Investigating Tort Reform

For this question I have decided to investigate Tort reform. Tort law is designed to provide full compensation for proven harm. The Latin phrase restitutio in integrum (restoration to original state) is used in law to describe this. In other words, the idea of the law of tort is that if someone harms someone else, they should make up for it. Compensation should be, in the words of Lord Blackburn in Livingstone v Rawyards Coal Co,

“that sum of money which will put the party who has been injured in the same position as he would have been if he had not sustained the wrong for which he is now getting his compensation or reparation.”

Tort requires that those at fault for harming others should compensate the victims, this is usually accomplished by a financial payment. Typical liability issues can include loss of income, medical expenses, payment for pain, suffering, or loss of future income. The financial recompense of any claim is most often the largest element of the award. In UK those initiating liability lawsuits must pay court costs as well as the legal expenses of defendants if they lose. The effect of this is that the number of liability cases are reduced. In other countries, such as USA, each party bears its own expense of litigation. The current loser-pays rules are thought fairer and compensate winners of lawsuits against the costs of litigation. To reform our tort system to the USA system would not benefit the winning party involved if they were competing against a wealthier opponent. This would be so if the cost of winning the case was more than the amount of compensation that they could receive.

Another criticism of the tort system is that granting compensation to the injured party is a worthy goal, but litigation is an inefficient method of giving that compensation. It is claimed that the tort system can distort economic effects. This is because as the costs of litigation and compensation payouts raise the cost of insurance raises too. This is because most tort claims will be paid by insurance companies. Tort reformers say that reducing tort litigation and payouts will be beneficial to everyone that pays insurance. Some also challenge the wisdom that courts are the appropriate forum for personal injury cases. The reason for this thought is that as the ‘compensation culture’ grows it will undermine the tort system, which allegedly already redistributes undeserved income. Currently most personal injuries cases never reach court. They are settled between insurance companies. This is typical for road accidents and workplace injuries, as these are the areas in which the majority of personal injuries occur. Settlements are sometimes made ‘in the shadow of the law’, so the amounts paid will usually be an approximation of what would be an expected award in court following a credible claim from a claimant.

Supporters of tort law say that the law serves to compensate victims for their losses and the threat of liability serves to deter future accidents. They also claim that tort encourages corporations to produce safer products, discourages them from selling dangerous products and encourages safer and effective medical practices. Conversely, Tort reformers maintain that the present tort system is an expensive and inefficient way to compensate those injured. Critics of tort reform also claim that the real purpose of any proposed changes is to protect businesses and large corporate organisations from having to pay compensation to consumers or other legitimate tort claimants. It is considered that many corporations carry out cost-benefit analysis before considering whether to undo a wrongful action. When viewed in this way, the prospect of paying a small damage award would have little or no effect in correcting the wrongdoing, and would in essence allow the corporation to continue any unsafe practices unless industrial regulators became involved. The reform of tort has both positive and negative outcomes, but is a difficult area of law in which to make definite recommendations. Any changes to tort would require in depth study to ensure that the ‘idea’ behind tort is not lost. It would also need to ensure that after any reform no one party is in an unfair or beneficial position, or that any financial compensation is disproportionate to the claim.