America loves to sue!
There are over one hundred million lawsuits currently pending in the United States, and it is estimated that a new lawsuit is filed every thirty seconds. It is now routine for judgments to be in the millions, and the cost to defend yourself, even against a frivolous lawsuit, can cost $50,000 or more. With the number of lawsuits and the size of judgments on the rise, it is vital to have your professional and personal assets structured for lawsuit protection and prevention.
To protect our individual rights, there needs to be a legal system that holds people responsible for their actions when they cause injury to another. Not many people would object to this idea. However, in the current system, few cases result in the application of this principle. Many jurors have freely admitted that they have overlooked whether the defendant was at fault if they feel sorry for the plaintiff. Judges and juries often play Robin Hood to give money to a sympathetic plaintiff. In today’s litigious environment, you can do everything right and still lose a lawsuit.
Understanding the Theory of Liability
All too often, people are named as defendants in a lawsuit because of their ability to pay, not because of fault or error. Most lawsuits are done on a contingency basis, so one of the first things an attorney does before accepting a case is an asset search to see if the defendant would be worth pursuing. If the person immediately responsible for the loss or injury does not have the ability to pay, the attorney will search for a deep-pocketed defendant and a theory of liability that can be developed against him or her. In this search, the right candidate will have substantial personal/business assets available for seizure and/or significant insurance coverage.
The success of the trial attorney is dependent upon his or her ability to find a defendant (or defendants) who can pay and then construct a theory of liability, showing why that defendant should be held responsible. Trial attorneys make up one of the largest lobbyist groups in the country and have created laws to increase the level of vicarious liability. Vicarious liability means you can be held responsible for the actions of others. Trial attorneys have worked hard to ensure that whoever has the money can be held responsible for negative outcomes through vicarious liability, even if they committed no wrong.
A Surplus of Attorneys
There are nearly one million attorneys in America, and 100,000 new attorneys graduate from law school each year. There are not enough good cases to support this workforce of attorneys; in order to stay in business, they have to find people with assets to sue. An attorney for an injured party will attempt to show that the person with assets is legally responsible to pay damages even though they have no direct connection to the injury or loss. If you have assets that can be seized through a judgment, you are a potential target for these trial attorneys. Many attorneys will even pursue a bad case if they can find a defendant with the ability to pay. They hope that they can obtain a settlement or convince the jury to award cash to the injured, needy plaintiff from the comparatively wealthy defendant. A good trial attorney can often win over a jury with emotion, irrational arguments, and false information.
A study was done to determine how effective people were in distinguishing a witness that was telling the truth from a witness that was telling a lie. The majority of the time the subjects in the experiment identified the truth as a lie and the lie as the truth. This study has significant implication to the court room. Based on these findings, there is greater probability of the jury believing a lie than believing the truth. Every day we see trial attorneys winning cases that appear to be irrational, absurd, and without merit.
Attorneys know that even if you fight a case and win in court, you still lose because it will cost you thousands of dollars in legal fees to defend yourself. The trial will cost time and cause mental and emotional strain. Your privacy and reputation can be damaged, and the uncertainty of the outcome can result in a high degree of stress and anxiety.
An attorney can exploit all of these factors when he sues you. The attorney knows that you may be willing to settle the case—even if the case holds no merit—just to have it behind you. If you have available and reachable assets, the attorney knows he has leverage to get you to settle. Many attorneys make a living collecting settlement after settlement from innocent defendants (victims). This is what we call legal extortion. If you have available and reachable assets, it is not a matter of if you will be sued, but when.
Next Topic: "The Right Legal Structure"