Saturday, July 24, 2004

The trouble with lawyers...

This came from a post on one of my favorite message boards - - about a lawsuit where a drunk hit a couple, and the couple is suing the gas station that sold him the gas, and the oil company. A link to the original message is here.

from "Hound"
You can't "toss out" a "BS" lawsuit until its legally determined to be BS, which necessitates a court case, Unc.

PS: Butch, loser pays is a great idea when you have a level playing field. But when its some Giant corporation with 20 lawyers on staff against the guy who burned up in a F*rd Pinto, it ain't exactly a fair fight is it?

*shakes head* I really don't want to get into an overtly political arguement here, but sometimes that's exactly what needs to happen. To tell you the truth Hound, you sound like a trial lawyer - who are really the only group that believes that we don't need any reform in our legal system. The system is set up such that it encourages lawsuits to be filed, which keep trial lawyers rich, but serve to cost the rest of the nation money. Allow me to explain albeit a bit simplistically...

In the current legal system we have for civil cases - note this does not include criminal cases which are an entirely different subject - what is required to win a case is not "proof beyond a reasonable doubt", but simply "a preponderance of evidence". This simply means that he who has the best evidence and convince a jury that they are more right than the other side wins. This was fine in older times, but in modern times, a few new inventions have greatly skewed this process - namely TV.

What has happened is that someone who feels "victimized" can file a lawsuit against any other party, regardless of how remotely they are connected to the actual case. In the example that started this message, the two plaintiffs are suing the gas station and the oil company. Forget that the driver of the other car was drunk, he doesn't have enough money, so they sue someone who has more money, and who can afford to pay them for their pain and suffering. With the advent of TV, these companies do not want to be associated with a terrible accident on the nightly news, as it may lead to a decrease in revenues due to the bad press. So the companies settle out of court, giving the "victim" something to make the case go away, irregardless of whether they were at fault or not. They view the bad press as costing them far more than they would have to pay to the victims, and the cost of the lawyers that would have to defend them. It makes economic sense to pay up and keep the case out of court.

Where the problem comes up is when you get greedy victims - or as is usually the case, greedy victim's lawyers. Why settle for $500,000 when you think you can get $2,000,000? They play a little hardball, threatening to take the case of the poor victims to the local TV station, which they know - and the company knows - will cost the company far more money than the $2,000,000. But this isn't justice - it's extortion. Cases like this get press because of how ridiculous the idea of someone suing the gas station and the gas company because they supplied gas to the drunk who hit thier car.

But here's the dirty little secret - companies don't pay legal fines - the people who buy their products pay the fines. Comapnies are in business to make money. If, for example, someone sues GM and wins $10,000,000 in a case, GM isn't going to just take the hit. They're going to raise the price of new vehicles to cover the cost. In GM's case, that means about $2 per new vehicle sold for the next year to pay that legal bill. It gets really big when you realize that some recent jury awards have gone over $750,000,000 - about $100 per car sold. Same thing goes when someone sues McDonalds because they spilled their coffee. Someone wins $8,000,000, McDonalds raises the price of Big Mac's. They aren't in business to lose money. In the end, we the consumers pay the bill. The most recent estimates I've seen are that close to 35% of all costs we pay for goods and services are directly the result of legal actions. The examples are everywhere - just look at the AirBag warning stickers on the visor of your Av - they're there as part of a lawsuit settlement in which some idiot thought that they didn't need to wear a seatbelt because they had airbags.

What changing the legal system to a "loser pays" system like most of the rest of the world would do is to eliminate the ridiculous lawsuits. If you still have a valid case that a lawyer thinks they can win, they'll still take it to court. But if you have to pay for both sets of lawyers, you had better have a REALLY strong case, or else you're going to get stuck with some really big bills. It would virtually eliminate the ridiculous cases like the McDonalds coffee case, and people suing the gas station and gas company for a drunk driver hitting them. It wouldn't stop the cases like the exploding pintos, because the victims would likely have a VERY solid case against the company, and any number of lawyers would line up to get in on that gravy train.

I could go on and on about this subject as it has caused me considerable grief and a lot of extra design cost due to ridiculous court cases. But I'll stop here for tonight as I'm getting tired, and this message is already plenty long enough. Let's just say that I really hate frivolous lawsuits...

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