Would the world be a better place without lawsuits? Your initial thought is probably, “YES!” The words “good” and “lawsuit” do not go hand in hand, or so it seems. However, contrary to popular belief there are many benefits to lawsuits, besides making great movies and television series like Erin Brockovich, Lincoln Lawyer, My Cousin Vinny, Law & Order, L.A. Law, Harry’s Law, and my personal favorites, Boston Legal and A Time to Kill (just to name a few). While the benefits of pursuing lawsuits against people who commit heinous crimes are obvious, the benefits of civil cases and in particular, tort cases (i.e. car accidents, wrongful death, malpractice, occupier’s liability, product liability, battery, assault, false imprisonment, privacy, negligent misrepresentation, nuisance, defamation, etc.), are a little less obvious. Insurance companies want you to believe that all civil lawsuits are bad, but in my opinion there is such a thing as a good lawsuit. Being a lawyer, I may be biased, but consider the facts and judge for yourself.
Six benefits of lawsuits (as summarized from Linden: Canadian Tort Law, 7th ed.):
1. Victim Compensation - The purpose of tort law is to compensate (repair) the victim for the damages they have suffered where another person or entity is at fault. In Canada, we have three levels of compensation when someone gets hurt. At the bottom are social insurance measures, which include: health care, EI and CPP disability benefits. The next level is situation specific and includes: Worker’s Compensation, Victim’s Assistance and ICBC Accident Benefits (aka Part 7 Benefits or no-fault benefits). The first two levels are independent of who’s at fault. The third level is the tort claim. While there is some money available at the first two levels, they do not typically come close to fully compensating the victim, which is where tort law comes in. Even when you have private disability insurance, you will still be undercompensated in an accident if you do not have the right to pursue a tort claim. This is because disability insurance is designed to cover certain pecuniary losses, like wage loss (which is great), but it is not designed to cover non-pecuniary losses, like pain and suffering.
2. Deterrence/Accident Prevention - Lawsuits enforce reasonable standards of conduct and encourage socially responsible behaviour. They do this because they punish the wrongdoer and provide a warning to others that if they engage in certain behaviour, they too may be found liable for large sums of money. Although liability insurance has removed some of the sting out of the deterrence argument, it has not been removed entirely. If you have insurance and you are found at fault, you will still see your insurance premiums go up. In addition, depending on your insurance policy limits, if the judgement is for more than your policy, or if you are in breach of your policy (i.e. drinking and driving), you will be personally on the hook for the judgment. In addition, if you are the person injured but you are found to be contributorily negligent (i.e. failing to wear your seat belt) you will recover less. This in turn, affects one’s own behavior.
Also, because accidents and lawsuits cost insurance companies money, they are motivated to prevent claims. As a result they take steps to reduce claims, such as driver education campaigns and investing in road improvement projects.
3. Educating the Public - The public pays close attention to lawsuits. This is particularly true when they involve professions (i.e. RCMP, doctors, lawyers, teachers, etc.) or products of interest (i.e. medication, tobacco, guns, products related to children, etc.). Tort law is said to encompass society’s moral principles and when someone has allegedly done something wrong, it puts them in the lime light for the entire world to see. As a result, the public becomes educated. Do you think car manufacturers would recall defective and dangerous vehicles if they could not be sued? How about the drug companies or toy manufacturers? Would we, the public, know as much as we do without lawsuits?
4. Psychological Benefit - It has also been suggested that lawsuits satisfy a psychological need or desire for revenge in a socially acceptable way. If you think this is a ridiculous benefit (I’ll admit it sounds bad), you only have to talk to someone who has been permanently injured at work as a result of an employer ignoring safety requirements to see the logic. Worker’s compensation legislation in Canada prevents employees from suing their employers and in exchange, employees get a form of no-fault accident coverage. However, in the employees’ eyes, the employer is not held responsible for their actions. As a result, employees usually feel helpless and frustrated when their employer has caused their injury because they cannot sue and there is no acceptable outlet for their anger.
5. Market Deterrence - Market deterrence is an indirect effect of lawsuits. In essence, because of lawsuits, riskier activities cost more. For example, owning a car is more expensive than taking the bus. This can defer participation in the activity altogether or make it so that those participating in riskier activities are bearing the costs associated with them, including accidents.
6. Ombudsman/Watch Dog Function - Lastly and probably, one of the most important functions, from my perspective, is that lawsuits empower you, the individual. Currently, in negotiations with insurance companies and other large organizations, the threat of a lawsuit is the only big stick you wield. Without the ability to litigate you have little to no power to ensure that you receive fair compensation for your claim or change the behaviors of large corporations. Judges, unlike adjusters and legislators are independent of financial and political pressures that influence decisions. Anyone can commence a lawsuit. Also, depending on the results, they can act as a catalyst for our legislatures.
In conclusion, while lawsuits can be abused, they also serve some pretty important functions. In particular, the publicity of a lawsuit can be used against the wrongdoer and cast a spotlight on the wrongdoer’s negative behavior. This publicity can affect sales, stock value and the reputation or prestige of the wrongdoer. Therefore, unlike any other tool, lawsuits can be a weapon of social reform to protect the weak, which in my opinion, is a good thing.
*Important Note: The information contained in this column should not be treated by readers as legal advice and should not be relied on without detailed legal counsel being sought.