If a credit card company sues you for $6,000 you only have $6,000 at risk. But even when you can endure the odds of being sued and the uncertainty of winning or losing, you must consider the possibility of a devastating award. You can’t predict what you could lose in a major lawsuit. A plaintiff who wins a few dollars in actual damages may pocket millions more in punitive damages. A buyer of a $20 defective product can turn it into a class action case that can cost the seller millions – or even billions.
One lawsuit can start an avalanche of others. Enough nonsense lawsuits topple the most powerful business or wealthiest family, as we have seen with litigation against tobacco, pharmaceuticals, asbestos and other industries.
This uncertainty of outcome also explains why nine out of ten lawsuits settle. What defendant can go to trial confident of victory? What defendant can know what they may lose if their case goes to trial? How many defendants can afford the exorbitant legal fees to answer these questions? So plaintiffs’ lawyers use lawsuits as their weapons to extort whopping settlements because the economics are always with the plaintiffs. The defendant is coerced to pay ‘go away’ money, because the defendant who has exposed wealth simply has too much to lose by gambling on litigation.
Of course, lawsuits can involve more than money. A lawsuit can attack your personal character – particularly those that allege fraud, racketeering, or conspiracy. And you may have good cause to get angry when a lawsuit attacks your professional competency. Ask any doctor how it feels to be characterized in a malpractice lawsuit as ‘negligent, incompetent or reckless.’
One leading New York thoracic surgeon was sued twice in his thirty-year career but will tell you, “You know you did nothing wrong, but you begin to question your own competence. Inevitably your self-confidence and self-esteem drops a few notches.”
Every lawsuit creates some stress and uneasiness; however, a major lawsuit can disrupt your social relationships, cloud your thoughts, dampen your enthusiasm for the future, and always create that nagging sense of insecurity.
The essence of the lawsuit was best voiced by the Tort Informer: “The law provides incredible financial incentives to seek out a victim with deep pockets, drag him into court, ruin his reputation, wear him down with endless discovery demands, pay a fortune to defend himself and then extort a settlement. This is not justice in any sense of the word.”
But if you are well-protected you may avoid all this. That’s our goal with our clients.
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