Almost everyone should be less afraid of lawsuits

But the total value of medical malpractice claims is around $5 billion per year in the US

You shouldn't compare things to the current cost of medical malpractice claims, you should compare it to the counterfactual cost where people did less to avoid lawsuits.

The person suing will have to give up a lot. Instead of playing games or taking a vacation or putting in extra hours at work, they will have to do legal research and give testimony.

Only true for a poor person. A rich person merely throws some money at their lawyer, tells them to make the target's life a hell within this budget's constraints, and returns to playing games at the vacation.

People are so irrationally intimidated by lawyers that some legal firms make all their money by sending out thousands of scary form letters demanding payment for bullshit transgressions.  My company was threatened with thousands of frivolous lawsuits but only actually sued once. 

Threats are cheap.

I think this raises a lot of good points, that the thesis is overall quite possible, but the post underestimates the costs of being sued. 

• You imply the cap on damages is essentially 25% of your wages, but that's if you don't have money to pay the judgment. If you do, that money goes away (which makes lawsuits more costly for wealthier people).
  • Maybe you think you'll just be able to make more money, but not everyone has that ability or confidence therein.
• You have to pay your lawyers, potentially a lot, even if you win.
• The time costs if the case goes to trial are huge.
• You may have to turn over some, perhaps all, of your communication records, exposing large parts of your life that have nothing to do with the legal question. Maybe your friends and family are questions by lawyers. Maybe the lawyers take that opportunity to insinuate a bunch of things about you to your friends and family that would never be admissible in court.
• It's stressful.
• If you're sued in a professional capacity, the lawsuit may be a stain on your ability to work in the future. Why see a doctor who's been sued once when you could see one who hasn't? (I think readers here would answer "because they're willing to take risks", but most people won't see it that way).

I don't know what the magnitude of risk is, and plausibly it's small enough that we should still update downward. But I think the worst case scenario is quite a bit worse than you describe here.

I think many people should be less afraid of lawsuits, though I'm not sure I'd say "almost everyone."

I wouldn't draw much from the infrequency of lawsuits being filed. Many disputes are resolved in the shadow of the legal system, without an actual court being involved. For example, I read a number of cases in law school where one person sued another after a car accident. Yet when I actually got into a car accident myself, no lawsuit was ever filed. I talked to my insurance company, the other driver presumably talked to their insurance company, the two companies talked to each other, money flowed around, things were paid for. Much more efficient than bringing everybody into a courtroom, empaneling a jury,  and paying lawyers in fancy suits to make arguments. The insurance companies knew what the law was, knew who would have to pay money to who, and so they were able to skip over the whole courtroom battle step, and go directly to the payment step. This is what usually happens when an area of law is mature - the potential parties, sometimes with good advice from their attorneys, reach similar conclusions about the likely outcome of a potential lawsuit, and this allows them to reach an agreement outside of court. Lawsuits are much more likely to happen when the law is more ambiguous, and therefor the parties can have significantly different estimations of the outcome of the suit. So the frequency of lawsuits is often a measure of how much disagreement there is about an area of law. Other times it reflects a requirement to actually go to court to do something (like debt collection or mortgage foreclosure). But I don't think it is a good measure of the likelihood of having to pay out money for some arguable violation of the law.

Also, many contracts contain arbitration clauses, which also prevent conflicts from making it into a courtroom.

 

The notion of lawyers being overly conservative I think is also an incomplete description of that dynamic. A good lawyer will tell you how much you can expect a potential lawsuit to cost, and therefor whether it is more or less than the expected benefit of the action. If your lawyer won't do this, you should  fire them and hire someone else. As an illustration, think about universities violating the free speech and due process rights of their students, and getting sued for it. They do this because the cost of not doing it (in public relations, angry students/faculty/donors, Title IX lawsuits) is more than the cost of a potential constitutional lawsuit, and they know it. How do they know it? Because their lawyers told them so.


I think sometimes people don't want to take the advice of lawyers they perceive as overly conservative, even when they should. People trying to build something or make a deal will often get very excited about it, and only want to see the ways it can go well. Lawyers have seen, or at least studied, many past conflicts, and so they can often see more clearly what conflicts might arise as a result of some project, and advise clients on how to avoid them. That is often what clients pay lawyers for. But to the client, it can often feel like the lawyer putting an unnecessary damper on the shiny project they are excited about.


There is also the moral aspect. Laws often have a moral point behind them. Sometimes when people refrain from doing things to avoid being sued, they are refraining from doing immoral things. And sometimes when people disregard legal advice, do a thing, and get sued, they actually did an immoral thing. To take an example that I watched closely at the time, and that connects to one of Alyssa's examples, during the 2014-2015 school year Rolling Stone published an article, based on a single young woman's account, of gang rape being used as a form of fraternity initiation at UVA. Rolling Stone did not do the sort of fact checking that is standard in journalism. (If memory serves the Columbia School of Journalism put out a report detailing the failures here). Over the course of several months, the story fell apart, it turned out to be a complete fabrication. And Rolling Stone was sued, and had to pay out. I can imagine Rolling Stone's lawyers advising them not to publish that article without doing some more fact checking, and those lawyers would have been right on the law. But more fact checking also would have been the morally correct thing to do. Even in the case of abuse/rape, defamation law does have a moral point to make - you shouldn't make up stories about being abused/raped and present them as the truth.


Finally, as an ex-lawyer, I unreservedly endorse Alyssa's advice not to take on six figures of debt to go to law school without researching the job market.

This reminds me of something Paul Graham wrote in How to Start a Startup:

There is more to setting up a company than incorporating it, of course: insurance, business license, unemployment compensation, various things with the IRS. I'm not even sure what the list is, because we, ah, skipped all that. When we got real funding near the end of 1996, we hired a great CFO, who fixed everything retroactively. It turns out that no one comes and arrests you if you don't do everything you're supposed to when starting a company. And a good thing too, or a lot of startups would never get started. [5]

[5] A friend who started a company in Germany told me they do care about the paperwork there, and that there's more of it. Which helps explain why there are not more startups in Germany.

an organization that always listens to lawyers is being more cautious than the optimum.

Even an organization that disobeys the lawyers sometimes but never regrets not having obeyed them is being more than optimally cautious.

I'm in two minds about this post.

On one hand, I think the core claim is correct Most people are generally too afraid of low negative EV stuff like lawsuits, terrorism, being murdered etc... I think this is also a subset of the general argument that goes something like "most people are too cowardly. Being less cowardly is in most cases better"

That being said, I have a few key problems with this article that make me downvote it.

• I feel like it's writing to persuade, not to explain. It's all arguments for not caring about lawsuits and no examination of why you maybe should care. (Is the entier medical industry + pretty much every newspaper just randomly irrational in the same direction? Are we really sure we know better than the market what the risk of being sued actually is?)
• I also think there's quite a bit of fairly questionable argumentation as pointed out in the comments. e.g: comparing the current cost of claims against current $ spent on mitigation when the comparison should be with the cost of lawsuits in a no mitigation counterfactual, the fact that legal stats referenced are about cases that go to court, not out of court settlements which is 99% of cases etc...

Alternative title: This IS Legal Advice

Isn’t this just an example of the loss aversion tendency in action? It’s a well known concept rooted in our primate evolutionary past, nowadays broadly accepted by mainstream academia, that people care more about losing X then gaining Y when X = Y.  Maybe the ratio is as great as losing 1*X = gaining 2*Y.

So in the liminal zone where there isn’t sufficient activation energy where X < Y < 2*X, it should be expected that humans avoid taking such actions, for example like legal risks. Even if it’s a net benefit, because the net benefit is insufficiently large. 

The real challenge is finding a scenario where losing 1*X = gaining >2*Y.

I found this post valuable for putting a meme "into the water" which, on the margin, I expect made people's risk assessments more accurate.

While there are probably first-mover disadvantages for highly legible institutions attempting to follow this advice, it seems much more possible for individuals, which makes this an example of an inadequate equilibrium [? · GW].

Nitpick: Trump himself has often had his own high-powered legal teams to fight things (including a key lawyer with a long Wikipedia article). So he probably "handled" legal risk in ways the average person would have a hard time replicating. (E.g. won't go broke form missing work while he's being sued, it's just a background task for his team to handle --> therefore, he can outlast the plaintiffs and then settle.)

Cryptocurrencies can make you less vulnerable to lawsuit extortion by making you appear poorer. The government will suck out your bank account before you know what happened.