"There's no such thing as a frivolous lawsuit."
I couldn't believe my ears when I heard a classmate say this at my last high school reunion. This particular classmate had spent his adult years as a trial lawyer. He made his very comfortable multi-million dollar living suing physicians.
Ever since, I've made a hobby out of collecting the most insane, outrageous, or simply silly lawsuits I can find -- just to prove this statement wrong. And, despite the "tort reform" efforts in many states, I add to my "collection" of stupid lawsuits almost daily.
One recent study estimates that 50,000 new lawsuits are filed every day in U.S. state and federal courts. At that rate, the odds are that every one of the more than 300 million residents of the United States will be sued sometime in the next 16 1/2 years!
No more frivolous lawsuits? Consider this: a study published in March, 2007, entitled "Jackpot Justice," estimates that lawsuits cost the U.S. economy US$865 billion annually. This figure represents a yearly "lawsuit tax" of US$9,827 for a family of four.
To put this figure in perspective, the average American household pays more annually in 'lawsuit taxes' than in federal income taxes!
Why Lawsuit Taxes are So High in the U.S.
Unlike most other countries, U.S. lawyers can take cases on contingency. That means attorneys receive no fees unless money is recovered from the defendant. As a result, there's very little to prevent individuals with a chip on their shoulder from suing you --even if they don't have the money to hire an attorney.
For an attorney to take a case, he or she just has to believe there's a good chance that the case will be settled in their favor. And most importantly, the attorney must ensure you're "worth" suing -- meaning you have sufficient assets to collect.
To encourage even more lawsuits, companies have now been formed to invest in selected personal injury lawsuits by buying a share of the settlement. A recent search on Google revealed a total of 1.6 million hits under the term "lawsuit funding."
No more frivolous lawsuits? Well, like I said, I collect lawsuit stories the way that other people collect stamps or coins. Here are a few of my favorites:
A Montana man named "Jack Ass" sued media giant Viacom, saying the MTV show Jackass plagiarized his name, infringed on the trademark and copyright to his name and defamed his good character. Sounds as if the name accurately reflects his character...
A judge in Washington, D.C. named Roy Pearson is suing a dry cleaning serving for US$67 million for losing a pair of pants. The ABC News Law & Justice Unit has calculated that for that amount of money, Pearson could buy 84,115 new pairs of pants at the US$800 value he placed on the missing trousers in court documents.
Naturally, these examples are just the tip of the iceberg. You've surely heard of the woman who sued McDonald's for serving her hot coffee, which she spilled on herself. But you may not have heard about the sue-happy high school baton twirlers, who were cut from the majorettes program at their high school. These baton hopefuls are now suing the coach, the athletic director and the high school principal, for violating their civil rights.
So the question is: Could you be the target of such a jackass lawsuit?
It's hard to say. But I can tell you high income individuals are prime targets, especially those who display their wealth openly are often subject to unwanted litigation. Also, professionals -- doctors, lawyers, engineers, etc. -- are also frequent targets. Disputes among relatives also often lead to unwanted litigation, particularly after the death of a wealthy family member.
You Feel Exposed Now? Just Wait Until You Get Sued!
If you're sued, any information that's revealed about you during the legal process is usually a matter of public record. That means information that was once private is now available over the Internet to private investigators, tax authorities and anyone else who's curious and has some free time on their hands.
And throughout the judicial process, a plaintiff (the person suing) can use a subpoena to obtain your books, records and other documents. That includes your records held by accountants, banks, brokers, etc.
This process is called discovery. If you refuse to cooperate, the court can compel discovery with fines and even arrest. If you lie, and are later found out, you may be charged with perjury, a criminal offense. You may not refuse to answer the questions, unless there is a possibility of criminal prosecution.
Six Remedies to Protect Your Wealth and Privacyfrom Stupid Lawsuits
1. My top lawsuit remedy is to keep your mouth shut, especially among people you don't get along with.
2. Never make promises you can't keep.
3. Avoid people you don't get along with, remembering rules #1 and #2 while you're doing so.
The most important element of this game plan is to make yourself look like an unattractive lawsuit target. Here are a few ideas:
4. Avoid having too much equity in your home, unless you live in a state with an unlimited homestead exemption, or if the equity in your home doesn't exceed whatever homestead limit is in effect. Real property owned in your own name is a "sitting duck" if you lose a lawsuit!
5. Use offshore business entities -- especially limited liability companies -- to hold title to business assets, brokerage accounts, etc. LLCs aren't asset protection panaceas, but are far more resilient against lawsuits than holdings in your own name.
6. Keep a prudent amount of money offshore, in countries like Switzerland and Liechtenstein that are unfriendly to frivolous litigation. Contracts such as life insurance, annuities and asset protection trusts are particularly well protected.
Even with these precautions, you may not be immune from attacks by the "Jack Asses" of the world. But you will have come a long way in the right direction!
I couldn't believe my ears when I heard a classmate say this at my last high school reunion. This particular classmate had spent his adult years as a trial lawyer. He made his very comfortable multi-million dollar living suing physicians.
Ever since, I've made a hobby out of collecting the most insane, outrageous, or simply silly lawsuits I can find -- just to prove this statement wrong. And, despite the "tort reform" efforts in many states, I add to my "collection" of stupid lawsuits almost daily.
One recent study estimates that 50,000 new lawsuits are filed every day in U.S. state and federal courts. At that rate, the odds are that every one of the more than 300 million residents of the United States will be sued sometime in the next 16 1/2 years!
No more frivolous lawsuits? Consider this: a study published in March, 2007, entitled "Jackpot Justice," estimates that lawsuits cost the U.S. economy US$865 billion annually. This figure represents a yearly "lawsuit tax" of US$9,827 for a family of four.
To put this figure in perspective, the average American household pays more annually in 'lawsuit taxes' than in federal income taxes!
Why Lawsuit Taxes are So High in the U.S.
Unlike most other countries, U.S. lawyers can take cases on contingency. That means attorneys receive no fees unless money is recovered from the defendant. As a result, there's very little to prevent individuals with a chip on their shoulder from suing you --even if they don't have the money to hire an attorney.
For an attorney to take a case, he or she just has to believe there's a good chance that the case will be settled in their favor. And most importantly, the attorney must ensure you're "worth" suing -- meaning you have sufficient assets to collect.
To encourage even more lawsuits, companies have now been formed to invest in selected personal injury lawsuits by buying a share of the settlement. A recent search on Google revealed a total of 1.6 million hits under the term "lawsuit funding."
No more frivolous lawsuits? Well, like I said, I collect lawsuit stories the way that other people collect stamps or coins. Here are a few of my favorites:
A Montana man named "Jack Ass" sued media giant Viacom, saying the MTV show Jackass plagiarized his name, infringed on the trademark and copyright to his name and defamed his good character. Sounds as if the name accurately reflects his character...
A judge in Washington, D.C. named Roy Pearson is suing a dry cleaning serving for US$67 million for losing a pair of pants. The ABC News Law & Justice Unit has calculated that for that amount of money, Pearson could buy 84,115 new pairs of pants at the US$800 value he placed on the missing trousers in court documents.
Naturally, these examples are just the tip of the iceberg. You've surely heard of the woman who sued McDonald's for serving her hot coffee, which she spilled on herself. But you may not have heard about the sue-happy high school baton twirlers, who were cut from the majorettes program at their high school. These baton hopefuls are now suing the coach, the athletic director and the high school principal, for violating their civil rights.
So the question is: Could you be the target of such a jackass lawsuit?
It's hard to say. But I can tell you high income individuals are prime targets, especially those who display their wealth openly are often subject to unwanted litigation. Also, professionals -- doctors, lawyers, engineers, etc. -- are also frequent targets. Disputes among relatives also often lead to unwanted litigation, particularly after the death of a wealthy family member.
You Feel Exposed Now? Just Wait Until You Get Sued!
If you're sued, any information that's revealed about you during the legal process is usually a matter of public record. That means information that was once private is now available over the Internet to private investigators, tax authorities and anyone else who's curious and has some free time on their hands.
And throughout the judicial process, a plaintiff (the person suing) can use a subpoena to obtain your books, records and other documents. That includes your records held by accountants, banks, brokers, etc.
This process is called discovery. If you refuse to cooperate, the court can compel discovery with fines and even arrest. If you lie, and are later found out, you may be charged with perjury, a criminal offense. You may not refuse to answer the questions, unless there is a possibility of criminal prosecution.
Six Remedies to Protect Your Wealth and Privacyfrom Stupid Lawsuits
1. My top lawsuit remedy is to keep your mouth shut, especially among people you don't get along with.
2. Never make promises you can't keep.
3. Avoid people you don't get along with, remembering rules #1 and #2 while you're doing so.
The most important element of this game plan is to make yourself look like an unattractive lawsuit target. Here are a few ideas:
4. Avoid having too much equity in your home, unless you live in a state with an unlimited homestead exemption, or if the equity in your home doesn't exceed whatever homestead limit is in effect. Real property owned in your own name is a "sitting duck" if you lose a lawsuit!
5. Use offshore business entities -- especially limited liability companies -- to hold title to business assets, brokerage accounts, etc. LLCs aren't asset protection panaceas, but are far more resilient against lawsuits than holdings in your own name.
6. Keep a prudent amount of money offshore, in countries like Switzerland and Liechtenstein that are unfriendly to frivolous litigation. Contracts such as life insurance, annuities and asset protection trusts are particularly well protected.
Even with these precautions, you may not be immune from attacks by the "Jack Asses" of the world. But you will have come a long way in the right direction!
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