The legal system in US has been criticized for being too costly, inefficient and ineffective in administering fair awards. The economic costs associated with these are considerable. These costs are:

1. The individuals suffer directly by having less disposable income than they would otherwise have.

2. Individuals suffer indirectly when the businesses raise their price on goods and services, as a result of paying higher premiums on product liability.

3. When businesses charge higher prices, they do less business as it slows down the job expansion and economic growth. Individuals bear the brunt of this economic slowdown in the form of lower wages and fewer jobs

4. Increasing awareness of litigations, discourage the businesses and individuals from taking any kind of risks which means fewer new products and new technologies are brought to the market.

Individuals living in the urban areas are the ones who are greatly affected by these tort laws as they experienced an even greater increase in tort costs. In the current environment of fiscal responsibility and taxpayer flight from cities, urban governments and residents can ill-afford to allocate large portions of their budgets to litigation costs.

The economic effects of such a huge tort burden on the American economy are hard to be measured directly, but are nonetheless significant. Individuals suffer from the high price of insurance and the increased cost of goods and services. Businesses are hurt by the higher prices they must charge to pay their insurance costs. The overall economy also suffers when productivity and growth are slowed by excessive litigation, which discourages risk-taking and slows the introduction of new products and technologies.