Full story in the Los Angeles Business Journal

By Nancy Hoffman Vanyek

Eighty-three percent of Californians say the legislature should act to stop lawsuit abuse and eliminate what they call the “hidden tax” on families.

In a nation where consensus on almost anything is rare, that number should stop lawmakers in their tracks. Rarely do we see such clarity across political, geographic and demographic lines. When nearly nine out of 10 Californians are sounding the alarm, policymakers should be racing to respond.

That is not just my opinion. A June 2024 survey by Protecting American Consumers Together (PACT) revealed overwhelming concern about the state’s litigious environment. Californians understand that lawsuit abuse is not only a legal issue. It is an economic one. It directly raises the cost of living for families and businesses that are already struggling to make ends meet.

Nowhere is the problem more acute than in Los Angeles County. City officials themselves have described plaintiff’s attorneys, commonly called billboard attorneys, as “getting rich off taxpayers.” The numbers bear it out. In the last decade, lawsuit payouts by the city of Los Angeles have exploded from $64 million to nearly $300 million annually. That is money that could have been used to repair sidewalks, modernize libraries or hire more first responders. Instead, it is diverted to cover outsized legal claims.

Small business owners see the ripple effects, too. Many report liability insurance premiums climbing 40 to 50% in just the past year. They are not just paying for protection. They are paying for a legal system tilted toward excess. When their costs go up, they have little choice but to raise prices, pushing the burden onto consumers.

The mechanism is clear. Billboard attorneys refer clients to doctors who profit from inflated injury claims and to lenders who charge predatory rates on advances against settlements. They often discourage contact with insurers who could help manage costs. And when cases conclude, attorneys commonly take 30 to 40% percent of the payout before their clients even cover medical bills. Local governments absorb these inflated costs. Insurers raise premiums. Businesses pass them along. Ultimately, families shoulder the weight.

Contributing to unaffordability

Polling confirms that Californians are connecting the dots. Seventy-two percent believe lawsuit abuse drives up the cost of goods and services. Seventy-six percent say their insurance premiums rose in the last year, with more than half saying they rose “a lot.” And 92% give the legislature poor marks on holding down the cost of living. What may seem like an esoteric debate over legal practice is in fact a major contributor to California’s affordability crisis.

Affordability is California’s defining political challenge. Every conversation, whether about housing, health care or utilities, circles back to how expensive it is to live in the Golden State. Lawsuit abuse does not explain all of it, but it does compound it. By one estimate, the cost amounts to $5,500 per household each year. That is not a lawyer’s fee or a single settlement. It is a systemic surcharge baked into rent, groceries, gas and insurance.

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Fortunately, the solutions are within reach. Sacramento could take straightforward steps to close loopholes that reward abuse. Prohibiting attorney kickbacks to doctors would cut off the referral mills. Capping excessive legal fees would ensure victims, not lawyers, receive the bulk of settlements. Restricting predatory lending to plaintiffs would prevent vulnerable people from trading away their recovery before a case even concludes. Other states have enacted reforms such as early disclosure requirements and limits on punitive damages, with measurable success in reducing costs while still preserving victims’ rights. California should be leading on this front, not lagging behind.

The choice before lawmakers is clear. They can protect families, taxpayers, and small businesses, or they can defend a lawsuit industry that thrives at everyone else’s expense.

Californians have spoken with rare clarity. Eighty-three percent want action. The legislature does not often get a mandate like this. It should not waste it.

Nancy Hoffman Vanyek is the president and chief executive of the Greater San Fernando Chamber of Commerce, which is based in Van Nuys. She has spent more than 38 years with the nonprofit organization.