You are far better off just not engaging with sketchy people than trying to use lawsuits to get your way. For the average citizen, suing people is just out of the question.
In many online forums, I read about someone getting ripped off, and like clockwork, someone else will chime in, "Well, you should hire a lawyer and sue them!" as if this was a simple matter of a few phone calls. You never have to worry about getting ripped-off in America, as our legions of lawyers are ready and waiting to sue on your behalf, get all your money back and all at no cost to you!
Well, reality is a little different than that. In fact a lot different. Let me explain the process and maybe you'll understand why relying on lawsuits is an illusory remedy. You are far better off just not engaging with shady characters and shady businesses, because civil law likely won't protect you. Hell, even criminal law hardly protects you!
Say you get scammed out of some money. $1 or $1M it makes no difference, other than the jurisdiction you can sue in, and whether a lawyer will take your case. As we shall see, only the largest cases are worth pursuing, so if you lose, say, $10,000 in some scam, you likely will never see that money again and can't afford to sue. But saying you do want to sue, what do you do?
1. Find a Lawyer: This seems like an easy one - after all, they advertise on billboards just like TGI Fridays! All you have to do is call up and they get your money back! Well, maybe not. The lawyers on billboards are personal injury attorneys, and they are interested in suing deep pockets, such as trucking companies and insurance companies. And as I noted in another posting, these sorts of lawyers will take these auto-accident and slip-and-fall cases and settle for pitiful amounts - often less than what the insurance company would have offered you, and often years and years later. They are not likely to take your investment scam case.
And the best of lawyers don't advertise on billboards, and the best of lawyers will likely try to talk you out of suing, unless you really have a case. The worst lawyers will eagerly take your case - and your money. Which leads us to....
2. Pay a Retainer: Most "I'm going to sue!" people stop the process right here. They lost thousands of dollars in some scam or whatever, and then find out the lawyer wants $10,000 in a retainer just to start the process. I talked with one Estate Attorney and she wanted ten grand up front, plus the right to charge my credit card - open-ended - as the work progressed, always keeping that ten grand on account. As you might imagine, I took a pass. Attorneys don't work cheap, and they are under pressure to bill, bill, bill (and doctors are too, sadly) so they have a financial interest divergent from your own. As one young lawyer I used to know would quip: The Attorney-Client Relationship is itself a conflict of interest.
3. File Suit: Now supposing you found a lawyer who will take the case (and he isn't a crook who is going to victimize you further) and you came up with the retainer money, now we need to file suit. Preparing the papers isn't that hard - broad allegations are all that is necessary at this point. But you have to figure out who to sue and where. You have to hope the company that screwed you is located in the United States, and hopefully near you. Trying to sue overseas is next to impossible (and scales up the litigation costs by a factor of 2-5). Foreign courts are prejudiced in favor of their own citizens - act shocked. So you have to hope you can find these scam artists in the US and sue them in a friendly, nearby venue. Good luck with that. Scam artists are smart, and often locate overseas, and failing that locate their assets overseas, which we will address later.
4. Pre-Trial Phase: Assuming you have passed the previous hurdles, found the people, served them, and have your lawsuit pending, now you have to be prepared to wait - years and years. Civil matters are low priority to overburdened and overworked courts. Particularly money matters - judges expect you to settle these types of cases before trial. So rapid justice isn't in the cards. Besides, there is a lot of work to be done - all of which you will be billed for. There is the discovery phase - document requests, requests for admissions, deposition of witnesses, and hiring of expert witnesses, if necessary. All of this takes hours and hours and is all billable - to you. That ten grand retainer was just the initiation fee. There's a lot more to spend!
Of course, the opposition has to respond to all of this - and they will, with their own document requests, request for admissions, depositions, and so forth. It becomes a race-to-the-bottom, with each side inflicting financial damage on the other in the form of legal bills. It often is like those games of poker, where the guy with the losing hand can "win" simply by outbidding his opponent until he folds. And guess what? You are the guy with far fewer chips on the table. Your opponent (who stole your money and is paying his lawyer with it) can afford to bleed you to death.
Then there is pre-trial motion practice - filing of motion after motion with the court. You have to respond to each one, otherwise the case is lost. And you may lose the case at this stage if the judge grants a motion to dismiss. Nothing is assured.
5. Trial: Now assuming you have passed all these daunting hurdles, and haven't gone broke in the process, you might actually get to trial, several years after filing suit - and several hundred thousand dollars, in some cases, depending on the complexity of the case. At a minimum, you've spent fifty grand to get this far. In Patent litigation, we could bill that in a week or two. So you see the problem right there - if you lost, say, $10,000 to a scam artist, it isn't worth spending $100,000 in legal fees to get it back. And trial is just starting! You'd better be ready to pony up just as much again for the trial phase.
The opponent has a right to a jury trial, and they likely will claim it, as jurors have an average 8th-grade education and are easy to sway. So now you have to hire a jury expert and voir dire the jury. If the con was complicated and difficult to explain to the jury, chances are, you will lose. You will spend all your time with expert witnesses and trails of boring paper, trying to explain to sleepy jurors that you were scammed out of your money. Meanwhile, the handsome and persuasive CEO of WeConCo will take the stand and charm the jury. Hey, he charmed you at one time, right?
You have a 50/50 chance of winning, at best. And you may not win much, either. The jury might award you less money than you spent on legal fees, rendering then entire process moot - or a loss for you.
6. Enforcing Judgment: Once you win at trial, (which is highly unlikely, given the cost and odds) you need to enforce your judgment. You won a million dollars! Whoo-Wee! Time to cash in! But where? The con artist isn't going to smile and write you a check. He is going to make you work for it. So you have to track down his assets - houses, cars, bank accounts - and start seizing them. Even if you have someone in the country - like O.J. Simpson - it is hard to collect from them if you obtained a judgment. It is all-too-easy to hide assets. Or they may in fact be broke.
For an off-shore operation or a con artist who keeps his money off-shore, it is next to impossible. He may have a million-dollar mansion on the coast of Florida, but that is protected by the State's homestead act - you can't attach it! Again, O.J. If you want to attach foreign bank accounts, you'd have to go to court in that country - spending tons more money - and it is highly unlikely that country would allow you to attach the bank account (and by then, the money has flown off to somewhere else).
It is damn hard to enforce a judgment against sketchy characters. Big American Corporations with lots of assets? Sure. Now you know why the lawyers-on-billboards want to sue big trucking companies and insurance companies. They don't want to take your case if you are hit by an illegal immigrant in a stolen, uninsured car. Damn little money in that!
7. Appeal Process: And this is assuming the defendant doesn't appeal. If he does, well, you have to pay your lawyer even more money. And odds are, whatever you won at trial will be reduced on appeal. Oh, and by the way, you might have to wait a year or more for that decision to come down, and you can't go after the defendant's assets in the meantime. And if the defendant loses on appeal, he can appeal to an even higher court. It can take years - more than a decade even - for some lawsuits to be fully resolved.
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Now after reading all that, you may wonder, why do we have a legal system at all? And the answer is, the system is there to police our society, not to make it even-Steven. In criminal matters, the Police solve a minority of cases - particularly property crimes. Even in murder cases, if you don't count the cases where the perpetrator was a family member or was caught a the scene of the crime, holding the bloody knife, declaring, "I dunnit!" the success rate in solving cases is very low - despite what you saw on C.S.I. - that's television not real life. We have a criminal law system to catch as many as we can and also deter crime. It is, by its nature - not perfect.
The high cost, complexity, and time needed to litigate cases acts as a filter to filter out smaller matters that really are not worth the court's time. In Federal cases, for example, in order to obtain jurisdiction, you must allege a minimum amount of damages ($75,000 or so). The courts aren't interested in the ten grand you lost to an Invention broker or a Nigerian scammer. You should have known better is what they are saying.
It is like when you got your bike stolen. The policeman shows up and asks you if you locked it. And you say, "No, I didn't" and he says, "Well, you really shouldn't leave your bike in a sketchy part of town unlocked!" which you could say is blaming the victim or just common sense. The same is true with being scammed, which is why you have to use your own skepticism as your first line of defense and not "I'm going to sue!" as your last. Because the scam artists will laugh when you say that - they know the score.
But what about small claims court? Yea, I wrote about that before as well. It is kind of a cruel joke for a number of reasons. Odds are, you will lose there, or if you win, you will still have to collect. And if the defendant doesn't cheerfully hand you a check, odds are it will be difficult for you to attach his assets.
Again, the law is a last line of defense, not your back-stop for everyday financial transactions. The best defense is a good offense. And that is to say, be skeptical about people who promise something-for-nothing, and for any transaction that goes beyond handing someone money and them handing you goods at the exact same time.
The figurine above is from the desk of one of my law professors, John Banzhaf. He became sort of famous or infamous, depending on your point of view, with his cry of "sue the bastards!" He taught a litigation course that at one time required students to sue someone as part of the class. This was viewed as a bit unseemly, as a lawsuit should not be some sort of lark for students to get a grade - after all, there are people on the other end of these lawsuits.
When I was at GW, one student sued a local dry cleaner for charging more to launder women's shirts than men's shirts. It is an odd thing, but many laundries charged more to clean women's clothing - don't ask me why. Some claim there are technical reasons for this. Others claim it is just plain gender discrimination. Whatever the cause, the unfortunate small businessman on the receiving end of a student's school project had to hire a lawyer and pay them (see steps #1 and #2 above - the process for being sued is about the same as suing only worse).
The student, on the other hand, had all the free time in the world to prepare and file papers and of course had nothing to lose if they lost. Yes, we have something called Rule 11 sanctions for frivolous lawsuits - they are rarely, if ever, enforced. So the poor dry cleaner settled for some token amount of money and, well, the student got an "A" and today many laundries and cleaners still charge more to clean women's clothes than men's. I am not sure that accomplished much, but it did garner some headlines. And yes, some jurisdictions have passed laws against shirt cleaning gender price discrimination - such as in California (big shocker). But it is not the law of the land.
So while a lawsuit may provide temporary and emotional gratification, it hardly makes one whole or solves the world's problems. Class-action suits are even more toothless - being merely a vehicle for lawyers to enrich themselves at the expense of their clients. Hmmm.... come to think of it, I guess all lawsuits are about that way.
Like my friend said, "The Attorney-Client relationship is itself, a conflict of interest!"
UPDATE: The only positive thing about this is, if you run into someone who says, "Well, sue the bastards!" over some trivial matter, you can be sure you are dealing with a real loser. He probably also believes in the 100-mpg carburetor and other conspiracy theories - and has a justice boner a mile long. But more about him in my next posting.
UPDATE: The only positive thing about this is, if you run into someone who says, "Well, sue the bastards!" over some trivial matter, you can be sure you are dealing with a real loser. He probably also believes in the 100-mpg carburetor and other conspiracy theories - and has a justice boner a mile long. But more about him in my next posting.
