There is a lawsuit crisis in America.
Some states are far worse than others. For example, California is rated as the #1 state in the nation for frivolous lawsuits.
The lawsuits often come from the lawyers who search and advertise for clients to file suits.
I did a quick survey of 100 billboard ads from lawsuit firms in California and Tennessee. California: over 80% of the billboards are soliciting new lawsuits for employment, accidents, discriminatory work issues, and more. Tennessee: about 20% are for lawyers for lawsuits.
These lawyers charge no upfront legal fees. But, they take outrageous percentages of court awards.
Frivolous lawsuits come not only from legal lawsuit firms, but also from private individuals filing lawsuits.
For example, Andres Gomez is a 34-year-old Miami man who has filed more than 600 disability compliance lawsuits in Florida and California since 2015. In his lawsuits, he alleges business websites are incompatible with his screen reading software, which he uses to navigate the web.
My business was in California, and every year I paid over $100,000 to settle frivolous lawsuits out of court.
In Tennessee where the office has moved – nothing.
The difference?
The laws and regulations in California and many other states make frivolous lawsuits easy and lucrative for lawyers, disgruntled or fired employees, and anyone wanting to make a quick buck.
California law specifically allows for rampant abuse of the Americans with Disabilities Act (ADA) and a lesser-known statute, the Private Attorneys General Act (PAGA).
The PAGA legislation allows private attorneys to fileclass-action lawsuits against businesses on behalf of a group or class of employees.
Predatory trial lawyers comb through more than 800 pages of California’s labor code, looking for unintentional violations which will cost the employer $100 per employee per pay period during which the violation occurred.
Abuse of PAGA and ADA by attorneys seeking a quick profit leads to harmful consequences that hurt not only small businesses, but consumers as well, by:
- Clogging the state court system, preventing judges from focusing on legitimate trials
- Costing small businesses millions of dollars in out-of-court settlements
- Raising prices for consumers as businesses try to make up for frivolous lawsuit payouts
Up until the early 1970s, when two UCLA law school graduates held an open house in a Van Nuys strip mall to announce the opening of their new personal injury law firm, it was actually illegal for lawyers to advertise.
The California bar association attempted to sanction them, but the two young lawyers took the case to the California Supreme Court and won, arguing that preventing them from advertising violated their First Amendment rights.
In 1977, the U.S. Supreme Court – in a separate case – agreed.
So here we are, 45 years later – trial lawyer firms encouraging employees to file frivolous class-action lawsuits against their employers for labor code violations that neither employees or employers knew were violations.
The attorneys typically receive 35% of any out-of-court settlement in a class-action or individual lawsuit. The state and the mediator receive 2% each, with the remaining 61% being divided among the group filing the suit.
Sixty-one percent may sound like a large payout to the group filing a lawsuit, but not if the group is large.
Here’s just one example that was front page news 5 years ago…
In 2017, a U.S. District Court judge approved a $7.5 million settlement between Uber and a class of former drivers. The drivers each received $1.08. The lawyers received $2.3 million.
This is a typical case – the attorneys are getting rich while everyone else is suffering.
What do you think? Email me at craig@craighuey.com.
Read another article here: Frivolous Lawsuit Abuse – Destroying Small Businesses And Jobs