Tort reform has recently become a controversial issue in the legal arena. Tort reform commonly refers to laws passed on a state-by-state basis which place limits or caps on the type or amount of damages that may be awarded in personal injury lawsuits. Those who advocate tort reform argue that limitations or caps need to be placed on damages able to be recovered in lawsuits because excessive damage awards create an oppressive tax on the cost of doing business. Advocates of tort reform attribute high costs of certain products or services to be due in part to litigation costs. Those opposed to tort reform argue that such cap or limits on damages are arbitrary and that damages need to be assessed on a case-by case basis because a blanket approach is unfair to severely injured plaintiffs. Opponents also argue that tort reform measures won't prevent insurance rate hikes. Other issues raided in tort reform legislation include contingent fees, venue-shopping, certification of class actions, and other areas viewed as subject to abuses in the legal process.
In February 2005 Congress approved a class action reform measure. The legislation authorizes federal courts to hear class-action suits involving over $5 million and involving persons or companies from different states. The aim of the legislation is to make it more difficult for the lawsuits to be approved. The bill would also seeks to end settlements" in which plaintiffs get little but their lawyers get big fees. It would link lawyers' fees to the amount of recovered by plaintiffs.
The following is an example of a state tort reform statute: