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It is no secret that some attorneys will initiate litigation of a weak case hoping that the defendant will settle instead of risking a trial. This is a very calculated move. Understanding the calculation and how privacy can affect the formula in your favor, can help lower the risk and cost of marginal litigation and stop frivolous lawsuits.
Most plaintiff’s attorneys will take a case on contingency. That means that they will not get paid unless the case is a winner, and they will only get paid a percentage of the judgment. If a law firm is going to stay in business, they need to make sure they don’t spend their time pursuing claims that will not recover as much as their costs to litigate.
Most successful attorneys will evaluate a case using the following formula:
Liability x Damages x Recovery > Cost.
As long as the left hand side of the equation is greater than the estimated cost of litigation, there might be some attorney willing to take the case. To stop frivolous lawsuits, the cost of the frivolous lawsuit needs to be greater than the other side of the equation.
Cost will be different depending on each firm. The higher the left side is relative to the cost, the more likely it is that there will be a lawsuit. Many things could affect the cost of a case, from the size of the law firm taking the case to the difficulty of the subject matter being litigated. Since you really have no control over the “Cost” side of the equation, the best way to stop frivolous lawsuits is to focus on reducing the “Liability x Damages x Recovery” side.
“Liability” represents how easy it is to show that someone is at fault. The more clear the liability, the more accurately the outcome of a trial can be predicted.
A case where the liability is very clear would be where a drunk driver drives onto the sidewalk and injures an old lady in front of a dozen people. The driver has clearly violated a bunch of laws, gone way beyond any type of acceptable behavior and there were plenty of witnesses. Fault is very clear.
A case where liability might be less clear is if a man was hit on the head by a pebble while fishing at a quiet pond. He thought he saw a woman tossing rocks into the pond earlier, but there was nobody else in the area. Although he had a small bump and bruise, he did not take any pictures of the injury and did not seek medical care. It would be very hard for anyone to prove liability in a case with such little evidence.
Damages are the amount of money that can be recovered in a lawsuit. Damages often include the medical costs, lost wages, costs to fix or replace damaged property, pain and suffering, among other things. Thus, the worse the injury the higher the damages.
In some cases there might be punitive damages involved. Punitive damages are available when harm is done intentionally or recklessly. Those damages can depend on the financial condition of the defendant.
If the drunk driver is found liable, she will be required to pay for the injuries she caused. She may be subject to punitive damages if she was intentionally trying to run someone over or was extremely intoxicated. If the rick thrower is found liable, she will probably only pay nominal damages for the insult of hitting a poor old man on the head, even if it was intentional.
Privacy is unlikely to be of any benefit to a person who finds themselves at the ugly end of a punitive damages claim. In these cases, the defendant is required to disclose their assets, no matter how well those assets are buried in the back yard. Failing to disclose something that should have been disclosed would be perjury.
Even if there is clear liability, and even if the damages are very high, possibly including punitive damages, a key factor is the ability to recover from the defendant. If the person has no ability to pay a judgment, it is worthless to bring an expensive suit. Not being able to pay a judgment is often referred to as being judgment proof.
All attorneys will look at these factors when evaluating the strength of a case. If some factors are exceptionally high, the other factors do not need to be as high for a lawsuit to be worth it. For example, if damages are very high and the potential defendant has plenty of means to pay a judgment, they can be a target for claims where liability is marginal.
Privacy Can Stop Frivolous Lawsuits
Privacy can affect the perception of the ability to recover any judgment. As a result, the liability and/or damages will generally need to be much more clear for a case to be worth it. Before deciding whether to take a case, many attorneys will investigate potential defendants. They might look at the public records for their assets, send investigators to look at their home address, or find out what kind of job they have to see if the “Recovery” factor is high or low. If the potential defendant appears not to have much to their name, an attorney might pass on bringing a marginal claim against them.
If you feel like you might be a target because people are aware that your ability to pay a judgment is high it might be worth it to use a ghost address to protect your true home. It might be worth it to own real estate in the name of a trust or private business entity. Protecting your privacy might help you avoid court costs and attorneys fees to defend or settle marginal litigation and can help stop frivolous lawsuits.