Grading Our Justice System, Part 1: Are lawsuits out of control?

You’ve heard the phrase “certain things come with the territory.”  That’s as true for lawyers as anyone else.  Besides hearing every lawyer joke that comes along (both bad and hilarious), lawyers routinely hear complaints about how the system is broken, lawsuits are out of control, fraudsters make out like bandits, and honest folks pay the price in higher premiums.  We hear all these things from family, friends, and neighbors.  But what is most interesting is when we hear it from our clients.  They have heard all these lines and yet now they find they need a lawyer.  Many clients understandably are defensive about it, saying things like “we’re not the type to sue” or “we’re not trying to get rich.” 

So, we’re going to throw some light on these topics over the coming months, and pepper in some half-decent lawyer jokes too, because the numbers can get pretty dry and boring by themselves.  Are lawsuits out of control?  Well, every lawsuit is tracked by the federal and state court systems, so there is plenty of data to examine the question.  What about ‘runaway’ juries?  Verdicts are tracked, too, so ‘runaway juries’ can be spotted.  Although fraudsters have existed since before the Pyramids, we have more tools than ever to identify them and “brand” them to prevent repeated offenses.  What about how all this affects your insurance premiums?  For that we have to train our focus on insurance industry profits.  Insurance companies failing to turn a profit would be a very big, very yellow “canary in the coal mine” of our system.  Of course, if Progressive or State Farm was failing to turn a profit, we wouldn’t see their corporate fingerprints all over our ballparks, racing cars, and constantly on our screens.

Other related topics, such as the now-24-year-old McDonald’s coffee case will be included.  Finally, we encourage questions and comments through our website at

This issue’s topic:  Are lawsuits out of control?  In recent decades the Ohio Supreme Court has kept ever-greater records on lawsuits in our state; the total number, type, length, and disposition (for example – actually went to trial, was dismissed, settled, etc.). This is all found in an annual report, which takes a lot of work to put together. Ohio has 129 municipal courts, 35 county courts, 303 mayor’s courts, 88 Courts of Common Pleas, and one Court of Claims. (2014 Ohio Courts Statistical Summary, p. 5) These 556 courts collectively are our “trial courts,” in which new cases are brought.  (The Court of Appeals and Supreme Court do not typically hear “new” cases.)

From the most recent report (released Fall 2015):  

“In 2014, a total of 3,167,967 incoming cases were reported across Ohio’s courts, the fewest in the last 10 years, and 2.6 percent fewer than 2013.… the general divisions of the courts of common pleas experienced the largest decline, at 5.5 percent over 2013.”

When people talk to us about the system being out of control, they are of course referring to car crashes, slip-and-falls, and suits against doctors or hospitals.  The vast majority of these cases; over 99%, are filed in our Courts of Common Pleas and are assigned to the General Division.  This is also where banks file their foreclosure cases, neighbors file suit over fencelines, businesses sue each other for breach of contract, and other, yes, “general” litigation.  Yet all of this, from foreclosures to car crashes, accounts for just 5-7% of lawsuits in Ohio (6.6% was the figure in 2014). By far the biggest slice of litigation in Ohio is in the municipal and county courts, which hear most of the state’s traffic cases and small claims matters.  Their share of the activity in last year’s report was almost 79%.  Criminal matters, divorces, juvenile cases, probate, and a few other categories make up the rest. 

To measure the general division, we have to be mindful of foreclosure cases, which surged following the Great Recession in 2008 but which have now run their course.  (In fact, foreclosure filings are significantly below even their pre-Recession levels.)  But if we use a 10-year window and go back to 2005, before the foreclosure surge, and compare it to the most recent year, lawsuits in the general division are down 22%. There is a 16% decline when looking at all categories together, so car crashes and the like are down even more than other types of filings.  So, no: lawsuits are not spiraling out of control and are actually down significantly.

Auto Insurance 101

All automobile insurance policies start out by declaring that the insurance company will pay damages if you become legally liable as a result of a motor vehicle collision. All the pages that follow that initial statement list the insurance company exceptions and exclusions. If driver A rear ends driver B, driver A, under tort law, is legally responsible to driver B. Driver A’s insurance company has no legal liability, under tort law, to driver B. Driver A’s insurance company’s legal obligation is to their insured, driver A, under contract law. Under tort law, driver A is responsible to driver B for damages driver A caused.

Driver A’s insurance company who wrote the policy that says we will pay all damages you are legally liable for could simply wait until driver B sues driver A, a jury returns a verdict and a judgment is rendered for a dollar amount. Then driver A’s insurance company could simply write a check. That would fulfill their legal obligation under their policy.

So why don’t insurance companies do that? They have found in time that it is much more cost effective for them to control the claim process from the onset of the collision. So when driver A rear ends driver B, driver A’s insurance company is going to contact driver B and attempt to control the claim process. Driver A’s insurance company’s goal is to keep the claim value as low as possible. Clients often mistake this distinction and believe that they are not being treated properly by the other driver’s insurance company and that their claim is against the other driver’s insurance company. It is not. The claim is against the other driver. If a lawsuit is filed in court, the lawsuit will identify the case as driver B versus driver A. The insurance company who is the 800 pound gorilla in the matter and the driving force behind the conflict is not even mentioned in the lawsuit. The insurance industry has been proactive to make sure the evidentiary rules that apply in court exclude any reference or discussion or mention of insurance in the case in front of the jury. Insurance companies do not want the jury to realize that an insurance company is behind driver A or that the insurance company is the driving force for why this case is in court.