America the Litigious

Posted July 13, 2010 in Uncategorized by

Much is made of the fact that Americans are litigious, or happy to sue at the drop of a hat. But are we really that litigious? And if so, why?

A 2005 study showed 3.3 lawsuits are filed each year for every 1,000 people. In comparison, in England only 1.2 lawsuits are filed annually for every 1,000 people.

Why File a Lawsuit?

I’d argue there are three reasons why Americans file lawsuits more frequently than citizens of other countries:

  • We have access to courts: Small claims courts, in particular, lower the barrier to filing a lawsuit. You don’t need a lawyer and you don’t need much money to file a lawsuit.
  • We don’t have a "loser pays" system: Many countries have what is known as a "loser pays" legal system. In other words, the party that loses a lawsuit is forced to pay the winner’s legal expenses. Arguably, the “loser pays” system discourages frivolous or nuisance lawsuits.
  • We’ve created a culture that views justice as entertainment: "Gunsmoke," "The People’s Court," "Law & Order" and "Judge Judy." Americans enjoy legal-focused entertainment, whether it’s reality shows about civil courts or fictional shows about the criminal justice system. Generations of people have grown up learning about the legal system.

Why Not File a Lawsuit?

Remember that statistic about 3.3 lawsuits filed for every 1,000 Americans? Let’s look at it another way: Most Americans aren’t filing lawsuits and will never file a lawsuit in their lifetime.

If you’re like me, you’ve probably considered filing a civil suit at some point in your life. Personally, I had a landlord that refused to return a security deposit to me, despite the fact that I was entitled to its return. But life is a series of decisions and compromises. In my case, the landlord owed me a couple hundred dollars. I knew that it would cost me several hundred dollars to file the lawsuit, plus time off work. I also knew that even if I won – which I fully expected – there was no guarantee that the landlord would actually pay me, or it might have required a lot of effort to enforce the judgment. (After all, the landlord’s reluctance to pay was the reason I was contemplating a lawsuit in the first place.) Ultimately I decided that it just wasn’t worth the hassle of filing a lawsuit. After all, my time is worth money and a lawsuit would require a lot of time.

I suspect that many people think like me. We appreciate having the option to file a lawsuit even if we never take advantage of the opportunity.

In researching this article, I came across a blog post called "BP Spill: How Litigious Yanks Hurt UK Pensioners." The basic premise: BP’s dividends account for a huge share of all corporate dividends in the United Kingdom. "Pensioners" (the British term for retirees) are the ones who really suffer from the BP oil spill and the company’s announcement – at President Obama’s insistence – that it will cut corporate dividends until the full cost of the spill is known. The author notes: "Ultimately, pensioners whose funds hold many BP shares and rely on dividends from them are the real victims of US litigation lust (or so they say)."

I read author’s comments and suddenly it crystalized the issue in my mind. Hundreds of thousands (millions?) of American people are suffering as a result of the BP oil spill. Jobs lost, businesses destroyed and real estate devalued. The damage to the wildlife and the environment is incalculable. I’m sorry that some think British pensioners are the real victims of the BP oil spill, but thank goodness that Americans have the right to sue.

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