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Cost of Small Claims Court vs. Online Arbitration

9 Apr

Going to court is expensive and not at all fun

There is a common misconception that using small claims court is an easy, quick and cheap way of resolving a dispute. The reality is that it is not easy, nor quick, nor cheap.

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, both the plaintiff and the defendant will need to pay a filing fee. The amount varies from about $15 to $200 depending on the jurisdiction as well as the dollar value being claimed. The plaintiff pays to file the statement of claim and the defendant pays to file the statement of defense.

Attorney’s Fees

Some jurisdictions do not allow attorneys in small claims court. Even so, since failure to adhere to the court’s complicated procedures and technical rules could leave one at a disadvantage, to have the best chance of winning, consulting with an attorney beforehand would be prudent. For a decent attorney you should expect to pay at least $250 per hour and often more. Assuming a two-hour consult, that is at least $500.

Your Time

Time is money. Reading and understanding the rules and procedures, and completing all the forms correctly, often takes longer than one might expect. One example is the requirement in most jurisdictions that certain documents be notarized or signed in front of a person authorized to take oaths and affirmations—typically a lawyer, a court clerk, or a licensed Notary. Assuming you value your time at $40 per hour, disregarding all other out-of-pocket expenses, the cost of your time alone can be seen below:

 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 take in to consideration the additional time that will be required if the defendant does not show up in court on the scheduled day and later asks the court to re-open the case for trial. Nor if the defendant does show up but asks for an adjournment to a later date. In some jurisdictions there also is a mandatory pre-trial hearing or mediation where the parties must meet with a representative of the court to discuss the case and determine whether the issue can be settled without a trial.

Time Off Work

In most instances it will be necessary to attend court during the work week, both to file the initial paperwork and for the trial, and possibly to attend a pre-trial hearing. This requires time off work on two or three days–this could be anywhere from five hours to ten hours. Assuming an hourly wage of $40, that is between $200 and $400 of lost wages.

Formal Notices

When a lawsuit is filed, the defendant must be given formal notice in writing that they are being sued along with all the paperwork and supporting evidence. In most jurisdictions, the plaintiff 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 assumptions above and depending on the circumstances and the value a person places on their time, litigating a case in small claims court could cost anywhere from $100 to $2,000, if that person is self-represented. If an attorney is retained, it will probably cost at least $2,000 more since it is unlikely an attorney would accept a case for less given the responsibilities and liabilities.

Other Possible Costs and Points of Note

There are other possible costs. They are not typical, but circumstances may dictate they be incurred. For instance, since written witness statements are not usually acceptable in court, if the testimony of a witness is needed, he or she will have to attend the trial and their expenses and a small fee will have to be paid. The other party may also bring a ‘motion’ for one reason or another that may require another day in court at a later time. In some jurisdictions there is also the slight possibility that at the end of the trial the judge may grant the defendant an appeal which would mean another attendance in court for both parties. It should also be noted that small claims judgments are public information and could appear on your credit report, affecting your credit rating.

 

eQuibbly offers an alternative to small claims court litigation. eQuibbly offers a simple, private, and cost-effective way for individuals and companies to resolve disputes without the aggravation and expense of litigating in small claims court. A former trial Judge will conduct an arbitration online and after hearing the case, hand down a legally-binding decision that is enforceable in a court of law.

 

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

New Report on Access to Justice Finds Much Fault with Our Justice System

23 Jan

Access to Justice ReportIn 2008 the Chief Justice of Canada, The Right Honourable Beverley McLachlin, P.C., convened an Action Committee on Access to Justice. The Action Committee recently released its final report that proposes a profound shift in the way courts, lawyers and litigants operate. Many of the recommendations are applicable to the justice system in the United States.

Here are some highlights of the report:

The cost of civil and family matters varies significantly. Nationally, costs of litigation based on legal fees are recently reported to be $13,561 – $37,229 for a civil action up to and including 2-day trial, $23,083 – $79,750 for a civil action up to and including a 5-day trial, $38,296 – $124,574 for a civil action up to and including a 7-day trial, and $12,333 – $36,750 for a civil action appeal.

Nearly 35% of the population will experience at least 1 legal problem in a given 3 year period. Few will have the resources to solve them. Of those who do not seek legal assistance, recent reports indicate that between 42% and 90% identified cost — or at least perceived cost — as the reason for not doing so.

According to one recent American study, as much as 70%- 90% of legal needs in society go unmet. There is a major gap between what legal services cost and what the vast majority of people can afford. Most people earn too much money to qualify for legal aid, but too little to afford the legal services necessary to meaningfully address any significant legal problem.

The civil and family justice system is too complex, too slow and too expensive. It is too often incapable of producing just outcomes that are proportional to the problems brought to it or reflective of the needs of the people it is meant to serve.

The full report can be found on the Canadian Forum on Civil Justice’s website.

EXCITING CHANGES ARE COMING SOON TO EQUIBBLY TO HELP YOU RESOLVE YOUR DISPUTES

16 Jan

STAY TUNED !

Coming  Soon

Courts in Crisis – Long Lines and Ridiculous Delays

6 Jan

NBC - Courts in CrisisThis NBC video explains how dire the situation has become in some courts where budget cuts have led to layoffs resulting in long lines to file court document and even longer backlogs. Although this report focuses on California courts, the situation in most other states is similar. Judges worry that the problem could get worse, delaying and possibly even denying justice for many.

An NBC Investigative Unit has found that thousands of Californians must wait up to four times as long as normal to have their day in court. Some residents now wait five years or longer to have their civil complaints heard by a judge.

Presiding Judge Robert Foiles said that backlogs have reached a crisis point in many courts. This affects tens of thousands of people including those who need to file a small claim, get a divorce or settle a landlord tenant dispute.

http://www.nbcbayarea.com/news/local/California-Superior-Courts-in-Crisis-216668081.html

Chief Justice Roberts Comments on the State of the Federal Judiciary

2 Jan

Chief Justice John G. Roberts Jr. wrote this week in his 2013 year-end report on the state of the federal judiciary that the budget cuts that went into effect in March reduced judiciary funding by 5 percent, or nearly $350 million. The Chief Justice said that these reductions have created widespread delays in civil and bankruptcy cases and over time these delays will give rise to “commercial uncertainty, lost opportunities and unvindicated rights.”

The full story can be read in the New York Times online.

Median Costs of Litigation by Case Type

17 Dec

The National Center for State Courts released a study this year estimating the litigation costs of various types of civil cases in the U.S.. The model used to estimate costs relied on survey results from attorneys of the time expended to resolve typical types of disputes litigated and their billing rates. The graph below presents the median costs of litigation by case type in the U.S.:

Median Costs of Litigation by Case Type

Median Costs of Litigation by Case Type by the National Center for State Courts 2013

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