Although there are many other compelling reasons to use online dispute resolution rather than small claims court, one of the most significant is the cost savings. Even when attorneys are not used, there are simply more costs associated with trying to resolve your dispute in small claims court. It should be noted, however, that it is extremely difficult to provide an accurate cost of going to court since many costs depend on the actions and decisions of the other party and the judge. It also depends on how “cost” is defined. It should be noted that rules and procedures vary by State and specific jurisdiction where your case is heard.
Filing Fees
To file a suit in small claims court, you will need to pay a filing fee. The amount varies from about $15 to $200 depending on the State as well as the amount being claimed.
Attorney’s Fees
Some States do not allow attorneys in small claims court. However, since there are some complicated procedures and technical rules that could cause problems for your case if not followed correctly, to give yourself the best chance of winning, you might want to consult with an attorney. For a decent attorney you can expect to pay at least $250 per hour and often much more. Assuming a 2 hour consult, that is at least $500.
Your Time
As the saying goes: time is money. Filling out all the forms correctly, reading, and understanding and following the rules and procedures, often takes longer than one would expect. One example is the requirement in most jurisdictions that your signature be notarized – typically by a lawyer, a court clerk, or a licensed Notary. Assuming you value your time at an average of $40 per hour, the following is how much your time alone will cost, disregarding all other hard costs:
| Event |
Time Required |
Cost |
| Filing Suit (travel to court to file suit and for trial, waiting in line, filling out forms, signing forms in front of a notary) |
10 hours |
$400 |
| Supporting Your Case (collecting evidence, finding witnesses, serving defendant) |
4 hours |
$160 |
| Attorney Consultation |
2 hours |
$80 |
| Reviewing claim closer to trial (since the trial will be months after the incident and months after you filed the claim you won’t remember the details) |
3 hours |
$120 |
| Attending Trial (You’re not given a specific time – you’re given a window of time where you must be in court waiting for your case to be heard) |
4 hours |
$160 |
| TOTAL |
23 hours |
$920 |
These costs above do not include the extra time you will have to spend if the defendant does not show up in court and later asks for the case to be re-opened and heard, or does show up and asks for an adjournment to a later date. In some jurisdictions there also is a mandatory pre-trial hearing where you have to meet with a representative of the court to discuss your case and see if there is a way to settle it before trial.
Time Off Work
In most cases you will have to attend court during the work week, both to file the initial paperwork, and to attend trial, and possibly a pre-trial hearing. So you will need to take some time off work on two or three days. This could be anywhere from 5 to 10 hours. Assuming an average hourly wage of $40, that is between $200 and $400 of lost wages.
Formal Notices
When you file suit, the defendant must be given formal notice in writing that you are suing them. In most States, you will have to bear this cost which could be upwards of $30 to $100 for a courier or licensed process server.
Total Cost of Small Claims Court
Based on the above assumptions and depending on your circumstances and how you value your time, taking your case to small claims court could cost anywhere from $100 to $2,000 if you represent yourself in court. If you want to be represented by an attorney you can add on at least another $2,000 since it is unlikely an attorney will take on a case for less given the responsibilities and liabilities.
Other Possible Costs and Points of Note
There are other possible costs – they are not standard, but circumstances may require them. For instance, since written witness statements are typically not allowed in small claims court, if you need the testimony of a witness you will have to convince the witness to attend the trial and pay them a small fee for doing so. In some jurisdictions there is also the slight possibility that if the defendant loses, the judge may grant an appeal to the defendant which means another attendance in court for you. The other party may also bring a motion for one reason or another that may require you to attend court again at a later date.
Most people expect that if they go to court their case will be heard in front of a judge, but that is not often the case for small claims court. Often small claims cases are heard and decided by Magistrates who are lawyers appointed by the Court, or possibly by a clerk who are not required to have a law degree. It should also be noted that small claims judgments are public information and could appear on your credit report, affecting your credit rating.
Cost of Online Arbitration
The cost of arbitration is generally broken down into three categories:
- The cost of the arbitral institution’s fees;
- The fees and expenses of the arbitrator; and
- The party’s direct costs. These include costs of legal representation, the costs of any experts, and the costs of any out of pocket expenses.
Costs vary widely for online arbitration depending on which arbitral institution is chosen to administer the arbitration, which arbitrator is chosen to decide the case and whether the party wants to be represented by an attorney. Arbitral institutions typically charge between $30 and several hundred dollars to file a small claims case. The parties also typically have to split the cost of the arbitrator’s time which can vary anywhere between $100 to $500 per hour depending on the complexity of the case and whom the parties choose.
eQuibbly is different. There is no charge to file a case, nor to use the platform. So if you have someone who is willing to arbitrate your case for free, such as a mutually acceptable neutral third-party, you can arbitrate your dispute completely free on eQuibbly. Of course, if you wish, you can also hire an independent arbitrator on eQuibbly – fees range from $50 per party per hour to $275 per party per hour, with some offering a flat fee of about $250 per party. These fees are paid directly to the arbitrator, not to eQuibbly.
You won’t have to spend time travelling back and forth to court multiple times, waiting for your turn to file documents with the clerk or waiting to be heard, or learning complicated rules and procedures. Nor will you risk time spent on an appeal. There’s also no need to pay attorney’s fees since decisions are based on what is fair given the facts, not on technical laws and procedures that are often difficult to learn.
So although it is very difficult to quantify costs, generally speaking, in most circumstances online dispute resolution will be a more cost-effective way to resolve disputes than going to small claims court. In any event, it is definitely a lot more convenient.
Sources:
http://www.dca.ca.gov/publications/small_claims
http://consumer-law.lawyers.com/US-Small-Claims-Court/Small-Claims-Court-In-Your-State.html
http://www.jud.ct.gov/faq/smallclaims.html
http://www.courts.state.ny.us/ithaca/city/webpageguidetosmallclaims.html
