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Wednesday, February 02, 2011

Even when you win, you lose

Tort reform. The words have several meanings and could do several things this year. Sen. Jack Johnson has a bill that limits punitive, non economic damages (Think pain, suffering, mental anguish or we don't like you paydays) at one million dollars.

Trial lawyers are going bonkers. They cry there will be no justice if it passes. No justice? Where have they been? Tennessee local governments already have a limit that blows that one away.

$300K is the absolute most you can sue the city for under ANY circumstance. In theory the city could burn down your million dollar house or business, on purpose, and the absolute most you would be allowed to recoup would be $300k. $300k not just on non economic damages but economic ones as well. The cost of your building, lost income, everything. $300k. That's it. Even I question the justice in that.

While the huge paydays are the dream for many a lawyer, the small ones are an issue as well. The Donna Rowland lawsuit is a prime example. We have a system where if someone sues for whatever and wins, they get paid, plus lawyer fees.

But the flip side does not hold true. If the defendant wins, the person who is punished is still the winner of the case. They are often still stuck paying their lawyers fees. These legal costs often run into the tens of thousands of dollars even for minor cases thrown out at the lowest level. This sets up a system where for financial reasons many people that are in the right will pay off the claimant and settle out of court just to make a court case and legal fees (that they have a pretty good expectation to never recoup) go away.

To me this reaks of extortion and exploitation.

I have heard one lawyers even brag how he often will sue a local paper company just to keep companies in fear of other lawsuits and to drain them of money.

If you are into the stock market this is similar to "Short selling" that was one of the major factors in our recent economic collapse. With short selling, the more the big stock trader bet a company was going to fail the lower the stock value went. The lower it went, the more money the trader made and the more they could bet against a company. It lead to a spiral that in the end, would lead a company to collapse. Our legal system is, and has been, heading down this same road for years.

The British have a system that stops this. Loser pays winners legal fees. Guess what? Their courts are much less clogged with frivolous lawsuits and only those of merit move forward. When someone wins, they are not punished for being right.

1 comment:

  1. Actually when plaintiffs' lawyers win, they usually DON'T get attorney's fees, except in contempt cases, some contract cases, and cases filed by the ACLU.

    ReplyDelete

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