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August 11, 2003

Are Lawyers Blocking Efforts to Revitalize Small Claims Courts?

Filed under: lawyer news or ethics — David Giacalone @ 2:21 pm

We could take a giant step toward solving the access problem in America’s justice system by revitalizing our small claims courts — turning them into consumer-friendly, affordable and effective “People’s Claims Courts“.  The consumer legal reform group HALT has detailed a number of steps to achieve that goal. See their Small Claims Reform Project webpage, and the article Small Claims Reform – A Means of Expanding Access.  In March 2003, the Consumer Federation of America adopted HALT’s plan.

The vast distance we need to travel, however, can be readily gauged from the state-by-state Small Claims Report Cards given by HALT last year (2002).  How did your state do?

The first target for reform has been the trivially low dollar limits found in most states.  There has been some progress recently in a handful of states, including laws passed during the past legislative session:

In Maryland the limit was increased from $2500 to $5000, as of Oct. 1st, 2003. (see HALT’s description of the battle, as well as a recent article from Hometownannapolis.com (07/27/03)).

In Indiana the limit was raised from $3000 to $6000, taking effect in 2005.  HALT (which would like to see the jurisdictional limits eventually rise to $20,000.) reports that the original bill requested an increase to $10,000.

In New York, a bill raising the small claims dollar limit from $3000 to $5000 passed both houses of the Legislature on June 18, 2003.   However, as reported in the Albany Times Union on Saturday, Governor George Pataki has not yet signed the legislation, and his office is mum about whether he will do so.  It is expected that Pataki will sign eventually, and the law would take effect Jan. 1, 2004. (Albany Times Union, Upping the ante in small claims, by Andrew Tilghman, Aug. 9, 2003). A summary of the legislation, with links to sponsors’ sites and the text, is available here.

  • What is taking you so long, Mr. Governor? Just how hard is it for a Republican to sign legislation that helps lots of consumers while angering some lawyers?

In addition, a Review Commission in California is considering a number of improvements in the State’s small claims system, including whether to approve a tentative recommendation it has received in a commissioned study, which would raise the limits there from $5000 to $10,000.  Hearings will be held in September, and HALT says it will be among those testifying.

Increases to $5000 or $6000 are important first steps, but most states have failed to increase their limits and, to be meaningful in our modern economy, far higher limits are needed. My 1999 column for Prairielaw.com, Supersize Small Claims [original in pdf.; also reproduced here] is still relevant:

[O]ur lawmakers could give a big chunk of the civil justice system back to the people by simply increasing the dollar limits allowed in small claims courts. By permitting claims up to $20,000 in these user-friendly “people’s claims courts,” we could greatly increase access to justice, and greatly decrease the time and money spent to resolve the everyday disputes of consumers and small businesses.

As they now exist, however, small claims courts have become irrelevant to most Americans — a downscale judicial stepchild, unfamiliar to most of the public, and relegated to handling cases too insignificant to warrant or attract lawyers. The dollar limits are simply too low: in two dozen states, the maximum monetary award granted in small claims courts is $3000 or less. It’s $1000 in Virginia, and in Washington State it’s $2500. Only two states (Delaware and parts of Tennessee) allow claims as high as $15,000. These paltry limits are outdated anachronisms at a time when the average new automobile sells for $24,000, and many kitchen renovations include $5,000 gas ranges and $4,000 refrigerators.

As a result, many consumers and small businesses must give up valid claims that would otherwise be highly appropriate for the user-friendly small claims format, because hiring a lawyer would make the claim far too expensive to pursue in other courts. Others are forced to take uncomplicated cases they could easily handle themselves to higher courts, where they pay hefty legal bills for lawyer services they don’t really need.

What’s stopping this needed reform? I’m afraid that virtually all resistance is coming from the bar.   For example, I poked fun at the Maryland Trial Lawyers Association in a posting last month (07/13/03), for its battle against legislation that twice passed unanimously in Maryland’s legislature.

The New York State Bar Association hasn’t even bothered to take a public stance over the five years it has taken to increase the limit to $5000 in their State. This silence — surely based on the guild mentality of preserving work for members — sent a message to legislators that delayed passage and is perhaps now delaying its being signed into law.

What a contrast to the legal profession in the early 20th Century. As I stated in Supersize Small Claims:

At that time, we had a legal profession led by reform-minded titans, such as Louis Brandeis, who used their influence to create a system of small claims courts in the name of “Justice for All”. Using simplified procedures and rules of evidence, those courts allowed anyone to bring everyday consumer claims and simple business disputes before a judge for a quick, inexpensive resolution.

A century later, that same legal profession has become the greatest (maybe the only) beneficiary of our Byzantine court system, and the biggest impediment to its reform.

Do we even have titans in our profession these days?  The best known and most successful lawyers in our era have had little or nothing to say about increasing access to justice for middle and low income Americans. The only battle ground is tort reform, where lawyers on the right propose legislation to protect the coffers of big business, and those on the left fight for the opportunity to make themselves billionaires.

The last few decades, the pro-consumer remnant of reformers still existing within the profession have been relegated to committees producing recommendations that are quickly ignored or defeated within their broader organizations.   Consumers need advocates, outside and within the legal profession, who can overcome the financial self-interest, guild mentality, and satisfied indifference of the organized bar and the majority of its individual members.   Maybe some of us who aren’t quite titans can still stand up and be heroes.

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