The Institute for Legal Reform (ILR), a division of the U.S. Chamber of Commerce, recently published a report detailing the rise in commercial tort costs from 2020 to 2021. The report, released in December 2023, found that these costs escalated from $291 billion in 2020 to $347 billion in 2021.

According to the ILR's findings, commercial revenues experienced a growth rate of 6.3% between 2020 and 2021. Concurrently, the Consumer Price Index revealed an inflation increase of 5.3%, leading to an approximate real economic growth rate of 1%. The ILR stated in its report, "Given this amount of inflation and economic growth, we would expect commercial tort costs to also grow by 6.3 percent or $18 billion. However, over the same period, the cost of risk increased nearly twice as much as the rise in commercial revenues."

The report further indicated that in 2020, the cost of risk for businesses was approximately $6.79 per every $1,000 in revenue. This figure rose to $7.63 per every $1,000 in revenue in 2021 - an increase of about 12.3%. According to ILR's estimations, this surge contributed at least partially to the substantial growth of commercial tort costs - up by nearly one-fifth between 2020 and 2021.

The ILR's report also provided a detailed analysis of estimated risk costs across various industries. It highlighted transportation, construction, and electric and gas services as sectors with the highest expected tort costs per thousand dollars of revenue. For instance, transportation companies generating less than $1 million annually are projected to bear around $85.03 in tort liability for every $1,000 earned.

According to ILR's findings across all sectors, smaller businesses tend to shoulder a higher burden of tort liability compared to larger corporations. The report noted, "While small businesses accounted for just 20 percent of business revenues in 2021, they bore 48 percent of commercial tort costs." It further emphasized the critical role of small businesses in fostering economic growth and community development, urging policymakers to shield them from disproportionate tort costs.

The ILR is an advocacy group working at state, federal, and international levels to stimulate economic growth and advocate for a balanced legal system. As stated on the U.S. Chamber of Commerce's website, the ILR believes that an effective legal system benefits both consumers and business owners alike. Among its primary objectives are reforming the class action lawsuit system and combating over-enforcement.