Tag Archives: File a claim

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

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