A company should never need to shut down because it can’t afford to defend itself. If this happens, it means our governing framework has seriously failed somewhere, and we should focus on fixing it.
Not really a vote-winner, but that’s no excuse.
I have personally been sued frivolously. After 6 months of stress during which the plaintiff decided to fire a lawyer and started to harass my attorney and expect them to spend time explaining the law (time for which I eventually was billed), we decided to settle. The plaintiff was supposed to pay me $6000, but decided to reduce that amount to roughly half. I just didn't have any energy to go to small claims court arguing that she still owed me the rest of it.
Had their initial lawyer been on the hook for a frivolous lawsuit, the whole thing would probably have never happened. Rather than getting all of the info, they were more than happy to only get one side of the story (truncated email threads, not preparing them to answer to a discovery packet and so on) and to get their money, only to find a way to bailed once they realized it was not going to be worth it.
Another thing that I found absurd is the fact that "reasonable attorney fee" doesn't seem to cover more than half the reasonable fees. My lawyer suggested filing motions to compel and/or motions for sanctions, but also warned me that it would cost me more than what the judge would award me for the fees. And of course, nothing for my time...
If my elderly grandfather goes to a doctor and says “here’s $100k please chop of my leg because I want to” the doctor won’t do that. If they did they may lose their license.
Seems like similar issues would exist for a company saying “here’s $1M please file lawsuits to block a company’s funding rounds.”
While it’s legally allowed, it seems like professional ethics should prevent it.
Of course it’s really hard to show what’s spurious.
Sure, the same way you get the teachers union to help fire bad teachers or the police union to punish bad apple officers.
Which is to say: not gonna happen.
I’m trying to think of an incentive to counteract the viscious cycle of frivolous lawsuits providing benefits for “good” lawyers. I think it’s hard to fix a problem if the problem makes money for the good guys.
So optimally good lawyers wouldn’t make money but wouldn’t want to avoid defending people against these suits. Maybe the Bar can have all firms contribute time from their best performers to serve and not bill, but I can expect that frivolous lawsuits aren’t apparent until after the suit is complete.
Onus is really on the clients bringing the suit. Anti-SLAPP laws have at least been somewhat effective on an individual level in states that enacted them, so laws can disincentivize client intentions in some cases at least. I have no idea what would actually work in the case at hand though.
The inability to defend yourself without deep pockets is terrifying.
The problem is that they need more funding t operate and no-one will touch them with the litigation hanging over them.
So the issue isn't so much the cost of litigating. It's the potential cost of losing.
Additionally, the firm will likely farm out more of the work on to paralegals, private investigators, forensic accountants etc. to get around the cap wherever possible.
That being said, I suspect the absence of "loser-pays-costs" does make things worse in the USA. This mitigates most of the potential downside to litigation, capping your exposure to a known (controllable) quantity.
But even then, it's still a huge problem in Commonwealth countries. I'm more interested to know if it's less of an issue in civil law jurisdictions like Germany.
As others have noted loser-pays doesn’t provide any protection. The problem is that lawyers write the rules for the system they operate in (either directly as legislators or indirectly through fundraising, influence, and lobbyists). Regardless of the outcome of a case the lawyers arguing it are fine. I wonder what would happen if you suddenly made the lawyers somehow financially vested in civil suits too and strengthen scenarios where lawyers become financially liable (ie bad faith arguments, shenanigans by lawyers that might be de facto legal but are judged to be bad faith, etc).