I attended a seminar at which John Ladenburg, the Pierce County Executive and candidate for Washington Attorney General, spoke and gleaned some statistics that I thought I’d share. We often hear about the crippling burden of litigation and the extravagant liability that businesses and government are exposed to.
Most governmental entities insure against litigation expenses and awards but Pierce County decided to cancel its policy and self-insure. In the course of doing this Pierce county kept careful track of its litigation and related expenses. The results are surprising.
From 2001 through 2007 Pierce County was involved in a total of seven trials and binding arbitrations. One each year on average. The County won all the trials and lost two of the three arbtrations. That’s two adverse results in seven years.
To sue the government a person must first file a claim. These claims are investigated and the County reports its decision on the claim to the claimant. About half of the claims are paid because they are meritorious, although usually payment is for less than the amount asked.
The half which are not paid, after receiving the explanation from the County, usually drop their claims. Only about roughly three to six percent of the claims result in lawsuits in Pierce County. Once filed, the vast majority the lawsuits against Pierce County are dismissed or settled.
This procedure in which the people’s claims are treated respectfully and a fair settlement is sought from the beginning has resulted in cutting amounts paid in the settlement of claims almost in half over the seven year period. This approach has saved the County a great deal of money.
Mr. Ladenburg’s impression is that high jury awards and huge litigation expenses are not the result of frivolous claims by litigation-crazed citizens, but a result of the aggressively adversarial treatment of people with claims. By refusing reasonable claims and settlement offers, governmental (and other) entities add to the burden on the courts and increase their own risks.
If you have ever been in a lawsuit with a big corporation or governmental entity, chances are that you perceived a refusal to entertain a settlement offer you thought was reasonable and a strategy that drove up the cost of the litigation. The strategy of some “deep pocket defendants” and their insurance companies is to make the litigation prohibitively burdensome and expensive, so people cannot see it to conclusion.
Mr. Ladenburg’s statistics suggest that plaintiffs are generally reasonable and those who are not reasonable meet with an appropriate fate in court. Corporations (governmental and private) that are aggressively litigious must bear a significant share of the responsibility for the caseload imposed on our courts.