Rising Lawsuit Costs Linked to Decrease in Tort Filings

An analysis of state court data by the Wall Street Journal challenges the notion that Americans are overly litigious and raises questions about prohibitive litigation costs.

According to WSJ, tort lawsuit filings (lawsuits for civil wrongs) declined more than 80% from 1993 to 2015. One of the main factors cited for the decline in tort filings is the high cost of bringing suits. Data from the National Center for State Courts shows that the median cost of civil cases is $43,000 – $122,000.

As lawsuit costs rise, clients are demanding hourly billing alternatives such as contingency-fee.

High lawsuit costs speak to another litigation trend: more clients saying they want some form of alternative fee arrangement such as contingency-fee litigation. But even as clients demand that law firms move away from the inefficient hourly billing model, most firms continue to use non-hourly billing on a very limited basis.

The Business Trial Group handles all lawsuits on a contingency-fee basis. We never charge hourly fees, and we charge no fees at all unless we make a recovery for our clients.

Receive a free review of your case and learn more about the benefits of contingency-fee business litigation during a free case review.

The High Cost of Justice

In “We Won’t See You in Court,” the Wall Street Journal describes a “nationwide ebb in lawsuits” that contradicts the perception of Americans flooding the courts with claims.

WSJ’s analysis of data from the National Center for State Courts (NCSC) finds that tort cases declined from 16% of state court civil filings in 1993 to about 4% of filings in 2015—a difference of more than 1.7 million cases.

“People are just not filing cases like they used to. It’s so expensive and time-consuming.”

But there was one notable exception to this downward trend. From 1993 to 2015 contract cases—which includes debt collection, foreclosure, landlord-tenant disputes, employment contracts, contracts for goods and services, and real estate transactions—increased from 18% of the civil docket to 51%.

Among the reasons cited in the article for the overall decrease in tort filings are pro-business tort reform efforts and the rising cost of filing lawsuits.

Judge Gregory Mize of the District of Columbia District Court is quoted as saying that, “People are just not filing cases like they used to. They are not seeking trials like they used to. It’s so expensive and time-consuming.”

NCSC data on civil litigation costs confirms that justice is not cheap. In its study “Estimating the Cost of Civil Litigation” NCSC modeled the cost of civil cases using the time expended by attorneys to resolve typical torts, including professional malpractice, breach of contract, employment disputes, and real property disputes. Hourly billing rates reported by attorneys (which ranged from $150 – $600 per hour) were used along with attorney time expenditures to calculate civil litigation costs.

Importantly, NCSC found that, “for all case types, a trial is the single most time-intensive stage of litigation, encompassing between one-third and one-half of total litigation time in cases that progress all the way through trial.”

In many cases, a plaintiff can recover the full value of their claim only by going to trial. Opposing counsel is well aware of this, which is why they often try to reach a pretrial settlement or drag the case on as long as possible and drive up litigation costs to the point where the plaintiff—unable to continue paying a lawyer—is forced to accept a settlement.

These tactics, however, rely on the plaintiff paying high hourly attorney fees. They do not work when the plaintiff hires the Business Trial Group on a contingency-fee basis.

Legal Clients Demanding More Alternative Fee Arrangements

Legal consulting firm Altman Weil, Inc. performed a survey in 2015 that found “more and more clients are saying they want some form of alternative fee arrangements…but most law firms still don’t approach AFAs proactively.”

While more than 93 percent of firms surveyed reported using some non-hourly based billing, more than half of the firms generated 1 to 10 percent of their fees from non-hourly billing. And 68% of firms offered AFAs only in response to client requests.

These trends are corroborated by a 2015 Claims Litigation Management Advisors study in which sixty-seven percent of litigation executives polled anticipated no change in the use of AFAs over the next five years.

The contingency-fee model aligns the interests of attorney and client and creates a shared goal.

A well-known problem with the hourly attorney fee model is that it can reward inefficiency and create a misalignment between the interests of attorneys and those of their clients. The contingency-fee model, on the other hand, aligns the interests of attorney and client and creates a shared goal for the case—maximizing the recovery.

The Business Trial Group’s contingency-fee model makes hiring experienced and knowledgeable corporate attorneys affordable for clients large and small. When you hire us to handle your business dispute, you pay only for results. And if we do not achieve a successful outcome, you pay us nothing.

In the face of rising commercial litigation costs, contingency-fee business attorneys are a way to ensure that anyone with a meritorious claim can obtain justice.

The Business Trial Group has offices throughout Florida, including Orlando, Tampa, West Palm Beach, Fort Lauderdale, Jacksonville, and Fort Myers. For a free review of your claim, contact our attorneys today.