For the second consecutive year, the American Tort Reform Association has placed California’s legislature on its “Heat Watch” list in the annual Legislative HeatCheck report. This isn’t just a symbolic gesture — it’s a warning to every small business owner, taxpayer, and working Californian living in a state burdened by rampant lawsuit abuse.
Let’s not sugarcoat it: California has one of the worst legal climates in the country. We rank fifth in the nation for tort costs — also known as the “tort tax.” That’s $2,458 per person each year, or nearly $10,000 for a family of four. In high-cost metro areas like San Francisco and Los Angeles, the price tag soars to over $4,600 per resident. These aren’t just numbers—they’re costs that lead to higher consumer prices, lost jobs, and closed businesses.
And rather than addressing the issue, lawmakers in Sacramento are making it worse.
According to ATRA’s report, the 2025 legislative session has seen a spike in bills that expand liability. Proposals like Senate Bill 82 and Senate Bill 29 aim to limit arbitration and significantly broaden noneconomic damages in survival actions. If enacted, these bills would flood our legal system with lawsuits, pressure small businesses into unfair settlements, and further tip the scales toward trial lawyers rather than real justice.
This couldn’t come at a worse time. Lawsuit abuse is already estimated to cost California over 829,000 jobs annually and $5 billion in lost tax revenue. These are real impacts — fewer jobs, slower economic growth, and tighter state budgets.
But it’s not all bad news.
Some legislators are pushing for reform. Senate Bill 84 sought to reduce predatory ADA lawsuits by giving businesses time to fix issues before being sued. Senate Bill 690 aimed to protect companies from exploitative privacy-related litigation under the California Consumer Privacy Act. And Assembly Bill 743 would have brought oversight to the largely unchecked third-party litigation funding industry.
Unfortunately, all three proposals stalled. Instead of reform, many lawmakers chose to maintain a system that disproportionately benefits trial lawyers.
The silver lining? There’s still time to change course.
ATRA’s Legislative HeatCheck report helps shine a spotlight on who’s fighting for a fairer system — and who’s protecting the status quo. Californians deserve to know which legislators are driving up costs, wasting public funds, and stifling economic recovery.
Here’s the bottom line: If we want to talk seriously about affordability, job creation, and fairness in the courts, then we must include lawsuit reform in that conversation. That means rejecting harmful, liability-expanding bills and revisiting commonsense reforms that failed this session.
Ignoring the problem won’t make it go away. Every frivolous lawsuit drains resources, drives up insurance premiums, and discourages entrepreneurship. Most small businesses can’t afford endless legal fights — they either settle or shut down.
California has a choice to make. We can lead the nation in legal reform — but only if our elected officials are willing to put people over politics and stand up to powerful legal interests.
Let’s prioritize progress and create a legal system that works for everyone.
Victor Gómez is executive director of California Citizens Against Lawsuit Abuse.
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