgets, reduce job opportunities, and increase prices for everything from insurance to consumer goods. In fact, in a recent

report, the American Tort Reform Foundation has reported that the nation’s ‘suing spree’

costs every American $1,666 and kills 4.8 million jobs.

So what does all this mean for Virginia families? Let’s break it down.

The Growing Price Tag of America’s “Litigation Boom”

According to multiple studies from legal-reform groups, the U.S. tort system cost over $529 billion in 2022 — roughly 2.1% of the entire U.S. economy. That breaks down to an estimated $4,200 per household in hidden costs.

Even more concerning is that lawsuit costs are rising significantly faster than inflation. From 2016 to 2022:

• Tort costs grew 7.1% per year

• Inflation averaged 3.4%

• GDP grew about 5.4%

  
  

This “tort tax” manifests in higher prices, fewer jobs, and higher insurance premiums — costs that most households feel, even if they never step inside a courtroom.

Certain states feel the burden more strongly. California families, for example, face an estimated $5,429 in litigation costs per household each year. New Yorkers pay even more.

In Virginia, the "damage is still significant, but not as high as the national average as the tort burden per household is $2,968.

Total tort costs paid in Virginia this past year were $9,765,328,958, which is 1.5% of Virginia's GDP (2.1% nationally). Tort costs grew at a rate of 6.1% annually (below the national average of 7.1% per year) from 2016 through 2022.

Why Are Costs Rising So Quickly?

Experts point to a number of factors:

1. More aggressive lawsuit strategies

Some personal injury firms experiment with new theories of liability in sympathetic courts — leading to larger judgments and increased settlements nationwide.

2. Third-Party Litigation Financing (TPLF)

This fast-growing practice allows outside investors — including hedge funds — to finance lawsuits in exchange for a share of the profits. While legal, critics argue that it encourages more lawsuits and higher settlement demands, thereby increasing costs that companies ultimately pass on to consumers.

3. Expensive mass-tort campaigns

High-budget national advertising often attracts thousands of claimants simultaneously, resulting in substantial settlements and substantial legal fees.

4. Concerns about evidence standards

Some states allow expert testimony or scientific claims that others consider too weak or unverified, which can increase the likelihood of large awards.

The Economic Ripple Effects

Rising tort costs don’t just affect big corporations. They can:

• Increase homeowner and auto insurance rates

• Raise prices on consumer products

• Reduce local job growth

• Discourage business investment

• Limit innovation as companies hold cash back for potential lawsuits

The American Tort Reform Foundation estimates that excessive litigation costs the U.S. approximately $368 billion annually and contributes to the loss of 4.8 million jobs.

A Bright Spot: States That Have Turned the Tide

Some states have proven that reform can make a significant difference — and actually lower costs for families.

West Virginia is the standout example. Thanks to legal reforms passed since 2016, including improved transparency around litigation financing and limits on misleading legal advertising:

• The state’s tort costs dropped over 20%

• It now has the lowest per-household tort cost in the nation, about $2,100

For families there, that’s a meaningful savings.

What’s Happening at the National Level — Including in Virginia

Lawmakers in Washington are also paying attention. Several bills focused on transparency in third-party litigation financing were introduced this year.

One of them — the Protecting Our Courts from Foreign Manipulation Act — is sponsored by Virginia Congressman Ben Cline. The bill recently passed out of committee and awaits a full House vote. While it may undergo additional changes, it signals growing bipartisan concern about the role outside investors are playing in U.S. lawsuits.

Another bill, the Litigation Transparency Act, also seeks to shed more light on who funds major cases.

Supporters argue that these measures will not deter legitimate lawsuits — they aim to make the system fairer, more predictable, and less susceptible to profit-driven abuse.

What This Means for Virginia Homeowners

Virginia does not appear among the highest-cost states, but that doesn’t mean families are insulated from national trends. Rising litigation costs influence:

• Insurance premiums

• Home repair and construction costs

• Prices at the store

• Availability of certain products or services

• Local business investment

In a tight economy, even small increases add up.

Understanding how the legal environment impacts your household budget helps you make informed decisions — from choosing insurance coverage to supporting local businesses and staying engaged with your state and federal representatives.

The Bottom Line

America’s tort system is essential — it protects people, holds wrongdoers accountable, and promotes safety. But as lawsuit costs balloon, homeowners are increasingly feeling the financial strain.

The good news is that other states have demonstrated that thoughtful, balanced reform can reduce costs without compromising justice. And with lawmakers (including some right here in Virginia) taking notice, the conversation about fairness, transparency, and affordability is gaining momentum.

For Virginia homeowners, staying informed is the first step.

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Sources: Sources: US Chamber of Commerce, Issues and Insights, Public Law Library, The Washington Examiner