The Myth Of The Frivolous Lawsuit

ePluribus Media – USA by Justinian
One of the catch phrases of tort reformers is “frivolous lawsuits” – a lawsuit that has no legal basis, or is so petty that the suit isn’t justified.  Often, tort reformers cite high profile cases, such as the McDonalds coffee case[1] to try and show that the court system is “broken” and that “runaway juries” routinely award ridiculously large verdicts in frivolous cases.
Tort reformers argue that these “frivolous lawsuits” are “clogging the courts” and cost honest, taxpaying citizens billions of dollars every year.  They further claim that the only way to stop “frivolous lawsuits” is to pass legislation that will make it more difficult to file a “frivolous lawsuit.”

What tort reformers don’t tell you is that the legal system already has three safety mechanisms in place to prevent, dismiss, and correct “frivolous lawsuits” and “runaway jury verdicts.”  The first mechanism, the contingent-fee agreement, prevents frivolous lawsuits from being filed in the first place.

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The Contingent-Fee Agreement:
 Have you ever seen or heard an ad for an attorney who promises something like, “No cost to you unless we collect!”?  That’s a contingent-fee agreement; whether the attorney gets paid is contingent upon the attorney collecting money for you.  Nearly every attorney that brings a lawsuit for a personal injury case does so under a contingent-fee agreement.  How does a contingent-fee agreement work?

Let’s say you’ve had an auto accident and decide to hire an attorney to protect your rights.  If you shop around, you’ll find that contingent-fee agreements vary from attorney to attorney, but generally range from 25% to 50% of the total settlement or judgment you receive.  For simplicity, we’ll say you hire an attorney on a 40% contingent-fee agreement.  If you were to receive $10,000.00, the attorney would get $4,000.00 in that case as his or her fee, in addition to being reimbursed for any expenses he or she incurred in building your case.  These expenses include obvious things like court filing fees and postage, but there are some hidden expenses in many cases that the general public doesn’t know about: expert witness fees.

What is an expert witness fee?  Well, in most complicated cases – and virtually all medical malpractice cases -  the plaintiff needs to hire expert witnesses to help prove his or her case.  In many states, you’re not even allowed to file a medical malpractice suit without first having a report from a physician that says, in essence, the doctor or hospital you wish to sue committed malpractice.

While your attorney is willing to work on a contingent-fee basis, which means it may be months or years before he or she is paid, expert witnesses want to be paid up front, and it’s the attorney who has to pay them out of his or her pocket.  As you might surmise, expert witnesses aren’t cheap: they’re highly qualified professionals who generally have high hourly fees. 

What kind of expert witnesses might be needed in a given case?  Let’s take some real-life examples of experts and what they charge:
Professional Engineers: If you’re suing a manufacturer because you got hurt by a product that you think was poorly designed, you’ll need at least one professional engineer.  The going rate for engineers is around $225.00 per hour, and many charge an additional $100 or more per hour for time spent in depositions and in court.  So, if that engineer spent ten hours reviewing a design, and five hours in court, that would cost your attorney almost $4,000.00.  Again, that’s money that your attorney pays out of his or her pocket, and only gets back if you win your case.  In a complicated design case, it’s not uncommon for several engineers to spend fifty or more hours evaluating the product, at a cost to your attorney of over $10,000.00
Doctors: If you have a medical malpractice case, or any case where the extent of your injuries is called into question, you’ll need to hire a doctor as an expert witness.  Doctors, as you might guess, are expensive.  Plan on having your attorney spend around $250.00 per hour, possibly twice that much for a well-regarded specialist.  In a complicated medical case, you may need three or more doctors, including expensive specialists like anesthesiologists and neurologists, with a cost of $20,000.00 or more to your attorney.

Nurses: You’ll probably need a nurse in any case where you need a doctor.  While they’re not as expensive as doctors, they’ll still be around $75.00 an hour.  Just like doctors, they’ll also probably have to spend ten to twenty hours on a case – another couple of thousand dollars that your attorney has to gamble on your case.

Surprisingly, finding expert witnesses isn’t easy.  Often, a lawyer will have to “shop around” for experts.  That means your lawyer will spend time finding experts with the right qualifications for your case.  Then, he or she would gather all the pertinent materials and send them to an expert for review.  Sometimes, the expert will review the records and say that they’re not interested in the case.  Or perhaps they’ll review the records and not find anything helpful to your case.  Either way, the expert will still have to be paid, and it’s your lawyer who will have to pay them.  It’s not uncommon to go through two or three experts, and several thousand dollars, before the “right” expert is found.  Of course, it’s also not uncommon for a lawyer to think his or her client has a great case, only to be told by several experts that the case has little or no merit.  This is especially true in medical malpractice cases.  In such an instance, that lawyer will have wasted thousands of dollars, but the client will owe nothing to the attorney – thanks to the contingent-fee agreement.

Now, if you were a lawyer with a contingent-fee agreement, would you be willing to spend thousands of your own dollars and hundreds of hours on a case you’re not confident you can win?  If your answer is “no” to that question, then you’ve just seen how contingent-fee agreements prevent frivolous lawsuits from being filed.

While contingent-fee agreements prevent frivolous lawsuits, they also do something even more important: They provide access to the courts to everyone.  Most lawyers charge $100 to $300 an hour, with “superstar” lawyers charging as much as $750.00 per hour.  At those rates, a complicated injury trial could cost an injured person $30,000 – which few people can afford.  If contingent-fee agreements were abolished, two things would happen: Only the rich would be able to file lawsuits, and attorneys would be far more willing to file a lawsuit that doesn’t have merit; when you’re paid by the hour, it doesn’t matter if you win or lose.

No case is “easy”, and in general, the more complicated the case, the harder it is to win.  Contingent-fee agreements attract lawyers to the complicated cases.  Contingent-fee agreements drive lawyers to take those cases to trial, instead of settling for a fraction of what the case is really worth.  Contingent-fee agreements allow the poorest of the poor to hold corporate juggernauts accountable for their actions in a court of law. 

Is it any surprise then that some special interest groups are attacking the contingent-fee agreement?  They argue that it’s not fair for attorneys to take such a “large percentage” of any recovery of their clients.  Their arguments have worked: Some states have put limits on the percentage an attorney can take  Do you think that those special interest groups are truly interested in ensuring injured people aren’t taken advantage of by unscrupulous attorneys? 

Damage caps and attorney-fee caps work together to make the complicated cases less enticing for lawyers, and the consequence is that those who traditionally receive large jury verdicts – the catastrophically injured, or the families of those who are killed – won’t be able to find attorneys to bring their case to court.  The corporate entities that support tort reform won’t be held accountable when they act irresponsibly or unethically, and will instead enter into confidential settlement agreements with those who are harmed by their products.

The irony is that as those corporate entities take away the individual’s right to a jury trial, they’re doing it under the guise of protecting the public from “greedy lawyers.”  It’s also important to note that capping contingent-fees will do nothing to reduce so-called “frivolous lawsuits.”  That’s because contingent-fee caps only discourage lawyers from filing complicated lawsuits on behalf of the severely injured.

So, what happens if an inept lawyer decides to file a frivolous lawsuit?  The second safety mechanism, the Summary Judgment, would be used to dismiss the suit.

The Summary Judgment:

Tort reformers say that the courts are overwhelmed with “frivolous lawsuits” – lawsuits that have no legal basis, or are so petty as to not be worth the time of the court system.  They say that to protect the justice system, we need to make it harder for individuals to file lawsuits.   

But what if instead of putting barriers up that could prevent legitimate lawsuits from being filed, there was a tool that could quickly and easily dismiss frivolous lawsuits?  What if this tool not only dismissed frivolous lawsuits, but could also be used to force the plaintiffs in frivolous lawsuits to pay the attorney fees of the defendant?  Wouldn’t such a tool be a better solution than passing laws that would hurt individuals with legitimate lawsuits?

This tool not only exists, but has been in use in America since 1937; it’s called the Summary Judgment.

The purpose of the summary judgment is to determine whether there is a genuine need for trial.   When a party files a motion for summary judgment, they’re telling the court that there is no need for trial because the facts and law applicable to the case would prevent the other side from winning. 

 We’ll use a fictitious car wreck as an example of how a summary judgment would dispose of a frivolous lawsuit:
Mr. Smith runs a red light and slams into Mr. Jones.  Mr. Smith claims the light was green, but two witnesses say the light was red.  Mr. Smith is found to have a blood alcohol level that is nearly twice the legal limit.  Mr. Smith doesn’t dispute the fact that he was drunk, but still decides to sue Mr. Jones for the damage to his car and for his medical bills.
Mr. Jones hires a lawyer.  Mr. Jones’ lawyer spends a few hours drafting a motion for summary judgment.  At the end of the motion, Mr. Jones’ lawyer requests he be awarded attorney’s fees from Mr. Smith because the lawsuit is frivolous.

The lawyer for Mr. Jones files his motion for summary judgment, and includes evidence that Mr. Smith was legally intoxicated, and under the laws of that state, therefore legally responsible for the accident, even if he didn’t run a red light.  
In such a case, the judge would most likely grant the summary judgment, and Mr. Smith’s lawsuit would be dismissed.  The judge could also decide to order Mr. Smith to pay for Mr. Jones’ attorney’s fees.  In the end, Mr. Jones wouldn’t be out any money, and Mr. Smith would have had his day in court. 
The requirements for summary judgment vary from state to state, but in general, you need to show the court two things:
1:         That the facts clearly support your side.  In Texas, for example, you have to show that “reasonable and fair minded people” cannot possibly come to different conclusions about what the evidence shows.  If reasonable and fair minded people could come to different conclusions about the facts of the case, then summary judgment shouldn’t be granted.
                     2:         That the law clearly supports your side.  A common use of the summary judgment is to dispose of lawsuits where the statute of limitations has passed.  Many states have a four-year statute of limitations for breach of contract.  So, if you bought a car in 1995 and tried to sue the dealer for breach of contract in 2000, you wouldn’t legally be able to win – the statute of limitations would bar you from recovery – and the judge would grant the car dealer’s motion for summary judgment.  In most medical malpractice lawsuits, there is a two-year statute of limitations. 

Summary judgments have disposed of frivolous lawsuits for decades.  They allow a defendant in a frivolous lawsuit to get out of the case quickly and without the expense of a full-fledged trial.  Often, the defendants are even awarded their attorney’s fees for preparation of the motion for summary judgment.

The bottom line is that because of the summary judgment, very few “frivolous lawsuits” ever make it to trial.  It could even be argued that any case that makes it past summary judgment can’t be a frivolous lawsuit because an impartial judge – not a “runaway jury” – decided that the case had enough merit to proceed.

Tort reformers want to make it hard for you to file a lawsuit, harder for you to win a lawsuit, and impossible for you to collect a meaningful amount of money in a case involving serious or permanent injury.  To accomplish these goals, they claim that frivolous lawsuits and runaway juries are destroying the justice system.  However, tort reformers don’t talk about how summary judgments have been effectively used for over 100 years to dispose of untold thousands of lawsuits.

The next time someone tries to persuade you that we need more barriers to filing lawsuits, ask them why they don’t think the summary judgment is getting the job done.

Let’s assume that somehow a frivolous lawsuit makes it past summary judgment and a “runaway jury” awards more money then they should.  Several judicial remedies exist to correct these verdicts.

Directed Verdicts:

Most people think that a jury can make whatever decision they want.  This isn’t the case at all.  A judge can issue a directed verdict, which tells the jury that they must make a certain decision.  Usually, a directed verdict is used when something comes out at trial that prevents the other side from winning as a matter of law.  For example, it could come out during the trial  that a key event happened so long ago that the statute of limitations prevents the plaintiff from winning.  In such a case, there would most likely be a directed verdict for the defendant.

Less often, the evidence in a case is so strong that the judge feels that there can be only one verdict, and he or she would order the jury to return that verdict.  One example would be a case where someone caught the auto accident in question on videotape, and the tape clearly shows that one of the parties to the lawsuit ran a red light, and is therefore at fault.  In such a case, the judge may direct the jury to find in favor of the person who did not run the red light.

Directed verdicts are more common in criminal cases than in civil cases, because the summary judgment would typically be used to dispose of a civil case before a jury trial.  However, directed verdicts can and do allow judges to dispose of civil lawsuits without merit.

Judgment Not Withstanding The Verdict (JNOV):

Everyone is familiar with the concept of appealing a decision; if you lose your case, you can generally appeal it to a higher court.   However, not everyone is familiar with a Judgment Not Withstanding the Verdict (JNOV).  JNOV is an acronym for Judgment non obstante veredicto, which is Latin for “notwithstanding the verdict”.

A JNOV is one of the ways that a judge can reduce the dollar amount of a verdict.  Some states require that an attorney file a motion for a JNOV, while other states allow a judge to issue a JNOV sua sponte, which is Latin for “of its own accord.”  A JNOV can set aside an entire verdict, or just parts of a verdict.  Here’s a good example of how a JNOV could correct an improper jury verdict:

In many states, if a jury finds that the conduct of a defendant in a lawsuit was “knowing” and/or “intentional”, the court must double or triple the amount of a jury verdict.  Let’s assume that in a medical malpractice case, a doctor made an honest mistake.  Maybe he transposed the numbers in a prescription, and the plaintiff ended up taking too much medication.  But, for whatever reason, the jury found that this honest mistake was intentional, and awarded $10,000 dollars.  Because the doctor’s conduct was found by the jury to be intentional, the judge would have to award the plaintiff $30,000 dollars.  However, if the evidence was very convincing that this was an honest mistake, a JNOV could eliminate the finding of the jury that the doctor’s conduct was intentional, and the plaintiff would be awarded only the $10,000 dollar jury verdict.

Directed verdicts and JNOV’s are two mechanisms that judges have available to prevent juries from awarding damages when they should not, and to reduce jury verdicts that are clearly excessive.   One example of verdict reduction occurred in Stella Liebeck’s famous lawsuit against McDonald’s.  In that case, the judge reduced the jury award from over $2 million dollars to $480,000 dollars.  Of course, tort reformers don’t tell the public about the many ways judges can reduce or ignore improper jury verdicts.  Tort reformers aren’t as concerned about reducing large jury verdicts as they are about the bad press that accompanies the verdicts.  In fact, most large jury verdicts are paid for at least in part by insurance policies!

Settling After a Decision:

In many cases, such as the famed McDonald’s coffee case, the plaintiffs in a lawsuit will settle the case for less than they were awarded.  In the McDonalds case, Stella Liebeck was awarded $2.7 million dollars, and the judge reduced the award to $480,000.  Stella settled with McDonalds for a confidential amount less than $480,000.

Plaintiffs and plaintiff’s attorneys are often motivated to settle because a settlement means they won’t have to go through a lengthy and potentially risky appeals process.  This is where big companies have the advantage over individual plaintiffs: A major corporation can afford to spend time and money to drag a case out for years, while plaintiffs and their attorneys more often can’t afford to wait.  Remember, the plaintiff’s attorney may have $50,000 of his or her money invested in the case, and may need it back sooner rather than later.  Settlements are extremely common, and are yet another way that even justified large jury verdicts are reduced.

Appealing The Decision:

The majority of cases where a jury awards millions of dollars are appealed, and many times, those verdicts are reduced or overturned on appeal.  For example, one appellate court reduced a $505 million dollar verdict down to $19 million dollars – a $486 million dollar reduction.  For the record, this case wasn’t a personal injury case.  It was an intellectual property case where one big corporation sued another.  That’s another secret tort reformers don’t want to get out: Businesses sue each other far more often than they are sued by individuals.

While some verdicts are reduced, others are overturned entirely by appellate courts.  It’s important to realize that the judges in appellate courts aren’t overly emotional jurors, but are seasoned judges who place far more weight upon the legal issues in a case then on the emotional issues.  As such, incredibly large jury verdicts are rarely upheld by the many appellate courts in our country.  In fact, the United States Supreme Court decided a series of cases that guides appellate courts to determine whether a jury award is so large as to be unconstitutional.

Despite what tort reformers claim, large jury verdicts are the exception, and not the rule.  When juries do return large verdicts, the plaintiffs usually settle for less than verdict or see the verdict reduced or overturned by an appellate court.

Our justice system is a system of checks and balances.  Before someone can even bring a case, they have to convince an attorney that their case is worth gambling time and money on.  The contingent-fee agreement weeds out countless cases that have no merit.  Once an attorney accepts the case, a judge will most likely scrutinize the facts and law applicable to the case through a summary judgment.  If the judge decides that the case has merit, then the case will be presented to an impartial jury of twelve men and women.  If those twelve men and women are convinced that the plaintiff has proven his or her case, the jury will then rule in favor of the plaintiff, and award compensation for the plaintiff’s injuries.  The judge has an opportunity to modify, reduce, or set aside the jury’s verdict.  Then, the defendant has an opportunity to appeal his case to higher courts, and even more experienced judges can then modify, reduce, or set aside a jury’s verdict.

The burden of proof in any case is always on the plaintiff, which means the deck is stacked in favor of the defendants.  Multimillion-dollar jury verdicts rarely survive the appeals process.  Yet tort reformers continue to argue that we need more barriers to file lawsuits, and statutory limitations on how much money can be awarded in the lawsuits that are filed.  The reason is that the big corporations who push for tort reform don’t want the bad press and public scrutiny that accompanies trials where people are severely injured or killed.  Instead, they prefer to enter into confidential settlements that the public never knows about.

Tort reform isn’t about fixing a “broken” justice system; it’s about protecting the public image and bottom lines of the biggest and most powerful companies in the world.  Tort reform isn’t about protecting doctors from high insurance rates; it’s about protecting their insurers from having to pay large judgments.  Tort reform isn’t about keeping “greedy lawyers” from filing frivolous lawsuits; it’s about keeping those who are severely injured out of the court system and away from the public eye.


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