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The Societal Problem of Frivolous Litigation

by JRO on March 7, 2013

Frivolous lawsuits impact society as a negative reality of contemporary times. Frivolous lawsuits are claims with no merit that are filed for the specific purpose of obtaining a judgment. There has been a lot of discussion about how best to address this issue that forces innocent defendants into the court system for no good reason. Other unfavorable consequences include driving prices of products and services up, clogging the court system, forcing insurance rates higher, rewarding unscrupulous attorneys and plaintiffs, and impeding the quality of medical care.

Certain areas of law are more prone to attract frivolous lawsuits. Medical malpractice is criticized for the number of unnecessary legal actions pursued. Medical doctors constantly complain about the cost of medical malpractice insurance, with some leaving the profession as a result.

While medical malpractice represents one major concern, frivolous lawsuits abound in all specialty areas. There are direct and indirect costs associated with this problem.

Direct Costs

Obvious direct costs incurred in these unnecessary lawsuits include both human and capital expenditures. Investigation and filing costs start the process. Then there are legal defense costs that need to be added to the total. Complex cases can cost defendants hundreds of thousands of dollars, even when there is no legitimate basis for the case to go to court.

Indirect Costs

While the direct costs of frivolous litigation are substantial, the indirect costs are even more troubling. Inflated pricing is one of the indirect costs associated with operating a business in a highly litigious business climate. Whether business management keeps a lawyer on retainer or has an in-house legal staff, companies are paying attorneys to keep them out of court, or worse, to defend them when necessary. As is true with variable costs, they get added to the cost of doing business. These costs are then passed along to the customer via higher product and service pricing.

Another soft cost worthy of discussion is that an overloaded court system delays the processing of lawsuits filed by plaintiffs with a legitimate complaint. Recognizing this, attorneys often try to stay out of court in favor of an expedient resolution. Even plaintiffs that want to get their day in court will often drop a charge because they don’t have the patience or money to deal with the court system. Unfortunately, criminals and people intent on getting away with breaking the law also realize the shortcomings of the system and how likely it is they will get away with their actions.

Insurance costs rise across the board to cover court awards. All consumers pay for frivolous lawsuits designed to extort money from sometimes-innocent victims. And medical malpractice and business insurance keep rising to cover these costs.

Solutions to the Problem

There are several obvious recommendations for deterring attorneys and plaintiffs from filing frivolous cases. Imposing penalties against attorneys or plaintiffs found to be guilty of unnecessary litigation is one suggestion for curbing these lawsuits. The fines would have to be significant to make an impact on greedy attorneys intent on exploiting the system for gain.

Another suggestion is to implement a point system, essentially keeping score of each attorney’s number of frivolous lawsuits. If attorneys with too many points had to answer to the Bar, possibly losing their license, then frivolous lawsuits would probably become a thing of the past. Rewarding overly aggressive attorneys with fees by settling cases out of court only encourages this bad behavior.

The court system is full of lawsuits unworthy of attention. Currently, the law requires that attorneys conduct an investigation to determine if there is any basis for filing a lawsuit. Unfortunately, this preventive measure has not kept frivolous lawsuits from overwhelming the courts.

Byline

Brian Spiro writes on Personal Injury, Intellectual Property, Banking, Financial Regulation, International Business, Contracts and other related topics.

JRO

JRO

JRO

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