Monday, March 28, 2011

The World That The American Torts System Produces

I was at a museum today that has a garden section. I was going to walk around the garden with a friend of mine, but near the entrance a guide stopped us and said that the garden was closed. My friend (who is Swiss) asked why. The man explained that there had been heavy rain, and the path was slippery and some parts were muddy. Hence, we were not allowed to go down there. From where we were standing, the path looked bone dry, although you could see a few small pools of water a few hundred metres away.

Almost certainly they did this because of potential liability on their part. Almost certainly they actually needed a man there to make sure you didn't go down, because a sign warning visitors may not have been sufficient to protect themselves.

I come from a family of lawyers that dates back at least two generations before me. So rest assured that I harbour no instinctive anti-lawyer animus.

And yet I found myself wondering what plaintiffs' trial lawyers in the US felt like when they tried to visit the garden and were turned away. Did they burn with shame and embarrassment at the system they have helped create? Did they reflect on the fact that this kind of enforced stupidity is the result of fostering a system where every careless action by some moron results in a 6-figure negligence claim against someone with little to no actual responsibility?

Or have they become so divorced from everyday opinion that they look at this and think "Good - there's a chance someone might have slipped over if the whole garden weren't closed today."

That one even I cannot believe. I'm sure the trial lawyers in the crowd were as annoyed as anybody else.

And yet I'm sure 99 out of 100 of them would not make the connection that seems obvious to everyone else in the common law world - this is exactly what happens when you refuse to allow a loser-pays legal system in civil matters. In the US, when you successfully defend yourself against a lawsuit, you win the booby prize of paying thousands of dollars in legal fees. In theory, the plaintiff pays their own fees too, except that a lot of the time plaintiffs are charged on contingency, meaning no win = no fees.

So the incentives are as follows:

-If you sue someone, your payoffs are zero if you lose, and positive if you win.

-If you get sued, your payoffs are negative if you win, and even more negative if you lose.

Are you starting to see why people are so eager to sue in the US?

Are you starting to see why if you're a defendant in a baseless case that the plaintiff is willing to settle for 10 grand, and it would cost you 20 grand to defend even if you win, why you'll tend to settle?

Are you starting to see how the fact that people are willing to settle increases the chances that people will file baseless claims in the first place?

In a better world, people that filed frivolous lawsuits against other people when they slipped over on their property would be considered as social pariahs. They would be shunned by polite society, and viewed as the reprehensible blackmail artists that they are. 

The role of the lawyers themselves is a little more murky. They will correctly argue that they didn't set the system up this way. That's just how the law is.

Which is fine. 

Except when they donate to the Association of Trial Lawyers of America, who continually donate huge amounts of money  to the democrats, to keep the current system in place. Then they lose the ability to hide behind this defence.

In which case, celebrate! We now live in a world of somewhat reduced chances that people will fall over on a slippery surface, and what a glorious world it is too.


  1. Reminds me of this, in the current Wired mag:

  2. That sounds about right. It's why they put the ridiculous warning label about the clapping even though they won the lawsuit, to discourage other lawyers from trying (since they'd already lost plenty of money by that point even though they won).