You’ve been sued
The word that most non-US businesspeople fear when discussing the US is “lawsuit.” It’s certainly true that the US system is different than most, for three primary reasons:
1. The loser doesn’t pay. That’s right, if someone sues you and costs you money, you still have to pay your own legal fees. That’s expensive enough if you’re in Poughkeepsie, but if you’re in Nagasaki or Naples it can be a pretty big deal. Not only doesn’t the loser always pay the winner’s fees, they may not even pay their own fees if the case is taken on contingency. That means that the plaintiff’s lawyer only collects fees if he or she wins the case, further lowering the risk for a plaintiff.
2. The discovery process. This is incomprehensible to many within the US, to say nothing of those outside it, but a plaintiff (the person suing) can ask the defendant (the party they’ve sued) for information and documents, and can even demand interviews with the defendant’s employees. Even worse, discovery can be demanded of third parties who have nothing to do with the case. In most countries you need to have the evidence before you bring a lawsuit, but not in the US.
3. Awards can be astronomical. Thanks in part to juries and punitive damages, damages in US courts can far exceed those in most other countries.
Now, it’s true that the US can be a scary place to do business, but it’s a big market, and there is some solace to those of you who are thinking of testing the waters. The formation and proper maintenance of a corporate entity can reduce the risk of liability to the parent company significantly in most cases, as can distribution of product through third-party distributors. Also, many types of commercial cases are not likely candidates for for contingency fees, and others can be settled or disposed of once the other party realizes the defendant is actually prepared to go to court.
Finally, many of those humungous awards you read about in the paper are subsequently reduced or eliminated altogether. For example, one of the most famous cases involved an elderly woman who sued McDonald’s over a spilt cup of coffee and won $2.9 million. What you likely didn’t read is that the award was significantly reduced (to less than $500,000) by an appellate court, and that there were a host of facts (many of which were obtained during discovery) which resulted in the verdict in the first place. Now, that’s still a lot of money for spilt coffee, and the system has its flaws. The important point is that there are checks and balances in the US system, and most business survive lawsuits quite nicely, thank you very much.
image from arstechnica.com
Related Stories
POSTED IN: Doing biz in the US
0 opinions for You’ve been sued
No one has left a comment yet. You know what this means, right? You could be first!
Have an opinion? Leave a comment: